Highest & Best use?

I have a situation I would like some opinions on.

I have a 4 bed 2bath home home that was previously rented as a boarding house. After paying for utilities, I could clear $1250 - $1400 per month.

I could also convert this into a traditional SFH and rent it out for $900 per month - but I would have to make it a 3BR.

It seems obvious that I should keep it as a rooming house - but here is the problem. I dont feel like dealing with collecting rent and managing 4 different folk in one home. Do you guys factor in your “preference” when deciding how to handle a property?

I am almost certain - I am going to keep it as a rooming home, but just wanted to see what you guys think. I also have a full-time job, 10 other rentals (SFH), trying to start a family, and prefer not to use property management companies. What would you do?

Highest and best use is typically determined by what will generate the greater cash flow and is of course legal. Is the property zoned appropriately for a rooming house? If not then you may be forced to convert it back to a SFH. If the rooming house is legal then why not have four rentals under one roof, consolidates your time collecting rent and doing repairs. Don’t forget to include all your expenses and reserves in determining true cash flow, but you already own ten rentals so I suspect you know what you’re doing.

Here in Pittsburgh we have a similar situation and what we have found works the best is to have one of the guys act as the house manager. His responsibility is to handle all the daily things that come up. Make sure rooms are clean, common areas clean, maintenance issues reported, etc. We still collect rents but hey I can go out of my way to collect $$$$. Other than than that the house manager handles everything else and things run pretty smooth.

We are liscensed by the state and deal primarily with recovering addicts and alcoholics and occassionally special needs individuals who need minor living assitance. However, I know of several places that operate boarding houses under the radar the same way.

By the way our house managers recieve free rent in exchange for acting as house manager.