Stretched thin? Take in boarders

Private individuals looking to open a boardinghouse are often in for a tough fight, Sheehan says. Neighbors are particularly likely to put up fierce resistance, earning them the colorful nickname NIMBYs, or "not-in-my-backyarders."

"You go through a very long public hearing process to get an exception, and you're going to get a lot of opposition," Sheehan says. "The NIMBYs come out of the woodwork: 'The world is going to end, and property values are going to fall!'"

Baschke is among the lucky homeowners who have received approval to turn their homes into boardinghouses. Before hanging out a "room for rent" sign in 1994, she had to clear her plans with Clay County and the city of Fostoria.

"You have to be zoned for multifamily," she says. "I went to our city clerk and got the zoning laws to make sure I fit the criteria. You also have to have a sales permit."

Some people ignore such legalities. Illegal boardinghouses are relatively common, particularly where there are heavy concentrations of immigrant workers and day laborers, Sheehan says.

He says there is no accurate way to measure the number of homes nationwide that rent out a basement apartment or mother-in-law cottage to nonfamily members, a common -- if illegal -- practice.

Tourist areas such as Baschke's community and some college campuses tend to be more accepting of single-room-occupancy housing, especially under the aegis of a bed-and-breakfast inn. However, you many have to obtain a business license or permit and collect and pay applicable sales taxes. You may also have to collect and pay hotel-motel fees, and possibly submit to periodic health inspections.

Know your market

Before opening a boardinghouse and hanging out a "vacancy" sign, it's important to familiarize yourself with your local rental market to determine your likelihood of success.

Check out your competition in classified ads and online at such sites as Craigslist.org. The type of data collected by the National Apartment Association won't directly translate to your enterprise.

• Talk back: Would you share a house to cut costs?

Rental housing nationwide increased by more than 1.5 million units in the fourth quarter of 2007 over the same quarter the previous year, the largest single-year increase ever. Due to the housing slump and subprime foreclosures, a good portion of that increase came from owners who can't sell their properties and decided to turn them into rentals. The result is more competition for you.

Despite these headwinds, a boardinghouse may still make sense for you. Baschke's efforts have already paid big dividends. In her first year, she anticipated that her house would empty as her student boarders returned to school at the end of the summer resort season.

But to her surprise, the rooms filled up again when autumn rolled around.

"That was the strange thing, but as the kids left, a new group of people started coming," she says. "These were highly educated people who were moving here for jobs in the executive sector, and they had families at home. This was really good because the wife could come and meet me, and the husband is not in a motel -- with a bar."

Now that her own kids have flown the nest and she has remarried, Baschke's boardinghouse pays off in more than just financial terms.

"My husband, Mark, is a truck driver who is on the road a lot, so this works great for me. I have company, and it keeps me out of trouble," Baschke says with a chuckle.

Gamber says that sense of community is crucial to the revival of the boardinghouse concept. The luxury of isolationism may be slowly giving way to new variations on the boardinghouse model, she says.

"You certainly have arrangements for migrant workers, but then at the other end of the scale you have very wealthy parents buying houses for their students, or elderly people banding together," Gamber says. "It seems to be happening in a variety of directions and among people in a variety of economic and social circumstances. I think both economically and (with) just some people's loneliness, it makes sense."

Baschke agrees.

"I don't ever plan to retire," she says. "I love people, and I would probably always continue until they find me dead in the bedroom one morning when I didn't fix breakfast."

This article was reported and written by Jay MacDonald for Bankrate.com.

Published June 10, 2008

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