Do you want to learn how to invest in real estate, but you’re leery of the hassles of marketing, management, screening applicants, collecting rent, and resolving tenant disputes?
PadSplit can help you create more rooms (and potentially more rental income) in your rental property by helping connect you with a contractor who can build additional rooms. The platform also advertises and books rooms and processes weekly payments for tenants online in exchange for a cut from property owners.
We'll look at how PadSplit works, who can use it, how much you can earn, common questions, and how to sign up and start renting rooms.
Learn how you could make money with your property's unused space.
- Up to 90% occupancy rate on average
- Improve turnover rates with better screening
- Reduce your vacancy cost
What is PadSplit?
PadSplit offers a marketplace where rental property owners can list rooms for rent for long-term stays. The startup was created in 2017 by Atticus LeBlanc to address the affordable housing crisis by leveraging housing as a vehicle for financial independence. Since its inception, PadSplit has created more than 2,500 shared housing units and provided homes to over 4,800 people.
PadSplit works with property owners to develop underutilized space in existing rental properties. PadSplit also reports weekly payments through rent reporting service Esusu so renters (called members) can build their credit scores.
Members live in a rental unit similar to a rooming house and pay just one bill each week and receive several incentives, including:
- A private furnished room
- Covered utilities (including Wi-Fi)
- Free credit reporting
- No minimum credit score needed
- No large security deposit
How does PadSplit work?
PadSplit's main priority is to help rental home owners add additional rooms to their property. After you create a hosting account, the platform will help you identify where additional rooms can go and can introduce you to contractors to build them out.
PadSplit's website outlines three main phases a property must undergo before readying for tenants: pre-renovation, conversion, and listing preparation. PadSplit helps with staging your property and adding the right features, such as smart locks, Wi-Fi, heating, air conditioning units, fire stops, and more.
PadSplit will also give you suggestions on how to list your rental property, such as adding parking, and pricing rooms. For example, PadSplit suggests choosing themes for naming bedrooms using neutral words like groups of states, colors, or types of flowers.
PadSplit markets runs background checks and verifies the employment and income of potential members. Applicants must:
- Be 18 or older
- Undergo a criminal background check — those with felony convictions in the past seven years will require additional review
- Not have had more than two evictions in the past seven years
- Verify their identity by a third-party provider via valid IDs and Social Security numbers
- Show proof of income or pay membership dues upfront
PadSplit takes care of all resident management, including tenant screening and rent collection calls. PadSplit also handles ongoing resident management involving phone and chat support, points of escalation, product support, and member issues.
PadSplit also offers a turnkey service to help real estate investors look for rental properties to buy in their area. PadSplit team members can then hire and manage contractors to make renovations; list your property and rooms for rent; and manage move-ins, move-outs, and property management and maintenance.
Who can use PadSplit?
Currently, members 18 years of age or older who live in the following states and cities can take advantage of PadSplit:
- Florida: Jacksonville, Tampa
- Georgia: Atlanta, Austell, College Park, Conley, Decatur, Douglasville, Ellenwood, Fairburn, Forest Park, Jonesboro, Lithonia, Mableton, Marietta, Morrow, Rex, Riverdale, Smyrna, Snellville, Stonecrest, Stone Mountain, Union City, Woodstock
- Indiana: Indianapolis
- Louisiana: New Orleans
- South Carolina: Spartanburg
- Texas: Dallas, Pasadena, Fort Worth, Houston
- Virginia: Colonial Heights, Petersburg, Richmond
- Wisconsin: Plover
You must have a property optimized for high bedroom count, multiple bathrooms (no more than four bedrooms can share a bathroom), a low-maintenance yard, and access to parking and public transit.
How much can you earn with PadSplit?
PadSplit offers a calculator you can use to estimate how much you could earn by adding more rooms to your property. It also takes into account your location and breaks down your maintenance and other costs. In one example of listing with PadSplit, converting a four-bedroom unit to a seven-bedroom unit would result in a net income increase from $723 to $2,259.
Keep in mind that these numbers will change based on property costs, location, and changes in the rental market. PadSplit cannot guarantee you will achieve these results with your particular property.
Managing your rental business expenses
Getting your spare rooms ready to rent might require some spending. Here's an excellent business credit card we recommend:
Ink Business Unlimited® Credit Card
This card offers unlimited 1.5% cash back on every purchase, so you’re rewarded for every purchase. Its $0 annual fee makes it an affordable option, and its welcome offer allows you to earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening.
Another unique feature of this card is that it has a 0% intro APR for 12 months on purchases (then 18.49% - 24.49% Variable). Businesses and side hustles can be expensive to get up and running, and the intro APR can help you get started on the right foot (and you could earn the welcome offer for an extra boost).
Find out more in our full Ink Business Unlimited credit card review.
Common questions about PadSplit
Is PadSplit legitimate?
Yes, PadSplit is legitimate, but it's important to remember that PadSplit cannot guarantee financial results. Additionally, PadSplit has been in the news for reports of negligent property owners, high fees, and inconsistent policies surrounding eviction and relocation, so it’s important to do your research before you decide whether it’s a fit for you.
How long does PadSplit last?
The length of PadSplit tenancy isn't guaranteed because it depends on a variety of factors, including pricing, how the property is configured, location, and more. However, PadSplit reports its occupancy rate at above 90% and residents stay an average of eight months.
How does PadSplit screen members?
PadSplit members must undergo background checks and meet certain approval criteria, including verification of employment. Members must abide by PadSplit’s Three Keys Policy, which can result in a member being removed or paying a fine if they violate the company’s membership rules.
How to sign up for PadSplit
PadSplit then moves you through three general steps:
- Schedule a call. In this call, PadSplit gets to know you and your property.
- Get your property ready. The PadSplit team introduces you to contractors who can help you split your room to help you earn more income.
- List your rooms. The PadSplit platform displays your home to potential members and screens them.
Alternatives to PadSplit
If you're learning how to invest in real estate and you want another entity to handle all member management, marketing, collections, disputes, and the challenges inherent in short-term rentals, PadSplit might make sense for you. Other co-living platforms similar to PadSplit include Common and WeLive.
Vacation rentals like Vrbo or Airbnb might also be an option for you if you don’t have a property you can split into multiple units. Get more ideas for bringing in some extra cash in our how to make money guide and check out some of the best side hustles.