Hi all,
It seems renting a house by the room is a good way to leverage the property. In reality does it work?
What are the pros and cons of doing this?
Mario
Typically, renting out a room will be cheaper, but there are many draw backs. First the lack of privacy and personal space. You would have roommates (a draw back by itself). If you split bills, you have to deal with the possibility of an extremist (heater/air conditioner full blast all the time increasing costs). An advantage is that you do not have to furnish a full apartment, but then again you are using other people's things and may be restricted on what you can and can't do. Security is another issue. How well do you know these people? Are they going to have people over that will mess with your things or interrupt your routine. Basically the same problems you would have with roommates, but they hold all the power because it is their house.
I have rented a room in my house. It has worked out well. The person is honest, always pays the rent on time and I know she's not going to steal my stuff. She is respectful of my things, I said she can use anything of mine as I have a house full of furniture etc. Her room was unfurnished and she has put all her own things in including bed, drawers, tv etc. We all have our tv's and computer etc in our room so if we need privacy we just go in our room and shut the door. The kitchen, family room and lounge are to share so if we want company or a chat we go there. I am now going to rent out the other bedroom. I hope I am as lucky with this one.
Are you asking about renting a house by the room or renting a room in your house? If the first, then I can recommend it for cashflow, but you have to put in more effort. I have a 5 bedder that when full realises $710pw less costs – $500. Normal rent would be $290 less costs.
I self manage, but in Melbourne I know there are prop. managers that specialize in student accom. I pay elect with a cap of $500 per mth, gas, water and internet usage + phone line. Also garden maintenance, lawn mowing and cleaning once a month.
Downside is short term of tenancies so if you can, sign people up for as long as possible ( min 6mths). 5 people or more it is difficult to get a mix where everyone gets on and pulls their weight. The more the turnover, the less people want to stay – less stability. Upside is a huge cash injection for what may have been a neutral cashflow or negative cashflow property and a good source of income to balance other properties in your portfolio.
A good tip is to get a group at once who are related or know each other well. Fills up the house and they all get on (hopefully)
Good luck with it.
Have you considered 'by the hour'? There are some uses which can dictate this esp if you are near a transport hub & there may be a shortage of accommodation but some regulars?
PGD wrote:Hi all,It seems renting a house by the room is a good way to leverage the property. In reality does it work?
What are the pros and cons of doing this?
Mario
In Queensland at least, there are restrictions on the number of people (not related) who can occupy a house in this way. Max is 5 before you need a licence. In our town many owners have received notices from the Council and Fire/Health safety people when they tried it with more than 5 people.
Mr Fair Go
Tried it once, dropped it like a hot potato. Not worth the hassles.
In my view, renting by room is a great way of increasing cash flow, but whether this strategy succeeds or not, all comes down to 'management'
Hi Sapphire 101,
You are my kindred spirit. I also rent rooms out to international students. Currently, there are 6 of them. There’s more — I also have four children.
This was how I supported my kids. They have been living with international students from the time they had consciousness. I became a homestay mummy 16 years ago.
My house currently receives gross income of $900. The upside is that we live for free. I pay tax on the “business”. So I tax deduct a proportion of electricity, water, gas, telephone, internet, foxtel expenses. We basically live for free.
As my kids are becoming adults, they are starting to “voice” an opinion, like, “why can’t be alone?” With the costs of living in sydney and the costs of mortgage, I don’t know how to do it any other way.
Take care.
angel
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