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
Getting insurance is a bit of a pain – search "rooming house" and "boarding house" on this forum to read more on that.
You'd need to charge an "all in" fee that covers water, electricity, internet etc. As such you might need to take measures such as arranging for the hot water to magically stop after the shower has been running for 4mins to prevent the residents from running up the bills.
"By the room" accommodation is always in high demand in major cities (ie for medium-stay tourists) and near universities. You'd want to move relevant furniture in/out as each new tennant arrives/departs. Eg a student might want a desk in the room, but a professional might prefer a 2 seater dining table.
Something to be a bit careful of is what you provide as a "kitchen". As I understand it, if you put a sink and a microwave and a barfridge in the room, that'll be fine. But you may run into strife if you actually put an oven+hotplates in the room, as then it is actually defined as a separate residence (and no doubt council will bill rates accordingly). Steer clear of having separate letterboxes at the exterior of the property for the same reason.Have a think about how you'd handle cleaning in the communal areas (eg the bathrooms). It's unlikely each person would do their fair share (or any cleaning at all) so perhaps build the cost of an occasional cleaner into the rental rates.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
actually lots of asian people do that in their house. and lots of overseas students share accommodations that way.
for example, renting out a 3 bedroom unit gives you 450pw, but by renting each room you can get 600pw ($200 per room X 3 rooms). The only pro is you do get more rent, better yield on your property.
cons are:
1. Only a few agents are happy to manage the property for you. This means it's likely you have to manage the tenants yourself. If you get troublesome tenants, it will give you LOTS of headache and stress.
2. if you want to be honest with insurance company, all major insurance companies won't insure your property.
3. Tenants don't know each other, they don't feel home in your property either, so no one will look after the property. Get ready to see your property trashed after couple of days. Yes, after couple of days, not weeks or months.I've lots of relatives and friends rent out properties by room to maximize rental return. So i've seen both sides of the storey. Some of them choose not to check out their property for months to avoid the stress and unhappiness when they see the trashed property. If you do decide to take this path, make sure you are ready to handle the stress, and the troublesome tenants, focus on the extra rent that you are collecting each week, then you'll be fine.
cheers
viv
Hi guys,
I am entertaining the option of 'Rent by Room' as part of my investigations into ways I can leverage a property in an attempt to manufacture a postively geard solution.
I am not surprised the logistics of managing such a scenario is a potential mine field.
Mario
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