All Topics / Help Needed! / RENT ROOM BY ROOM -House conversion to Shared House (Rooming House)

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of christychristy
    Join Date: 2013
    Post Count: 5


    Has anyone got any experience with shared houses (also known as rooming houses) in the state of victoria?  The house is based in Melbourne just 20km from the CBD just after Altona.   Share house = SH

    I am trying to figure out if it worth my while in terms of 'cost, time and effort'   to convert the house which is currently 4 bedrooms in the main house with a bungalow room at the rear (the bungalow is not self contained – just a room) to a share house.

    In terms of council approval i must appoint a surveyor, have plans drawn up to show the floorplan of the house and furniture placement, where smoke alarms are. I would then need to hard wire smoke alarms in the 5 rooms and alsoe provide emergency lighting and any other items to comply with council regulation. I am of the understanding that council application fees are $500, Surveyor around $700, plus the cost of labour for an electrician to install 5 smoke alarms, emergency exit lights and anything else that i need to do to comply with the council.

    I am currently only renting one room out one room to a couple for $210 ( inclusive of bills), whilst i find new tenants to fill another room. For my suburb, and in general I can have 3 people live in the hosue before requiring the SH council approval and a special permit.. I am currently finding the utility bills to be very high.( they are in my name and I bear the expense). The tenants are using $12.50 of water per week each, not to mention other utility bill costs. 


    1. if you have had experience with SH can you please advise if you managed or had an agent manage the property

    2. Which agents would you recommend to manage the property?

    3. Can i have the utility bills in my name and state in the lease agreement that bills are divided equally between the 3 tenants that occupy the premises?  If the tenants arrive at different times the split would be pro rata basis. 

    4. Can i ask for money in advance to cover me just in case the tenant doesnt pay for bills?  this money would be in addition to the standard bond money that i lodge with RTBA as the bond money can only be equivalent to 2 weeks rent ie. say $300

    Your help would be much appreciated and I look forward to your replies

    Appreciation in advance ;)

    Profile photo of The ImmigrantThe Immigrant
    Join Date: 2008
    Post Count: 73

    Too bad there is no comment on this post. I am very much interested on other's experience on this kind of tenancy. We are thinking of buying a house and turn it into a 'rooming house' for the short to medium term but with a plan of developing multiple townhouses on the property in the long term.

    Profile photo of Jamie MooreJamie Moore
    Join Date: 2010
    Post Count: 5,069

    Lenders see them as boarding houses and aren't huge fans of them so expect a low LVR. I doubt insurance companies will like them either – and I'm not sure who would manage it unless the fees they receive justify the additional effort.



    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of DWolfeDWolfe
    Join Date: 2009
    Post Count: 1,253

    Hi all,

    So 4 bedrooms, do you think the house can accommodate 6-8 strangers comfortably?

    I'm not a huge fan of boarding houses it seems like one huge headache for no much more return.

    You'd really want to crunch the numbers on this to make sure that going through all the fire rating/council hooey/ insurance issues/ etc is worth that extra $100-$200 a week.

    Find someone who will manage it first, talk to them about common issues before you take any steps. Talk to some insurance companies, what is the cost of insuring it, can you get insurance easily what does it cover? Talk to your current tenants, will they be happy sharing with as many as 6 other people at any one time, people may be happy to move in when you only have one or two other tenants but might jump ship when it becomes crowded.

    Lastly, you can ask for bond which is held by the Bond Authority. I don't like your chances of asking for 'cash just incase you don't pay rent' please check the red book for renters (get a copy off a property manager – sorry I don't know the link) this must be given to all tenants at the beginning of their lease.

    Hope this helps,


    DWolfe |
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    Profile photo of The ImmigrantThe Immigrant
    Join Date: 2008
    Post Count: 73

    Thanks guys for your inputs. I can see why investors shy away from this because it would be very difficult to manage, let alone find an insurance to cover this type of tenancy. Having said that, I think we can see a potential for cashflow in the short term while we prepare for the townhouse development. We plan to manage this ourselves as we are looking for a property close to our place. And I think we have access to a niche target of tenants that we want in the property. This will lessen the headache of managing it.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Join Date: 2009
    Post Count: 2,539

    Do your homework on which lenders and insurers would touch it, and under what terms.  (Expect insurance premiums to be sky high, mortgage interest to be high, and LVR to be low as already suggested by the others).  You'll also need to check with council to see if you need a permit to operate the property in this manner.  The topic of boarding houses has been discussed previously on the forums so it's worth doing a search and have a read.

    Jacqui Middleton | Middleton Buyers Advocates
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of seanlimbengleongseanlimbengleong
    Join Date: 2013
    Post Count: 1

    I was like you as well before, finding sources of people that do room rentals but somehow there are not many around, at least when I am looking for them 10 years ago. I must say it is not a norm therefore the majority of people are not familiar with what is necessary to run a room rental business. I do recommend you to not be closed to this idea as it does work and the results are truly exceptionally good, the profits that is. Your cost on the council approvals sounds reasonable if you would like to add the additional rooms, it should be recovered back in a couple of months.

    On your questions whether an agent would be willing to manage it for you, you would really have to check as I am not familiar with agents in your country. Since it is your first experience with room rentals, it may be wise to manage it yourself to get some experience before getting an agent as you would know the issues that may pop up and you would know how to manage it later on with the agent in the future especially when you got more rooms to manage. I am currently managing 35 rooms single handedly. It's a bit of work but still manageable with systems in place.

    On your question on the utilities, you can actually either exclude or include it in the rental depending on several factors as tenants may find it convenient if included and if its excluded you may find it an administration nightmare. It would also matter if they use heaters and other electrical equipment in the house that takes a lot of electricity. Your suggestion of splitting the bills is also one option that is workable.

    On money in advance in case they don't pay the bills, yes, I believe it's quite standard to collect utility deposits if you are getting them to pay the bills separately on top of the rentals. It is your house and you are the landlord so technically you can also draft your own tenancy agreement with this clauses in mind (do check with your agents on this) as we do this in Malaysia. I usually collect 1 month advance rental, 2 months deposits , key deposits and tenancy agreement fees, all this do increase your cash flow end of the day.

    Hope that helps!

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