How Best to Rent Part of PPOR Out

Hi all,

A friend of mine recently purchased a 2 bedroom unit with LUG in a suburb near a university. He bought it as his PPOR but is not keen to stay there for long (just for the minimum of 6 months required to get FHOG). He estimates that as an unfurnished unit, it could fetch around $400pw.

However, as he wants the FHOG, he was thinking of initially renting out the master bedroom unfurnished for 6 months and furnishing the rest of the unit. He might get $170pw for the master bedroom, and perhaps $30pw more for the LUG. He's not sure what to do after 6 months and his options are:

1) Rent out his bedroom for $150pw. Total rent would come to $350pw and he thinks renting out per room may not achieve a good yield compared to renting the whole unit out.

2) Kick the other tenant out and rent out the whole unit as partially furnished. Not sure if this would be a popular option as most rentals in the area are unfurnished. Also, there maybe more headache about replacing furnitures or appliances.

3) Kick the other tenant out and sell or dump the rest of the furnitures in the unit to rent is out as a vacant unit.

I personally prefer Option 1 as the other 2 options can be unfair to the other tenant, unless it was made clear at the start that it's only a 6 month rental (but that would push the rent down). What do you all think?

Thanks.
 
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