Renting By Room

Do any of you rent your properties by room?

I was thinking if I rented by room it could be a lot more lucrative but it could also be more risky... more chance of tenant disputes, people moving out etc.

For example a 2 bdr apartment in Newcastle rents for $350 per week.

I could rent it out $200 per room,

What are your thoughts on renting by room? Do you use manager or self manage?
 
You'll be paying for all water gas electricity and internet so allow for that. You could do it by the book and do a lease and take bond etc which would give both you and the tenant some certainty.
 
I was thinking if I rented by room it could be a lot more lucrative but it could also be more risky... more chance of tenant disputes, people moving out etc.

Not sure about NSW, but there may be different Tenancy laws for rooming/boarding houses.

The Y-man
 
I wouldn't go to that much risk for an extra $50pw.

That's a good point but that is $200 per month, $2400 per year extra.

That is only one place.

What if you had 4 X 3 bdr homes.

Say the home was rented out for $400 per week.

change to $180 per person

=$720 per week instead of $400, an extra $320 per week

Now if you had 4 of these properties that is an extra $1280 per month or

$15,360 per year ;)

Some people could live on that much money.
 
$15,360 per year ;)

Some people could live on that much money.

Yes but............ when we did it, the income was seriously eroded by utility costs as mentioned above.

The power, water, gas bills were mammoth.... :(
As well as "general wear and tear" (no care for common areas)


Looks like the laws are a lot slacker in NSW than Vic in some aspects of bond etc, so you might be ok.

http://www.tenants.org.au/factsheet-14-boarders-and-lodgers

The Y-man
 
Personally, if I did this, I would keep the rent still at $350 a week, for each room.

Just have the lease be very flexible.

This type of venture needs to be hands on, otherwise it isn't worth the hassle.
 
You would probably have to furnish the property as well.

Management would be more complex. You may not be able to do it through a real estate agent.
 
I would advertise for $xxx per month + utilities so they pay for the bills too. When they sign up you just tell them they will need to pay $30 a week or whatever for bills. Internet is nice but for a 2 or 3 bdr place you would be better leaving it out. For larger places with more rooms, TPG offer unlimited for about $69 per month.

Chinese investors are doing a lot of this in Sydney. I had a friend who stayed in a small room in Redfern, she was only paying about $180 per week but the owner had about 15 of these rooms in a large run down house that was probably once a business premises. I would not condone that but the Chinese know how to make money. He had some immigrants shacked up doubling in one small room paying around $160 each. That is $320 per room for a hole.

Ideally you will be near a University or a city area so finding new tenants is easy.

Yes it's definitely better for owner/landlords. If you had a handful of properties like this you can run it as a business and be the owner/landlord/handyman.
 
Re student accom:
I personally would not be doing it at the present time:
1. Canada (apparently) has poached some of the foreign students we used to get coming here
2. Last year, for the very first time, NSW introduced boarding house legislation with fire safety requirements and audits from local council
3. Uni construction on campus, has taken some students out of the private market
4. There are lots of ?for lease? signs (high vacancy) in the private market and lots of investors looking to unload their student accom properties.

This is not advice, just personal opinion. Alan
 
I would not condone that but the Chinese know how to make money. He had some immigrants shacked up doubling in one small room paying around $160 each. That is $320 per room for a hole.

The main reason we got out of the market was just this - illegal operators undercutting us, and there was no way we could compete.

The Y-man
 
That's a good point but that is $200 per month, $2400 per year extra.

That is only one place.

What if you had 4 X 3 bdr homes.

Say the home was rented out for $400 per week.

change to $180 per person

=$720 per week instead of $400, an extra $320 per week

Now if you had 4 of these properties that is an extra $1280 per month or

$15,360 per year ;)

Some people could live on that much money.

Firstly, the example you gave was a 2 bedroom unit. That's a lot different to a 4 bedroom house.

Yes, people make money doing this BUT in order for you to obtain the best income you need to have a home with the largest amount of bedrooms that this is suitable for. Checking with Council will let you know how many unrelated people you can have living in the one home.

You need to self manage, and be very hands on. You would probably need to furnish. You would need to be located in an area where there is a market for it. You would be responsible for the cleaning of the common areas.

It is not something that I would do.
 
I wouldn't do it either. We have a five bedroom house that has had five students in it for probably 15 years. The lease is for the whole house and they pay the whole amount each week. If there is a problem and one leaves, until they find a replacement, we still get the full amount.

For a little extra each week, I wouldn't want to have to manage five different leases, deal with someone leaving each semester and trying to find someone else to rent a room with four strangers.
 
The numbers look good when considering this type of strategy, but you would have to look at this more like a business compared to the traditional way of owning a rental.

It can work but as mentioned above its a lot more hands on,

- Paying for utilities
- Furnishing the place
- Higher ware and tare
- High turn over rate of tenants

Having these extra factors will limit the scale at which you can grow the system unless you want to employ staff. So the question to ask is what do you want to achieve from this strategy?

For me I would much rather 5 or 6 growth properties using the traditional method and ride the wave :)

Cheers
 
I wouldn't do it either. We have a five bedroom house that has had five students in it for probably 15 years. The lease is for the whole house and they pay the whole amount each week. If there is a problem and one leaves, until they find a replacement, we still get the full amount.

For a little extra each week, I wouldn't want to have to manage five different leases, deal with someone leaving each semester and trying to find someone else to rent a room with four strangers.

I couldn't be bothered either. I don't want to get involved with who's using too much toilet paper and who nicked who's food.

I do the same as you with a couple of mine and it works well. Usually a 'head' tenant becomes obvious and plays the matriarch/patriarch roles and runs the household, ensuring everyone pays rent, cleans and they sort out petty squabbles.
 
My brother went down this road, property near Uni, large house, turned out to be a nightmare. Personalities come into play, issues with someone who is untidy, someone who is a neat freak etc etc. Before you know it you have tenants fighting and then it just goes pear shaped. What was a nice cash flow, turns into negative very quickly.
 
Yes I did this before in Sydney when I had a 3 bedroom apartment.
I put two bunk beds in every room.

but they the students leave lights on in their room all night ... They use a lot of toilet paper... You will have to get UNLIMITED internet !!!

I remember seeing a electricity bill for over a $1000 once

I had to disconnect the Acon from the rooms but every time I went to work the Acond was turned on in the lounge room .
I would come home after a night shift to see the Acond blowing away at full speed.
Oh yes guess whose expected to do the cleaning ????
Who is going to clean the toilet ???


Internet is the first thing people want don't ask me why but that's what they asked for.
They the Asian students want to download their movies .
You will have to get a big fridge too .

I had to put a curfew in the dishwashing liquid ... It was getting to the stage I was buying a homebrand one everyday and a toilet roll everyday.

In the end I thought I made the same roughly as renting it out.
Mind you these were mostly Asian students I didn't want backpackers !!!p

As for Council permission you don't need this with Sydney City Council, they don't care.
But the Strata sometimes cares and will only issue say 3 swipe cards into the lifts.

Would I do it again?? It takes a lot of effort though .

So I had to get unlimited internet, buy all the bunk beds , clean the toilet , they all were too busy to clean and didn't care anyway, electricity was on all night.


I had Asian /Indian students only because I could handle them and less probs

Other international students-- mmmmm I was very cautious to take some other than Asian because most of the others are not real students they just come here to party and get drunk etc, but there's a market for it I guess.. Brazilian Turkish etc etc but I gathered they were more rowdy and I didn't want drunk or parties in my apartment where I was also living.


Backpackers tenants..There are some investors here in Sydney City who are paying off 3 bedroom apartments that advertise on Gumtree etc for backpackers only !!
I don't know why because I'm sure they will smash the rooms but all to their own I guess.Some house /apartment owners here have backpackers.. They will get drunk a lot but still some owners rent their rooms out to them ... So must be money in it... I guess put 6 to a room?
Even some of my Asian students would tell me they rang up some of the adverts on Gumtree to be asked by the apartment/house owner "are you a backpacker.,sorry I only have backpackers here."
I don't know why you would want to live and rent out your rooms to backpackers unless you want to party with them and are lonely.


Disabled room shares-----Even one guy I know up at Kings Cross who is paying off a 6 bedroom terrace has mentally ill people !!! It's sort of like a halfway house but he has no license whatsoever !!
Because he s not running a halfway house just renting rooms to people with a mental disability, he lives in one of the rooms and he told me they get rent assistance on their pensions so he puts two to a room and charges them something like $350 a week each and has 5 rooms at $700 x 5 so he must be making about $3500 a week... I think he provided a evening meal a day though and done all the cleaning and helped with medication ... I think it could of been more than $350 actually or close to $400 anyway I forget but he had this type of share which suited him.

I use to advertise on Gumtree... But there was a lot of competition in the city too.. Yes I used to advertise international students only, because I use to get Irish backpackers ringing up asking how big the fridge was so they can fit their beer in there... And what's the address mate? Me and me mates will be around there soon !!! ....

Ex prisoner -- even I got phone calls from this very same number some days usually the voices were slow and bogan like.
I found out the number came from a prisoners half way house down in Redfern where new ex prisoners can reside until they find accomodation so they let them use the telephone there.
This has a risk so if you have say a 5 or 6 bedroom terrace in any inner city you could try with this type of room share mates but maybe risky ... I would be scared to have some tattooed 7 foot muscular monster knock on my bedroom door late at night to tell me the toilet is not clean or whatever. "Yes sir I clean it immediately ""

But yeah you have me thinking now... Maybe I could put a deposit on a 4 or 5 bedroom house close to transport and rent the rooms out again .. A house this time not an apartment.
 
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Oh yeah, we had students leave heaters on full blast, complain it was too hot and slept with the windows open.......... :eek:

The Y-man
 
I talked to a few people and this is what they have said:

# You don't supply toilet paper or any other little things, not even towels or sheets

# Have the place idiot proof, no dainty, fragile furniture etc. Just have walls, windows and maybe some very basic cheap furniture like a table, sofa etc

# Have large shared fridge but buy a bunch of cheap mini fridges from kmart and lease them out if they prefer them.

# Don't have Gas, idiots will leave it on

# Supply a coin washing machine and dryer and a outdoor line if possible

# You make very clear rules (no heaters etc)

# Put up rules/notices around the place in clear laminated.

# You have regular room inspections

# Internet unlimited for 6 or more people otherwise lower the price and let them get their own or get a limited option and setup a login/quota for each person

# Be selective with tenants, go for quiet Asian girls for the best tenants

# Place ads in Gumtree

# Make it nice for them so they want to stay there, (without spending much money) get rid of any trouble makers promptly or the good tenants will move out. Get the odd newspaper, bring some cheap food you pick up from Asian grocer or just do little things to please the tenants and make them happy to have you as landlord.



Anyway I won't be doing this but could consider it in the future if I purchase the right place.
 
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