Will this work?

[Invest]

Hi all,

I currently own a PPOR (a house) with 4 bedrooms and plan to rent out each bedroom to 4 people and then move out into a unit/apartment that I wish to purchase within 12 months closer to the city.

The reason why I want to rent it out room by room is because if I ask for $125 board from every person, it will bring me back $500 weekly, which will totally cover my mortgage on it.

If I simply rent it out to a family, I will be only getting $350 weekly.

When I move into the new unit that I will buy, I still plan on having the house listed as my PPOR (have all the bills in my name etc)... I know this can be risky as my name is on the bills but I plan to have one tenant in the house being the minder of the house (will offer cheaper rent in return).

So I will pay for the existing PPOR out of my bank account as per usual and get the $500 rental from the 4 people living in my PPOR and pay with that for my unit.

Can someone tell me if this ok or is there an alternative? I would prefer to have 4 people renting a bedroom as opposed to renting it out to a family.

Thanks

 

[Propertunity]

You may have left out a couple of things:
1. Supply furnished, with linen, crockery, cutlery, fridge, TV etc
2. You pay the utilities - gas, water, power
3. You provide the internet connection (possibly)
4. In NSW you have no real other issues, however in Vic you'll need to read up on the boarding house legislation to see what other requirements you have to comply with

 

[Invest]

You may have left out a couple of things:
1. Supply furnished, with linen, crockery, cutlery, fridge, TV etc
2. You pay the utilities - gas, water, power
3. You provide the internet connection (possibly)
4. In NSW you have no real other issues, however in Vic you'll need to read up on the boarding house legislation to see what other requirements you have to comply with

Sorry, here goes.

1. I will provide things like microwave, TV, washing machine and a small fridge.

2. I will not be paying for their bills, this will be split into 4 by them.

3. They will need to set up their own internet access and phone line.

4. Im prety sure it should be fine.

My real worry is having to deposit the $500 into my streamline account but directly onto the unit mortgage. Can I manually deposit $500 weekly into the bank account where the mortgage for the unit is held? The unit will be "rented" out to my friend who will be sharing it with me. So in the end the house is still my PPOR even though I wont be living there and the unit will be my IP even though I will be living there.

Is this fine or a big headache?

 

[jaycee]

So will you effectively be claiming both as investment properties ?

 

[Invest]

So will you effectively be claiming both as investment properties ?

No just the new unit.

 

[Lil Skater]

Why bother?

Just claim the house as your IP and unit as your PPOR. What's the difference?

 

[JamesGG]

So in the end the house is still my PPOR even though I wont be living there and the unit will be my IP even though I will be living there.

Is this fine or a big headache?

Well no, that's not fine.

 

[Invest]

Well no, that's not fine.

How come its not fine?

 

[Player]

................Is this fine or a big headache?

Having read this thread thus far, I have one now

Firstly, are you confident that you can rent your asset out by the room. Is it near a University or similar, inner city or adjacent to a train station so that a "room by room" type tenant can be secured.?

Secondly, seek advice from your accountant as to your strategy?

Thirdly, be just a little bit aware of an organisation called the ATO. Be very clear with where, why and what each incoming rental dollar is allocated and how and what each expense dollar goes toward. The ATO requires nexus between expenses and income producing activity........they follow the flow of the money. You should also. Keep impeccable records and notations.

Also check insurance coverage and land lord's ancillary cover especially if you are self managing such an asset.

Good luck.

 

[Invest]

Why bother?

Just claim the house as your IP and unit as your PPOR. What's the difference?

Hmm... I could still get to rent out room by room yeah?

 

[Lil Skater]

Hmm... I could still get to rent out room by room yeah?

Did you read Player's post above?

The answer is yes, of course you can rent it out by the room. However this, may or may not work depending on where the property is located.

The reason I say what I did is because, one it would be less of a headache and two you're breaking the law.

 

[Ed Barton]

Hi all,

I currently own a PPOR (a house) with 4 bedrooms and plan to rent out each bedroom to 4 people and then move out into a unit/apartment that I wish to purchase within 12 months closer to the city.

The reason why I want to rent it out room by room is because if I ask for $125 board from every person, it will bring me back $500 weekly, which will totally cover my mortgage on it.

If I simply rent it out to a family, I will be only getting $350 weekly.

When I move into the new unit that I will buy, I still plan on having the house listed as my PPOR (have all the bills in my name etc)... I know this can be risky as my name is on the bills but I plan to have one tenant in the house being the minder of the house (will offer cheaper rent in return).

So I will pay for the existing PPOR out of my bank account as per usual and get the $500 rental from the 4 people living in my PPOR and pay with that for my unit.

Can someone tell me if this ok or is there an alternative? I would prefer to have 4 people renting a bedroom as opposed to renting it out to a family.

Thanks

as far as ATO scams go this is one of the best scams mentioned here; you have little chance of getting busted by the ATO.

you're more likely to get dobbed in by neighbours unhappy that there are 8 people residing. 4 residents easily turns into 8 with students/per rooms. initial they dob to councils, who can make life difficult for you then they may give you the curtesy of letting the ATO know what you are up to.

Quote:
Originally Posted by Propertunity View Post
You may have left out a couple of things:
1. Supply furnished, with linen, crockery, cutlery, fridge, TV etc
2. You pay the utilities - gas, water, power
3. You provide the internet connection (possibly)
4. In NSW you have no real other issues, however in Vic you'll need to read up on the boarding house legislation to see what other requirements you have to comply with
Sorry, here goes.

1. I will provide things like microwave, TV, washing machine and a small fridge.

2. I will not be paying for their bills, this will be split into 4 by them.

3. They will need to set up their own internet access and phone line.

4. Im prety sure it should be fine.

1. 4 ppl using 1. wears 1 out pretty quick and it needs to be replaced.

2. if you're targeting students/boarders they will expect that most bills are provided but will pay more than 125.

3. dividing some broadband on a wireless router doesn't cost much can be valuable to tenants.

4. get any complaints and you're in trouble. you may well get none.