There are some strategies which can help boost rental income for investors but is renting room by room a good strategy?
Even though it can be a profitable approach, it doesn’t come without risks. Although renting out individual rooms may result in extra income, it is more likely that problems will arise if there are a number of unrelated tenants living together and this could affect the cash flow.
Having a group of unrelated tenants living in your property may mean you will have to heighten security. Each bedroom needs to have their own lock and key and all of the common entries (e.g. the front and back door) will need to be accessible for all living there.
Furniture is one of the out of pocket expenses you will need to cater for and you will need to decide whether to furnish all of the rooms or just the common areas. Wear and tear on the furniture is inevitable and unless a tenant confesses to causing the damage, you will be responsible for the repairs.
As well as being responsible for the wear and tear of furniture, as the landlord you will also need to attend to the general maintenance of the property.
Arguments often occur over the cleaning responsibilities as not everyone will take responsibility to keep the house clean. If there are regular arguments, it might result in a higher tenant turnover and if the property isn’t kept clean, it may be less desirable for potential tenants.
One option to consider is employing a professional cleaner, but once again, this will be another out of pocket expense for you.
Unlike renting a property to one person, couple or family, renting room by room may result in a higher tenancy rate for several reasons. Some include:
• Strangers living together can heighten the chance of arguments and may result in people moving out if they do not get along with the other tenants.
• You may find that if most of your tenants are students, you may experience a higher vacancy rate during the university holidays (especially November to February).
• Students may move into a share house when they first start university as they do not know anyone but then move out after finding friends or a partner to live with.
Depending on the type of tenant you are going to attract, you will need to create a suitable buffer. For example, if the majority of your tenants are university students, then you will need to prepare for the possible higher vacancy rate during the holiday period.
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.