Renting by The Room and Keeping Tenants When Competition is High



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Question: What are the differences between leasing to students, ie by the room, compared to normal tenants like families or a group of tenants? What are the pros and cons? What are the likely challenges? In terms of compliance, are there specific regulations that landlords need to know about?

Answer: Renting by the room can be quite popular in some areas, especially those close to college and university campuses. To get the most out of this type of investment, the property should feature four or more bedrooms or be a three-bedroom home with the potential to be converted into a four-bedroom property.

To ensure success with this type of venture, you need to have strict house rules as an attachment to your tenancy agreement. These rules outline designated smoking areas (if you are allowing smoking), whether drinking is permitted in the house, and if tenants are allowed to have visitors to stay the night. They can also stipulate rules around the use of common areas and what hours laundry can be done.

Another consideration is landlord insurance. Would your landlord insurance cover the per-room set-up? Think carefully before you commit to this kind of property management approach.

Personally, the high-risk factor turns me off agreeing to manage anything like this. If you think a neighbour is hard to deal with when things go sour – for example when there’s a loud music complaint from the neighbour – imagine four or five people living under one roof having a disagreement, and the money it could potentially cost in damages/loss of rent! While it’s tempting, and it can work, I’d choose renting to a family every time over a houseful of students.

– Nicole Keene


Question: I’m worried that vacancy rates are rising in a suburb that I’ve invested in as tenants buy their own homes. With such cheap interest rates, I have heard some landlords are now losing tenants, and their properties are lying vacant for longer periods of time. What can I do to ensure that my tenants stay (if they’re not moving into home ownership)? Do I have to consider dropping rents to compete with others? I just want a regular income to pay for the mortgage interest rate.

Answer: You definitely don’t want to lose a good, long-term tenant! But the last thing I would recommend is decreasing the rent. If your tenant is good and their inspections are A+, perhaps offering a one-off incentive would be preferable, and keep you on solid terms. You could offer them a week’s free rent, present them with a gift voucher, or give them one week’s free rent every three months if they renew their tenancy agreement. The list of ideas to show how much you appreciate them goes on and on.

I know of one landlord who would buy their tenants a nice bottle of wine every time the lease was renewed – a simple, classy way to build goodwill. When the tenants finally did leave – and only because the owner eventually decided to move into the property – they left a bottle of wine behind as a thank you for such a pleasant, trouble-free tenancy.

If your tenant feels like they are your top priority, they will be much happier. Another way to your tenant’s heart is to address their complaints about property maintenance quickly! You can also nip any issues in the bud by addressing potential problems before they arise to avoid tenant frustration when parts wear out or things break down.

Being the ‘good guy’ can save you time and money, and a lot of frustration.

– Nathan Birch

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