Buying to rent out rooms seperately?

Discussion in 'What to buy' started by Alex123711, 24th Mar, 2019.

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  1. Alex123711

    Alex123711 Well-Known Member

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    I am considering buying a house to rent out the rooms seperately since I can't seem to find much where the rent covers the repayments/ other expenses, has anyone done this, any recommendations or cautions? Area I'm looking at is close to CBD Brisbane
     
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  2. thatbum

    thatbum Well-Known Member

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    Will you be living there at the same time? Legally, this can mean very different letting scenarios.

    If you're not going to live there, it sounds like you're signing up for a lot of extra hassle, and potentially not for very much more reward - tread carefully.
     
  3. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

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    Careful... how would you determine who was responsible for damage caused in the common rooms such as the kitchen or loungeroom?

    You won't have your pick of insurer or property manager. Not all will take on a property being rented in this manner.
     
  4. marmot

    marmot Well-Known Member

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    Isnt that similar to a boarding house.
    They also have a higher standard for Fire safety , unless you plan on running it illegally
     
  5. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    A bit fraught with danger in some areas as yes there are different legislative requirements for a boarding house. If you plan to live there at the same time then forget about writing off 100% of the expenses too. Would probably need a bit more info on plans and type to give any advice.

    - Andrew
     
  6. Zoolander

    Zoolander Well-Known Member

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    Its extra hassle to intentionally rent out each room. If you want to play loose you could have a sucker volunteer to be the “head tenant” on the lease and be responsible for all damages and arrears etc, and let him/her do the hard work finding “subordinate” tenants for each room and pay the entire rent when those rooms and vacant, and let them diplomatically decide how rent and bills are split and paid.

    In reality, no one in the right mind would put themselves into the head tenant position above.
    you’re better off getting a family into the house for stability and less complexity. Rent may be less but you also pay less reletting fees when the family stays there for several years.
     
  7. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    Re the building insurance - there are policies out there that cover say 5 people living together that are not related. Also factor in the costs of electricity & internet - the usage which can be hard to control.
     
  8. Trainee

    Trainee Well-Known Member

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    Who will manage this? PMs are generally reluctant to manage thes because its a lot more work for not much more money.
     
  9. Alex123711

    Alex123711 Well-Known Member

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    Yes I would be living there too.
     
  10. Angel

    Angel Well-Known Member

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    Would you be better off buying the property as your PPOR and privately taking in boarders?
    • It does not constitute a "boarding house"
    • You can evict nuisance guests more easily than the 60 day notice to vacate as per official rental leases
    • Financial advantages of it NOT being an investment property
     
  11. Paul Mete

    Paul Mete Well-Known Member

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    Alex I rented rooms out individually on a property in Brunswick in Melbourne within a walk/tram from Melbourne Uni and it worked out very well.
    I will explain how I did it which may suit you.
    I firstly consulted my insurance company and structured a policy to suit this arrangement.
    I had a presence at the house using the second living room as my office with a lock.
    The four bedrooms were rented out in a share house arrangement with no bedroom locks. Housemates were interview and selected with some agreed terms, all housemates had a say. We (landlords) offered to pay all bills and supplied toilet paper, soap, washing powder, etc. We also had a cleaner run through the house twice a month to communal areas all included in the price.
    It worked well and restored our faith in humanity. We made good friends and surprisingly it suited young professionals with a good balance of males and females with the occasional student.
    The house was a good size and had access to good transport and bike tracks.
    We were always a little worried something would go wrong but it went well.
    The key was the interview process as I vetted the applicants and presented one I was happy with to the household via a second meeting. I scarred off the party animals and people who wanted a partner sleeping over.
    I hope this helps you
     
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  12. Omnidragon

    Omnidragon Well-Known Member

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    Lots of effort. Why bother
     
  13. Rich2011

    Rich2011 Well-Known Member

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    Searching around for insurance last week one company asked if there were more than three unrelated people living in the house.
     
  14. Rich2011

    Rich2011 Well-Known Member

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    If you bought a large house and had most of the bedrooms let to boarders aren't you going to trigger CGT?

    Renting out part or all of your home

    If you rent out part or all of your home, the rent money you receive is generally regarded as assessable income. This means:

    • you must declare your rental income in your income tax return, and you can claim deductions for the associated expenses, such as part or all of the interest on your home loan
    • you may not be entitled to the full main residence exemption from capital gains tax (CGT), which means you'll have to pay CGT on part of any capital gain made when you sell your home.
     
  15. Rich2011

    Rich2011 Well-Known Member

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    There are area's in Brisbane where the rent will cover the repayments and other expenses, unfortunately they won't be 'close' to the city...
     

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