Need a crash course in being a landlord in NSW (Strathfield)

The neighbour across the road is moving out and asked if I want to rent his 4 bedroom house. He knows me well so he's willing to give it to me cheap for $700pw rent (it's generally $950-1000pw here). It's about 200mtrs to the main shops - the location is unbeatable really.

I just did some searching around and it seems like rooms here rent for about $300-350pw. I was thinking of sub-leasing out each room separately (he's ok with this, he just doesn't want the hassle of managing it himself, as long as it's all taken care of by someone he trusts).

Seems like an opportunity to make some easy pocket money on the side.

I know other landlords squeeze like 4 people into bedrooms in such highly sought after locations but I'm not interested in this - just one person (or couple) per room. Part of being a good investor is managing risk and I'm not looking to jeopardise all the other stuff I've built up by breaking the law (e.g. imagine if there was a fire, I'd be screwed).

So I guess I'm looking for a quick crash course on:

1) What's the legal limit? E.g. if a few couples move in, that could quickly amount to 8 people. In QLD it's only 5 unrelated parties. What's the rule in NSW?

2) Since I'm sub-leasing, will there be implications on me taking out landlords insurance?

3) What else should I consider?


I've have quite a number of properties of my own but they're all managed by agents. I have also self managed before, but A) not in NSW, and B) not one room at a time.

Since I live across the road it almost seems like a no-brainer for me to handle this myself. I just want to make sure I have all my bases covered.

 

Are you planning to live there yourself? Or lease it from him, then sublease each room?

 

The latter. I still love my house too much Plus I don't really want to share with others, I like my private space.

 

Ahh ok, kind of confused me as your location says Melbourne.

 

I used to be there. Also Brisbane for over 10 years. Now NSW. I'm everywhere lol

I live literally across the road from his house. It's an old school victorian house too with massive bedrooms. So beautiful, wish it was my house!

 

Certainly a problem with insurance all round here.

Firstly, you're unlikely to be able to take out landlord insurance yourself as you don't have an insurable interest, you don't own the property, you are the tenant who is then sub-letting. Pretty sure you'd have a problem here.

Secondly, the actual landlord (the property owner) is also likely to have a problem with insurance themselves. They may be able to get cover against defined events (fire, storm etc.) but unlikely with a landlord insurance policy (tenant damage and loss of rent) as most policies will exclude sub-letting. The risk and complications with sub-let properties is far higher, for example how do you prove who caused the damage with multiple tenants sharing the same facilities such as bathrooms, kitchen, lounge etc.? They would certainly need to disclose the fact that the property is being sub-let to the insurer or they would be jeopardising any potential claim due to not meeting "duty of disclosure".

 

I think you will have trouble find insurance for the house if it's more than 3 unrelated parties.

Also with the QLD law where did you read it's 5 unrelated parties? Are you sure it's not 5 unrelated people? Does the 5 include landlord if the landlord lives there?

Crash course on being a landlord is: it's better to have a house empty than have bad tenants.

But you are subleasing so there is some risk of having the house empty.

Interview well make sure you get nice tenants. Best to get Koreans.

 

Don't understand why he would lease to you at a lower rate if you plan on just subletting the rooms... but why not just offer to manage the property for a % of the rent? Seems like it would be a simpler solution, then you can just organise the LL insurance under his name.

 

Maybe the actual landlord probably doesn't live there and doesn't want to hassle of managing all the tenants. They probably rent out on a per room bias as well but might be sick of dealing with the tenants?