在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m
Signed a contract to buy a shared accommodation rental, the numbers look good on paper (purchase price mid $500K, theoretical rental return $800+/wk), but the more I dug into it the more scary it got. The main disadvantages are :
1. Ridiculous insurance premium $5000 & up. Many investors have the vanilla landlord insurance policy which doesn't cover property leased by the room. I know disasters don't usually happen, but if they do ............................
2. High cost of compliance such as fire and council.
also high tenants turnover and long vacancy. Been told by couple of local rental managers that some rooms have been advertised for tenants forever.
Most likely will cancel the contract, would appreciate opinions/experience for or against buying rooming rental properties.
Yes the insurance most likely will be higher.
Try to self manage yourself.
You could offer a friend a free room in exchange for them cleaning common areas, and showing rooms to applicants and/or signing them up.
You need to be very proactive.
Don;t just wait for applicants to contact you.
Scour the ads on Gumtree etc and answer them.
High tenant turnover is to be expected.
Vacancies don't need to be.
thanks Kathryn, getting valid insurance for a reasonable premium is more an issue than the tenancy/maintenance.
bornfree said: ↑
thanks Kathryn, getting valid insurance for a reasonable premium is more an issue than the tenancy/maintenance.Click to expand...Ask the Vendor who their insurance company is.It may give you something to compare to.
We may also be buying a property like that here, In Canada. The insurance is higher here too.
I don't know what their premiums are but have you tried:
Insurance is not only high priced it is also limited. On residential leases landlords insurance with good companies like terri scheer your risk of loss is zero as there are no excesses on tenant defaults.
There is unlimited upper risk with multi-let accommodations but when done right the returns can be higher.
I did a seminar on the pros and cons of multi-letting and recorded it some time ago, things may have changed by now but feel free to download the mp3 from our website at www.adprop.com.au. you need to register and refer 3 friends it is the second mp3 available,.
You're right to be looking at this more closely.
Is this simply a large house with a lot of bedrooms? If so what is the value of this property (without factoring in it's rental type), and are you paying for the property only or property and tenancy?
If above valuation could you not buy another large house and start your own share accommodation?
If you are just over your numbers that deem you be paying the higher rental insurance, then I wonder would it be worth reducing your numbers (assuming it's by 1 or 2) to reduce your insurance.
Do your figures based on all these costs, plus any premium paid on purchase on this type of accommodation.
My brother has a number of these multilet properties and has found the one that houses the most tenants, also has the most vacancies and turnover.
If they are always advertising this may be the case, so keep in mind theoretical rental return may not be $800+/wk.
On the other hand if the property is not your usual residential home, much of what I've said may not apply. I've read on this forum that if you do this type of let having more is better than fewer tenants (?to absorb some of these cost). I suppose it all depends on your realistic tenant numbers and weighing up overall cost and return.
thanks Propertunity for the link, will call PBInsurance tomorrow for a quote.
Xenia, will download the MP3, didn't realise there are so many things have to watch out for when multi-letting.
"My brother has a number of these multilet properties and has found the one that houses the most tenants, also has the most vacancies and turnover."
weg, I guess the more tenants in a property, they don't have a sense of belonging, hence the high turnover. I am weighing up buying this property versus other properties to be let by the whole house, the supposingly extra income is probably not worth the extra work and headache.
Thank you all for your comments.