Room rentals, any tips?

[Dan Golby]

I recently had a vacancy in my upper suite and discovered that there is huge demand for room rentals in the neighbourhood that I invest in thanks to jobs in the area. I've never given this method much consideration until now, it didn't really appeal to me because it sounded like a hassle to manage, but it is time to change my habits, to change my results My wife isn't working now so she has more time to manage it so it is time to take action.



Just wondering if there is anyone out there doing this already that has a crash course available for room rentals. Any tips/tricks would be greatly appreciated.



I know how to calculate gross annual rent/purchase price to see if a property lands in the cash flow zone, but I'm wondering how much higher the percent needs to be in order to make it worth doing room rentals. There will be extra cost involved to furnish and provide cleaning services etc. Then of course there will likely be slightly higher vacancies than normal.

Anyway, thanks in advance for help provided!

 

[BlaineBradley]

Hello,



The room rental idea is alive and well in Fort McMurray. Average prices are around $800/month for a regular room and $1000/month for a master (usually with an ensuite). These prices are for furnished rooms and "run of the house" (use of all common areas, etc.)



Pros

- potentially more cash in if you have lots of bedrooms

- can work well if all roommates are on the same work schedule

- good for commuters (leave area for days off)



Cons

- tough if only 1 bathroom

- parking concerns

- roommate issues

- more people makes sharing bathroom, kitchen, laundry difficult

- different sleep schedules can be difficult to manage



Good Luck!

 

[Dan Golby]

Thanks for the reply. I have thought of the parking issue, for that reason I've been trying to find older homes in good shape that still have back alley access. I like the fact that it leaves me the option of doing a fix and flip if we decide that room rentals aren't our cup of tea or the demand goes away.

 

[housingrental]

A few thoughts:



Talk with your insurer first. They might not cover you, or your cost might be materially higher.

Check to ensure legal compliance - zoning, fire, electrical issues might all be in play.

Be prepared for more: wear and tear, bailing mid lease, interpersonal issues, property damage, active management.

If there is a housing shortage in your area talk to employers to see if they will lease the house to house their workers.

 

[Dan Golby]

Great point about insurance. I've been tossing it around and I don't know that room rental is for us. Although we do have more time available now to manage, we aren't always available at a moments notice.



I like the idea of the employer lease though, we did have good luck with that when we first bought our rental, then the tenant just took the lease over when her employer was done.



I found out some interesting news about the area I invest in, so either way it is time for action!

 

[Angela123]

It`s a very good deal, anyway. Look at the prices for rental and calculate you would-be income, sure it will satisfy you if not now, including all the expenses (to buy furniture and so on) but later, in few years. I see only pros, if there is one bathroom, you can make another one (it can be very little, but comfortable), it will cost you from 5000-10000 (depends on prices in the local area)but you will earn later this sum while renting. Sharing kitchen is the other problem`here people should make an agreement what time to cook (but to say the truth, in most cases we don't cook at home nowadays). Try to do it, good luck!

 

[Dan Golby]

Thanks for the encouragement! Haven't ruled it out just yet, but I do plan to make a couple of moves that will include more "passive" income. I like the idea of the extra income, but it is a tough decision. I currently work away from home on a 7 day on/ 7 day off shift, so when there are issues when I'm at work it leaves my wife to deal with the issue, as well as a 3 year old and 8 month old kid.

Need to be realistic and say that as much as cash flow is great with the room rentals, lower maintenance is very attractive too!

 

[derekchien]

average home insurance would be $1000/year in Ontario, when you are talking about boarding/rooming house insurance, it will jump to $3000 to $4000/year. Also insurance will not pay anything that is illegal. So, if your city zoning/fire/building code doesn't allow it then it would be a big risk to you. Let say one of your tenant sets your property on fire, even you have rooming house insurance, it may not cover since your property is not a legal rooming house. Hope this helps.