Renting Out Apartments By Renting by the Rooms

There are people whose main or part business is renting out their real estate. These can be buildings, houses, apartments, garages and so on. But not many are lucky enough to have a portfolio of real estate properties.

Most people only own a single real estate property which is the reason why their real estate business is not very profitable. But there is a way where even though you own a single real estate property, you can still increase your income.

The solution is not to rent out your single real estate property to only one set of tenants, like a family. Rather, you rent out the rooms of your single real estate to multiple set of tenants.

This way, instead of collecting rent from only one set of tenants, you instead collect rent from multiple set of tenants without having to buy additional real estate properties.

The information in this article is based off my experiences living in a rental property where the owners rent by the room.

The Details:

1. You Potentially Earn More

The traditional rental properties are houses and apartments which are rented out to a single set of tenants, like a family or a couple. Usually, the rental charges are all-in, meaning the rental price is charged by the apartment or house and not by the number of tenants.

For example, you might have a two sets of applicants for your rental property: a family of three and a family of four, but whomever you select, you still get paid the same rental price because you charge by the rental property and not by the number of tenants.

The idea here is that your rental charge gives a single set of occupant the right to all the amenities in your rental property: the bedrooms, living room, kitchen, bathroom, and so on.

But renting by the room changes this ownership concept. This enables you to rent out your entire rental property to different sets of tenants who only enjoy the sole ownership of their respective bedroom, but have to share with others all the other amenities in the rental property.

Although each set of tenants pays a lower price as compared to them having to pay a higher amount to have complete ownership of your rental property, the cumulative rental payments of all the set of tenants results in a higher rental profit for you.

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2. Not Ideal for Every Tenant

You might have to run through several sets of tenants before you can get the ideal set of tenants who would stay in your rental property for a very long period of time.

This is because not many tenants would want to share home or apartment amenities like the living room, kitchen, bathroom and others to other people they hardly knew or are complete strangers.

Usually, tenants who stay long on by the room rental properties are single people and couples who want to save money. These people usually spend most of their time in their bedrooms and hardly use the other amenities of your rental property.

They are your ideal tenants and it could take a while before you fill all your for rent rooms with these kinds of tenants. But once you find them, and your rental prices are reasonable, you can expect these kinds of tenants to stay with your rental property for a very long time.

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3. Extra Work

Having not only one set of tenants but several, means more maintenance work for you. For example, the kitchen and the bathroom gets used more and this causes extra wear and tear on your rental property fixtures like your stove, plumbing and so on.

Even furniture that lasts for long periods of time can buckle under the strain of being used repeatedly often. For example, you might need to repair or replace your couches and chairs more than you normally need to.

But these are nothing compared to the hassle you get from settling disputes between your different sets of tenants. This is inevitable, as sharing living space would inevitably lead to friction between your different sets of tenants.

You might even lose your best tenants to some of your less than ideal tenants. This could mean having to do more work just to find yourself a new set of ideal tenants. Don’t rent by the room if you are unwilling to do extra work to maintain your rental business.

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4. More Maintenance Costs

The more set of tenants you have, the more is your maintenance costs. For example, you would spend more on electricity, gas, water and other utilities because you have more tenants occupying your rental property.

Usually, what landlords who rent by the room do is to add the utility costs to the rent, making sure that they don’t lose money in case their tenants use a lot of utilities. This takes experience for the landlord to successfully implement.

But if you have the money, you can pay for card activated meters on your utilities. For example, the electricity on your tenant’s bedroom might be paid for by a prepaid electricity card which you make available to your tenants.

You also have to consider that in some countries, it is illegal to charge your tenants utility costs unless you have proof that your tenants have individual meters that accurately show their utility usage. Such laws for example exist in some states in the United States.

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5. Minimal Rental Downtime

While renting out by the room means more work and more maintenance costs, it has an undeniable advantage: you hardly have any downtimes renting out your rental property.

This is unlike renting out to a single set of tenants only, where if they leave, you lose all your tenants. With a by the room rental setup, once one of your tenants leave, you still have other paying tenants.

Also, since renting by the room is cheaper than renting an entire rental property, you’ll easily find new tenants who can afford to rent one of your vacant rooms.

I have lived in rental properties and have rented out rental properties of my own, by my experience, it is easier to find tenants who would rent by the room than an entire rental property.

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Final Words

If you only have a few rental properties, say just one, you’ll find that your rental income would not be substantial if you rent out your entire rental property to just one set of tenants.

By renting out by the room to different sets of tenants, you can increase your rental earnings substantially.

But be prepared to work more and spend more on maintenance costs. This is because the additional wear and tear on your rental property and everything inside it, would mean that you have to spend more time maintaining and/or replacing them.

Also, you need to face the fact that sometimes, you would have to settle the disputes between your different sets of tenants. As a landlord renting out by the rooms, you would need good social skills to successfully maintain a by the room rental property.

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You Might Be Interested To Read This Article:

Renting a Room in My House: 13 Things to Consider First

It doesn’t matter if you rent out your building, home or a space in your building or home. You are still called a Landlord no matter what.

This means that you have a tenant or customer who pays you rent and you have a taxable business in the eyes of the government.

Although renting out a room in your house might seem an informal affair, this is a real business in the eyes of your tenant and the government. Contracts between tenants should be signed and permits from the government need to be acquired if required. ...

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