How To Start A Share House For Shared Accommodation.

How To Start A Share House For Shared Accommodation.
Offering a home to rent is supposed to be a very shrewd investment, and many people rush into it thinking they can make a quick profit, only to realize it is viciously difficult to make a profit. It requires a lot of planning, and the amount of hours you have to put into the business is far more than most people assume.

Picking a building to rent means considering the location relative to your target tenant, the type of building they need, and even the type of tenant you wish to attract. Starting a shared home for students and working teams is a viable renting option. The tenancy durations tend to be short, but there is often an ample supply of tenants every year, which means your house spends less time lying vacant.

There is also the fact that starting a shared home can be very lucrative. Each tenant pays a bedroom rental, which means there is a good chance the total rental fee will come to more than if you were renting out to a working couple or family.

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Picking A Good Location

Beware that students and teams of workers may not have cars, so a decent public transport system needs to exist in the area. This especially includes bus services that run very early in the morning (at least 6am).

Picking a location near an industrial estate that hires a lot of consultant or foreign workgroups can be quite lucrative. Otherwise, you can pick a building near a college or University and aim for student tenants.

Target Your Tenants

Do not advertise with estate agencies that do not have a strong pull with the student or working community. If you choose to go with an estate agency, you need to pick one that actively promotes to your target tenant. You can easily self promote your shared accommodation on the Internet, and even by posters in the local colleges/Universities and around the local industrial estates.

Estate Agency Or Not?

There are a few reasons why you should and shouldn’t go with an estate agency, though there is not really a “right” answer to this question. Here are a few pros and cons to help you decide:

Pro - They can take care of the legal side of taking a deposit
Pro - They can run credit checks
Pro - If you have no time to spare, then they may be helpful in finding tenants

Con - If a tenant is angry at the estate agency, then they take it out on the house.
Con - Estate agencies cost you money you could have saved
Con - Estate agencies have fees that may push your building over a student’s budget

Remember that all estate agencies are different. You may find one that is committed, low cost, user-friendly and very attentive to tenants, and you may find one that is the exact opposite.

Applicable Laws In Your Area

You cannot simply repurpose a house or building on a whim. The country and the state you live in will have its own rules on usage zoning. It may simply be a case of you asking permission. The building you own may already be in an area, or have permission, to set up shared accommodation.

There are also area-specific rules that may apply. The state and even the local postal area may allow multiple tenants to share a house, but a certain area may have its own bylaws that restrict the use of houses. There are plenty of places where you can be sued for having a dog or even for having hedges instead of a fence. You will have to find out if there are any bylaws or rules in building you rent, especially if the building is a block of apartments/flats.

Taking A Deposit*

In many countries, and in many states, there are very strict rules around taking a deposit. In some countries, you have to give the deposit over to a deposit scheme or you can be sued. In other countries, it is okay to keep the deposit, but you can be sued if you unfairly retain more than necessary after the tenancy has ended.

Should I Work Without Taking A Deposit?

There are a few pros and cons to taking a deposit, and despite what estate agents say, there is no right answer on this question either.

Pro - Tenants are more likely to take care of the house if there is a deposit at stake
Pro - It protects you against extra expense when the tenants leave

Con - Do not give back all the deposit and the tenants may return and trash the house
Con - It may push moving into your home out of some people’s budget
Con - There are legal sides to taking a deposit that you have to address

Can I Sue People For Damage To My Rental Home?

Yes, in most developed countries, you can sue the tenant for damaging your house. This is true even if you have retained all of their deposit. Taking a deposit or issuing the money into a deposit scheme does not mean that amount is the maximum you can get out of your tenant.

On the other hand, there are few mediators or small-claims courts that look favourably on landlords that sue their tenants. The tenant will have to have done a lot of very bad damage that puts costs into the thousands before mediators and courts will consider siding with you.

How Can A Student Start A Share House For Shared Accommodation?

If you are a student looking to rent a shared accommodation, you should know it is possible to start one yourself in most developed countries. You can do it without having to buy a home, and it is easier than you think.

Picking Somewhere Safe But Cheap

The first step is finding a place that is relativity near your college or University, but that is also cheap. The trouble with cheap is that it is often in a rough or unsafe neighbourhood, so it is up to you to make a compromise. Pick a place that is unsafe, and your co-tenants will leave and you will be stuck with the rent.

Why pick a cheap place?

The best reason is that they tend to have very desperate landlords that will take almost anyone. There is a misconception that if you charge less for a house that you will get more people applying, but it is not true. Plus, the landlord makes less profit overall, which means he or she has a very small contingency fund for the house. This means that the longer the house is vacant, then the more desperate the landlord gets.

If you approach a property owner and ask if you and your student friends can rent the house in a house share setting, then a desperate property owner is more likely to say yes and speed you through any paperwork.

You Must Have Permission From The Landlord

Be very wary about renting a big house and then moving your student friends in. In most developed countries, you are going to have to have permission from the landlord (property owner) if you want more people in the house than the rental contract states.

It may be that the house is not zoned (doesn’t have permission) to be a shared accommodation, or it may be that the landlord doesn’t want too many people in the house because it upsets the neighbours.

There may be tax issues to deal with, and may be insurance issues to deal with. In the worst case scenario, the landlord will be audited and if there are more people in the house than he or she knows about, then it may appear as if the landlord has kept the extra tenants “off the books” in order to pay less income tax.

Looking For A Shared Accommodation Is Not The Same As Starting One  

If you are looking on websites to find shared accommodation, then that is not the same as actually starting a shared accommodation yourself. If you are looking for pre-existing shared accommodation, then do it early before your college/University term starts because they fill up quickly. Also, pick people that are your friends, but that you have never had a disagreement with. They may only be partial-friends that you know, but don’t know that well. It is vital that you can all live together for at least a year, and that is sometimes hard with people you are very familiar with.

If anybody in your group is late handing over the deposit or advanced rent, then strongly consider dumping them from your shared accommodation team because they are likely to pull the same stunt when it comes time to pay the rent.

Consider Approaching As A Single Tenant And Negotiating More People In

Do not make assumptions about the landlord of the building you are looking to rent. The landlord may think setting up a shared-accommodation home means a lot of paperwork and licenses, or the landlord may have been looking into setting up a shared home for years and has never gotten round to it.

When you are looking for student accommodation, try approaching a few landlords on your own firstand testing the water to see if the landlord would consider allowing you to move your other student friends into the property. The worst the landlord or estate agency can say is no.

* This article refers to a deposit as the money a tenant gives to the landlord at the beginning of the tenancy. If the house is still in a reasonable condition once the tenant leaves, then the deposit is returned. Some also call it a bond or a security deposit.
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