House or House Conversion for Rental?

MartianMan

This is just a theoretical question...

If you had the option of purchasing a house (i.e. for rental purposes) or you had the option of purchasing a similar house in the same area which had been converted into 3 bedsits/flats, which would you buy?

Assuming the three flats were the same total price as the house.

Are there any advantages/disadvantages in either for rental purposes. With three flats you have three different sources of income, so less chances of there being periods of no income. But then you have the possible problems of dealing with three different people.

Any ideas...?

Cal

I would say (with some experience) 3 units = 3 x the grief. Yes 3 units means 'less chances of there being periods of no income' but only on a short term basis. In the long run 3 units are going to have the same vacancy periods as 1 unit. If you have 1 nice unit let to good tenants (pref multiple professionals sharing) then as one person leaves they get another one in, things are sweet and there will be a lot less regular decoration required.

In the present market look after your tenants well and you will have a regular trouble free rent/income.

Cal

MartianMan

When renting out a house is it better to have multiple professionals sharing, and for them to be in charge of who the new tenant is when one leaves...

Or is it better to have, say, a couple and to therefore be in charge of who you get in as a tenant when they leave?

I just wondered why it might be preferable to have multiple professionals sharing rather than a couple (or even a single person who can pay the rent)

Cal

I have seen a few situations where multiple professionals sharing will stay in the same property for years on end. This leaves you with less maintenance and decoration each time you have to relet and you loose no rent during that decoration & advertising period. (A disadvantage would be that it is not so easy to push up the rent so easily but that is not such an issue with current market trends)

It is very handy if it works out that way for you but it is almost impossible to put yourself in that perfect situation. It sort of happens itself as people move on and others like the property and want to stay.

As for singles/couples renting it is not a problem and more the norm really. Just tends to give a higher turnover of tennants in the long term.

antoinolachtnai

be very careful of the planning permission and fire regulation issues that surround multi-tenant houses. You can get away with ignoring this stuff at the moment, but the new tenancy laws are likely to make this more difficult.

I would think that you would get a higher overall rental yield from a house that is split into smaller units. Like the other posters say, however, there will be more hassle.

I would talk to a landlord friend who has experience of this sort of stuff before buying the multi-tenant house.

MartianMan

thanks for this.

Just another hypothetical question.

I've seen advertised for sale a house which has the first floor converted into a self-contained apartment, and it also has the ground floor converted into an apartment.

They aren't two properties (i.e. legally speaking); legally it's still one property - it's simply been converted into two self-contained areas.

afaik, Revenue allow people renting out a granny flat to be considered under the rent-a-room scheme. Provided it is attached to the house, and as long as the rent is under the R-a-R scheme maximum.

If I were to live in one flat and rent out the other, do you think it would still come under the R-a-R scheme; especially as it's all one property? (provided I charged no more than the maximum rent under this scheme that is)

Can anyone see any downsides to doing this?

spongebob

there are insurance issues as well if the owner and the tenants share an entrance.....say a tenant starts a fire by accident.

if the revenue decides these are commercial flats AND NOT A ROOM in your own residence then you will pay tax at 42% on all the rent.

room to let income is 6k a year tax free ISTR

find out how the property was treated by the revenue under the current owner b4 u buy it, the same treatment will apply to you most likely

M