One way to increase returns on your real estate investment is to allow renting by the room. This allows multiple tenants to stay in one room rather than a single family or individual. Both the landlord and the tenants benefit from this and is a popular option in many properties today. Essentially, it makes rental income more reliable, and your passive income more stable. However, there are some cons when taking this route that can ultimately affect the payoff.
High Turnover Rate
Having multiple people live in one home is a cost-efficient way to live. However, it’s not that much of a long term solution. People tend to want to move on from this and purchase their own home when the time comes. This is why you’ll see such a high turnover rate. But, on a positive note, there are always people looking for a place to stay, so you’re more than likely going to replace tenants fairly easily.
Irrational Tenants
The fact that you have more than one tenant in your living space can result in frequent arguments and disagreements. If you’re renting out a house for example, you’ll likely encounter people that just don’t fit well together. Their problems are essentially going to turn into your problem as the landlord. If you don’t feel like you’re up for the dramatic events, this may not be the right route for you. In addition, be prepared to fix whatever damages they do to the house. You never know what goes on until you get an official home inspection performed.
Bio: Kuba Jewgieniew, the founder of Realty ONE Group, has elevated his company to one of the fastest growing in America, as rated by Inc. 500.
