Splitting a property to rent out rooms

[Watchyourwaite]

Thought I'd ask some gurus here for some advice. I've read through other threads, but honestly... even the basics were a bit complicated for me.

I have a family home in a residential suburb in the NT. 6 bedrooms 3 bathrooms.

I want to purchase a property in Melbourne city. A 2 bedroom unit near or in Docklands.


I guess, first... is this even a possible thing I could do? Can I just turn a home into a rental? What makes something a commercial property? Because I can't have a commercial property in this suburb. (this is how little I know...). What do I need signed off etc before I can rent? Or can I literally open the door to someone and start accepting money for them to stay?

This isn't an investment property in Melb. It's retirement for my parents. The NT just isn't good for them anymore.
It's something I'd like to start doing in about 4 - 6 months time. But I don't even know where to look for good information.

This isn't a troll thread... I really just have no idea where to start.

 

[Lyyynnnchy]

You can rent out your NT property without having to fill in any paperwork or anything like that. You can simply call up a property manager and have them come in, take some photos and start advertising your property right away. You'll need to sign a contract with the property manager though.

Just because you're renting out your property it doesn't become a commercial property. A commercial property is used for commefcial purposes ie warehouse, retail store etc though some councils are also against home offices.

 

[Watchyourwaite]

You can rent out your NT property without having to fill in any paperwork or anything like that. You can simply call up a property manager and have them come in, take some photos and start advertising your property right away. You'll need to sign a contract with the property manager though.

Just because you're renting out your property it doesn't become a commercial property. A commercial property is used for commefcial purposes ie warehouse, retail store etc though some councils are also against home offices.

Thanks Lyyynnnchy. Saw all of your posts in the other threads, and was thinking of tagging you, just to make sure I could get some of your advice.

I've read the benefits about having a property manager. But if I live in the same house, would I be better off just looking after the problems myself? At least to begin with?
I don't even know if this is a good deal or not. "With a very competitive management fee of 7% plus GST, one week’s rent letting fee and a marketing fee of $180 + GST per month of advertisement".

For example, if I asked around and let to friends of friends, on a 4 month contract. I can repair what needs to be repaired, and I can chase up other things that are out of my ability. If I live there, I could do fortnightly inspections (As long as it didn't upset the tenets too much)?
And maybe move to having a property manager come in later on, if it is too much to handle?

Or is it just so much better going with someone with experience to begin with?
Or do I legally need someone, in order to sign leases and that kind of thing?

Again, sorry for the probably obvious-answer questions. I just don't know. And the more I learn, the more I find out how little I know.

 

[Deliverance]

Thanks Lyyynnnchy. Saw all of your posts in the other threads, and was thinking of tagging you, just to make sure I could get some of your advice.

I've read the benefits about having a property manager. But if I live in the same house, would I be better off just looking after the problems myself? At least to begin with?
I don't even know if this is a good deal or not. "With a very competitive management fee of 7% plus GST, one week’s rent letting fee and a marketing fee of $180 + GST per month of advertisement".

For example, if I asked around and let to friends of friends, on a 4 month contract. I can repair what needs to be repaired, and I can chase up other things that are out of my ability. If I live there, I could do fortnightly inspections (As long as it didn't upset the tenets too much)?
And maybe move to having a property manager come in later on, if it is too much to handle?

Or is it just so much better going with someone with experience to begin with?
Or do I legally need someone, in order to sign leases and that kind of thing?

Again, sorry for the probably obvious-answer questions. I just don't know. And the more I learn, the more I find out how little I know.

Most likely, the NT gov will have a downloadable lease form you can use of you want to manage the property yourself.
Unless you can get a recommendation for a good property manager it's just pot luck. They may do a good job for you, they may take your money and do bugger all. Like real estate agents a lot of them are hacks.
Living there yourself, it should be pretty easy to manage in terms of repairs.
Friends of friends will most likely be pretty straight forward.
Or
Go to your local real estate pretend to be a renter, get an application form and copy that to help vett your tennants, check their references and your good.

 

[Long Live HFC]

property managers are a waste of cash, IF you're happy to deal with the relatively-constant annoyances from tenants. 7% is above the industry standard (about 6% last time i looked into it; may have changed). if you're living in the same place as your tenants, i really can't see the point of having a property manager. it's a good idea to find a bunch of competent trade contacts though (plumbers, electricians, glaziers etc) for when stuff needs fixing.

otherwise, renting out a room(s) in a house you live in is a marvellous idea (assuming living with tenants sits fine with you). so many deductible expenses at tax time. almost everything other than your own personal living space (bedroom/ensuite etc) can be claimed for. ie, if 75% of your house is used by your tenants, you can claim 75% of your loan interest payments (for example) against your taxable income.

and cannot stress this enough: get a good tax accountant (unless you're one yourself). they take the stress out of tax time and know way more about what you can get away with claiming.

 

[Hamingja]

Are you borrowing for the new place in Melbourne? Do you need to use the rental income from the NT property to pass serviceability on the loan with the bank? If you plan to live there yourself and take in boarders so to speak then that is going to be an issue for lenders, you most likely won't be able to use that income towards servicing the loan.

Also is the CBD a great place for older people anyway? It would be close to hospitals if that is a consideration but as far as other services go, are there even GPs in the city for instance, I don't know. I guess there would be some expensive ones. Social activities? Community? Just a thought. Older people could feel isolated pretty easily in that environment especially coming from the NT?