By Gian Paolo Aliatis
Saving money by drinking less take away coffees may make a small difference to the savings pot, but becoming a live-in flatshare landlord is a certain financial game changer from day one.
Studies have indicated that the average household spending is as much as 72% of a resident’s income. Therefore, if it was possible to reduce housing expenditure to zero, it would be the equivalent of a 70% increase of income. This might seem an impossible ask, but it is entirely achievable through flatsharing.
Flatsharing or ‘houses of multiple occupations’ as are the quickest and fastest way to live rent-free. Like many other businesses that buy from wholesalers and sell on via retail channels, the flatsharing business is essentially the same concept. By taking 4+ bedroom property and turning it into a flatshare, typical market prices will allow the person who runs it, to achieve enough rent out of the three or four spare bedrooms that property may have, in order to pay the full rental income of the property and therefore live rent-free.
Whether you own the property outright, or are renting from a landlord, there are a number of factors to bear in mind
SUB-LETTING AS A LIVE-IN LANDLORD
When it comes to effective property sub-letting, the devil is in the detail. Where your property is located, the rental price, and how easily you can add capacity to it, all make the difference between its success and failure. There are properties that allow you legally to increase capacity, for example converting your living room into an additional bedroom. Alternatively, it may be that the prime location of your property and the rental prices you can get from existing rooms means that you can immediately become rent-free without having to make any significant adjustments to the property. The key factor with rented properties is to always check your contract before making any moves towards subletting to ensure that you are acting legally and within the remit of your tenancy.
CREATING A SUITABLE CO-LIVING PROPERTY
If you own a property and are considering turning it into a multiple-occupancy property, there are a different set of considerations. Besides the legal requirements that houses of multiple occupations need nowadays, you will have to adapt the property. The kitchen and the bathroom need to be divided in a way so every person in every room will understand what belongs to whom and where they can store their personal effects. In addition, you will need to consider what additional amenities may be required, such as an extra fridge, facilities to hang out towels, and other laundry facilities that would be beneficial for multiple tenants.
MARKETING YOUR PROPERTY
Once you have prepared the property, and it’s legally and functionally ready to operate as a house of multiple occupancy, the next step would be to rent out the rooms. In order to secure tenants quickly and at the price you are looking for, you need to have some basic marketing skills. The process starts with taking some good quality, well-lit photos of the rooms available and posting them on different platforms. Include all of the nuances that make the property unique or particularly appropriate for the type of tenant you are looking for. Once you have received suitable applications, you can then organise viewings and select the most appropriate flatmates for the property. When you are ready to formalise the agreement, be sure to seek legal advice on drafting a tenancy agreement that protects the rights of other occupants and creates a good environment between your tenants. Most tenancy agreements are for a minimum of 6 months, and the longer the terms that you can get flatmates for, the better. This is because there will be less rotation, less vacancies and as long as you choose the right flatmates that can pay the rent, you should receive the deposit and the rent for all flatmates. With that money, you should be able to pay rent for the whole flat and the bills so the property should not cost you financially and should actually generate a profit.
Exploring flatsharing is particularly attractive in the current climate because you are investing your time, but not necessarily your money. Consider this as a little part-time hobby business. Many people will start liking and identifying the advantages of having a flatshare and may start creating new flatshares and taking the second, third, and fourth, and fifth property. I started many years ago with one flatshare and built a portfolio of 180 properties in London with over 1000 tenants. This took close to 5 years but it was achievable. If we did it, then I would argue that most people that love this industry, with the right mindset and willingness to put in the hours, could achieve exactly the same as I did.