you can choose the length of the term. you can even just sign 3 months initially, but generally most people prefer a 6 month lease initially – tho 12 gives some guarantee to the owner.

just a couple comments, though i am by no means an expert. One of my IPs was a traditional house, I did some minor modifications and rent it out room by room. My parents home is also now converted to share accommodation.

-landlords insurance can be very hard to find for share-accommodation, and not worth risking it by purchasing traditional insurance as i’m sure they wouldn’t pay up should something happen. you need to be open to the insurance people that its a share house with multiple tenants

– didn’t use a property manager, manage it myself

– be careful about electricity and gas bills. Somewhere else on this forum I found a post from someone who had renovated student accommodation and she spent a fair bit of $$ on the electrician’s bill and got him to install a meter in each bedroom. The agreement was that the owner paid electricity/bills in the common areas, but each tenant paid their own room usage. this was aimed to cut down on 24 hour heating or air con use and huge bills. My summer aircon bill for this house really hurt, it was huge and I’m sure its because the tenants had the AC on 24/7 as they didn’t pay their own electricity.

– tenant selection is crucial, and its important that if its a small sharehouse the other tenants are given the chance to be involved in tenant selection. after all, to have someone move in quickly but causes other tenants to move out due to their behaviour is not ideal. Taking the time to find someone who is the right fit then everyone should be happy. I’ve had minimal vacancies in my house due to this, longest one was 3 weeks vacant for one room, other tenants rejected one tenant application but i rejected the others.

– fully furnished is generally the way to go, and include high speed wireless internet too

as for mixing students with others, the most important thing to ask is the working hours. you wouldn’t want to end up with a hospitality worker doing variable shifts, with shift-workers such as nurses who swing from night and day shifts, and students… At my share-house IP I don’t mind if the tenant studies or works, as long as they wont be leaving the house before 6:30am or returning after 11pm, and showering within these times. Wow, seeing this in writing makes me seem overly controlling, lol, but its a simply question asked “what time will you generally leave the house in the morning” and again its all about the balance of keeping existing people happy and not having their peace and quiet suddenly damaged by people returning at 1am, then watching TV for a while before having a shower and going to their room.

Before investing in a sharehouse, I had lived in 4 different arrangements locally so felt that I understood what works and what doesn’t work from a tenants point of view.

its time-consuming, can be tough, but also quite rewarding. The IP when I bought it some years ago was being rented for $275 a week as a 3 bedroom home by a couple. I made a few cosmetic improvements, furnished the place, put key locks on each door, and now collect $570 per week. HOWEVER from this I have to deduct electricity, gas, internet, water usage. I do get to claim depreciation on the furniture/assets though. Also, when I looked at purchasing another property, the bank would only consider market rental price for that house, around $300, meaning my serviceability was reduced in their eyes, despite the fact I felt I was doing fine.

Cheers,
Emma

So theoretically you could put up a divider that didn’t go all the way to the ceiling, but was above head height? Thus still allowing some open space at the top and not feeling so claustrophobic, but providing more privacy than a folding screen or curtain? Would there be some way of erecting a “wall” which was fixed to the side wall and floor, but with a free edge on top and on one side?

do you need any sort of approvals for removing the arch? assuming not, as its not a load-bearing wall, is that right?

If you do all the rental process legitimately and declare the earned rent and keep good records of expenses, then yes: your rental income forms part of your tax return, and all legit expenses can be deducted off the income.

For a very quick and rough calculation:

monthly rental income received on your PPOR
– monthly claimable expenses related to renting (eg management fees, landlord insurance)
– your new monthly rental what you have to pay

if your calculated figure is MORE than 0 then yes, technically you are in a better position, as there is less of your money going into paying off your mortgage. If you then add more of your money into the mortgage so there is more money going in than previously, that will help you reduce your mortgage quicker.

You can claim all deductions the ATO allow for investment properties, but just check with your mortgage repayments as if it was PPOR its quite likely you are paying principal + interest. Only the interest portion of your repayments are claimable. So check what your repayments are, but if you only bought it just over a year ago then the interest portion should still be very high and make it worthwhile.

By the time you add in other deductions and claims, plus depreciation, then it may be negatively geared and can reduce your taxable income.

You’ll need to speak to an accountant in regards to what is required to convert PPOR into IP and what records and evaluation/reports etc are required.

Also have a think about if you plan to return to your PPOR one day and live there again, or if it will remain IP.