How do you charge rent for Sleep-out?

[FreezingHot]

Hi

I am looking at a 3 bedroom property with a 2 bedroom & bathroom sleepout.

My question is how do you rent this type of property out, do you create 2 new tenancy agreements for 2 income streams or charge maybe a family what you think the extra accomadation would be worth. This has always confused me, also am not sure yet whether the sleep-out has a kitchen but will find out today.

I presume many of you have these types of properties so any information on this would be appreciated.

Regards

FH.

[Dean@Massiveaction]

Really up to you Patrick. Depending on the legality of the property the simplest is to rent the whole property to one tenant and they can sublet or whatever. To have separate tenancies it must be insured as a separate dwelling and that will depend on your insurance company.

[FreezingHot]

Excellent Poomba,

I always wondered about sleep-outs, when you have
2 separate houses on one tittle is when you can rent out to two separate parties.

The other consideration would be what to rent out the whole property for, so would I be in a good position to say rent the whole IP out for say $450.00 per week.

I know that other factors such as location, standard of property and renovations factor into account but for the IP mentioned would this be somewhere in the ballpark? $300 for the 3 bed house and $150 for the 2 bed sleep-out.

Now that I understand what to do with this type of property I need to know what the likely rent I can charge before I make any offers. As I only have one other IP and am a bit low on knowledge of sleep-outs and the like.

Thanks

FH.

[Glenn]

It all depends on your skill level and how much the sleepout is in the face of the house tenants.
The RTA does say you need to comply with the building act so one can run into problems if it is not building consented.
I have tried both systems, separate rents, and combined. I often run into inter-tenant disputes if I do it wrong.
I have found the best system is to let the house initially with a deal for them that they can choose to have their friends as "tenants" there.
Usually the power is fed from the house so you need to sort some sort of deal out. Like having a check power meter.
So anyway once they have choosen their friends you sign the sleep out tenants up. On the tenancy agreement you write "It is ackowledged that this is a sleep out and that you both agree to be bound by the RTA"
The RTA makes provision to be covered by the RTA when the property is not covered by it. If it is a special "chose to be covered deal" you can agree to have special conditions that are not normally covered by the RTA. Real clever eh.
Saves getting caught for not providing a stove as apposed to say a gas top and microwave.
Again do not over look the issue of having the two tenants on good terms with each other. The down side of this sort of deal is the two tenants can gang up on you so you need tenants that are docile and well trained.
Goodness that could be a completely new business venture for me. Running a tenant obediance training school.

[FreezingHot]

Thanks Glenn

Some more tools to add to my tool box.(knowledge)

I have talked to my builder friend about what I can and can't to with a sleep-out and he also has some good advice. It seems if you want to know something the best way to find out is ask people who know.

Thanks for all the replys to my questions about this matter.

All the best.

FH.

[fudosan]

What have you learned from your builder friend? Are you going to rent the sleep-out as a separate dwelling? If so, why?

[RacyTracy]

Depending on where you are. - I am in Rotorua so this is my local experiance - probably in a central city area these issues would not be as impt.

If the access is reasonably seperate and they can't hear each other easily - you shouldn't have any probs with 2 tenancies.

And if you can have two tenancies its is more likely you will get maximum rent - it is much easier getting two lots of people to pay one lot of rent each than one person to pay two lots of rent - meaning the rent may need to be discounted for one tenant.

Tracy

[FreezingHot]

Hi Racy Tracy

I think you make a valid point, but I think that if you rent out to 2 separate tenancies the sleep-out would have to have a separate meter box, kitchen and shower, and a few sleep-outs that I have seen only seem to have bedrooms (2) so in order to have 2 tenancies I would imagine all these amenities would have to be added.

So I think that while 2 tenancies is a viable option, it would have to be linked to what worked is required to a sleep-out.

Thanks

FH.

[RacyTracy]

Hi FH

Yes a seperate tenancy needs a kitchen sink and some form of cooking - can be plug in hot plates as well as a toilet and shower - if you can fit it in and do it cheaply then it can work well.

As for power - an idea would be to charge them a monthly fee which would cover it - and provide a monthly fee to the house with the meter to cover power - perhaps with a bit of a bonus for there trouble (ie if you think a bit laterally you could get around that one)

Tracy

[Aston]

Hi FH

Yes a seperate tenancy needs a kitchen sink and some form of cooking - can be plug in hot plates as well as a toilet and shower - if you can fit it in and do it cheaply then it can work well.

As for power - an idea would be to charge them a monthly fee which would cover it - and provide a monthly fee to the house with the meter to cover power - perhaps with a bit of a bonus for there trouble (ie if you think a bit laterally you could get around that one)

Tracy

I'm not so sure that this is good advice to be giving. It sounds illegal to me and being illegal is one thing but of course it also invalidates your insurance. If there happens to be a fire or any other sort of claim on the property and there is anything dodgy or illegal the insurance company will walk away.

It is important that any improvements to your property are permitted by the local authority.

Aston.

[FreezingHot]

Yes Aston, a valid point, I would not what any claim for insurance being in jeopardy due to un-permitted work.

How do councils therefore view doing alterations for a sleep-out?

Are there any major issues to overcome.

FH.

[Aston]

Hi,

Depending on where you are, you may or may not find the local authority very helpful.

You will need to get drawings done of your alterations and these must be done by a person knowledgeable of the Building Regulations. Either an Draughtsperson, Architect, or a clever builder will be able to do them for you. You can do them yourself of course but you will have to have help interpreting the Regulations, this is where a helpful Council come in. (I'm assuming here of course that you don't have the specific knowledge to do them yourself???)

If I were doing this I'd start at the Council and if they weren't helpful I'd approach a Draughting/ Architectural Co. Even if the Council are helpful I think they'll advise you to get an Architect.

It may seem a really complicated process just to get some tenants into your sleep-out, under a separate tenancy agreement, but if it's to be done legally this is what you must do.

Aston.

[RacyTracy]

Yes Aston - you should definately get it all permited - you will have to for all plumbing work (this covers the legal and insurance issues) - my point is if it works easily and cheaply it can have an excellent effect on your bottom line
Tracy

[Bluekiwi]

It all depends on your skill level and how much the sleepout is in the face of the house tenants.
The RTA does say you need to comply with the building act so one can run into problems if it is not building consented.
I have tried both systems, separate rents, and combined. I often run into inter-tenant disputes if I do it wrong.
I have found the best system is to let the house initially with a deal for them that they can choose to have their friends as "tenants" there.
Usually the power is fed from the house so you need to sort some sort of deal out. Like having a check power meter.
So anyway once they have choosen their friends you sign the sleep out tenants up. On the tenancy agreement you write "It is ackowledged that this is a sleep out and that you both agree to be bound by the RTA"
The RTA makes provision to be covered by the RTA when the property is not covered by it. If it is a special "chose to be covered deal" you can agree to have special conditions that are not normally covered by the RTA. Real clever eh.
Saves getting caught for not providing a stove as apposed to say a gas top and microwave.
Again do not over look the issue of having the two tenants on good terms with each other. The down side of this sort of deal is the two tenants can gang up on you so you need tenants that are docile and well trained.
Goodness that could be a completely new business venture for me. Running a tenant obediance training school.

Still applied now ?

Renting out a fully consented separate sleep out that is exactly the same as a MDU but no stove in the kitchen.

[sidinz]

I don't think so, according to what I've read about the current bill.