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5 steps to earning income by renting out extra space

 

Has the global pandemic and its lockdowns impacted or threatened your income? Are you looking for a side hustle to have a bit more financial room? If you own a property with a spare garden cottage, granny flat, or bedroom, you could consider renting it out.

 

In recent years, a trend has emerged of tenants opting for affordable rentals such as house shares for longer before moving into a place of their own. This means your empty space could be earning you some extra cash. Before you think “jackpot!” though, bear in mind that this trend, along with other factors, has also led to an oversupply of rental properties on the market, and lower rental prices as a result. In spite of this dynamic, investment property is still one of the most stable assets you can invest in, if you do it right. So where do you start?

First, make sure the space is inhabitable.

In a granny flat or garden cottage, you’ll need to make sure there is electricity, running water, and a geyser. Best is to connect these to separate meters so that you can separate your tenant’s usage from your own. If you can create a separate entrance for your tenant, for example installing a second gate, this will work greatly in your favour as tenants do value their privacy. Make sure their living space is secure, by installing a solid door, lock and potentially burglar bars. Lastly, consider giving the space a fresh coat of paint and repairing any damages in advance of their occupation. This will save you headaches later on and is easier to organise when no one is living in the space.

Next, decide how you’d like to rent it out.

You’ll need to choose between short-term rental and long-term rental, as this will impact which steps to take next. The advantage of short-term rental is that you can charge higher daily or weekly rates, but the disadvantage is that you need to be involved in changing the linen and cleaning the apartment every time a new visitor comes to stay. Your ability to attract short term tenants will also depend on whether you live close to tourist attractions. The advantages of long-term rental are that once you have found a tenant you don’t have to worry about advertising and there is more onus on the tenant for upkeep. The disadvantage is that you need to be more careful about which tenant you accept, and there are more rules and regulations to abide by. You will likely earn less per day, but have a more stable income through the year.

Advertise your space at the right price.

You’ll need to get the word out about your property – and the most popular route these days is through an online marketplace. If you’re doing short-term rental, Airbnb is the biggest player, and if you’re going for long term, you can choose between HouseME, Property24, Gumtree, and a few others. Before you start, take some time to research what other rooms, granny flats, or garden cottages in your area are going for. This will help you set a price that is relevant to the rest of the market and attract tenants faster.

Go the extra mile to secure a reliable tenant.

As you host your viewings, you’ll meet your prospective tenants in person and can see if you think you’ll get along, but don’t let looks deceive. Unfair discrimination is strictly illegal, but you should certainly conduct a thorough credit check to ensure the tenant can comfortably afford the rent and is in good standing with his or her previous landlord. In fact, you may even want to spend on professional tenant vetting here, because with them living in or near your own space it is all the more important to ensure that they will be a reliable payer that takes care of your space. Once you find The One, be flexible in negotiating a good rental deal with them – these days, a bird in the hand is worth a lot more than two in the bush.

Do the legals by the book.

Start by using a watertight lease agreement. If you are using an online platform such as HouseME or Airbnb, this will be taken care of for you. But if you’re going solo, you’ll need to thoroughly research the latest rental laws on what your lease should (and may not) contain. The CPA and POPI regulations are now in full effect, and rental law changes annually. Remember to attach your house rules, any complex rules, and your ingoing inspection report. And don’t forget to hold the tenant’s deposit in an interest-bearing trust account – this is required by law. Following procedure here will ensure you are protected from nasty legal surprises later on.

 

Start making some extra cash

Done right, you could earn a small but steady extra income with your spare room or cottage. If you have the time, it’s definitely feasible to manage your property on your own. But to avoid your golden goose turning into a black hole, be sure not to skip these steps.

 

Alternatively, get help from digital renting specialists who are there to help out independent landlords without the price tag of a rental agency.

 
Credits:

 

About HouseME: 

HouseME Founders Ben Shaw and Kyle Bradley
 HouseME’s Co-Founders, Kyle Bradley and Ben Shaw.







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