Spotting the Best Value and Other Real Estate Tips

Is a Multi-Occupancy Property the Right Investment for You?

If you are serious about saving for your retirement years, it's important to have stable investments that will give you a good return. Understanding the world of investment is, however, easier said than done. Property is a popular area of investment for many people because it's easier to understand the fundamentals of buying and selling property than it is to gamble away your savings on the risky stock market.

The world of property investment is extremely diverse, and there are many ways to invest capital into a property portfolio. One such investment is a multi-occupancy property in which you rent out single rooms to individuals seeking housing, such as students or refugees.

Here's everything you need to know about this kind of investment so you can determine if it's right for you.

A profit maximiser. Imagine that you buy a house split that has three bedrooms, a living room, a bathroom, and a kitchen. Of course, this house could be bought and let to a family who would use all of those spaces. Now imagine that you rent the three bedrooms to individual tenants, and that the living room is converted to a fourth bedroom as well. You are likely to bring in more money by renting to four individuals than to one family, and this makes multi-occupancy homes good investment properties.

The risk is spread. When you have multiple tenants living on one property because each person rents a room, the idea of one person falling behind on rent or damaging the property is less threatening to your investment because this won't affect the whole house. But if there is one person renting out your entire property, all your eggs are in one basket and you have to hope that they don't cause you any trouble because the results could be financially scarring.

Lending for multi-occupancy properties. If you want to convert an ordinary residential home into a multi-occupancy property, you should have no problems securing an ordinary mortgage so long as your credit is stable. If, however, you want to purchase a property that is designed with multi-occupancy in mind, lenders might view this as a commercial investment (which it is) and they could charge you higher interest rates and demand a heftier deposit as a result. This means that, if you want to invest in a large multi-occupancy property, you are better off being an experienced property investor with financial leverage.