Having one’s own personal living space or living alone is a dream for any young adult. Yet, affordability can sometimes be illusive. Whether you’re renting or buying a home, there are definite ways to make getting your own place possible. One of these is to take on tenants of your own. They could be friends, family or complete strangers.
Can You Afford Your Own Place?
If you’re thinking of buying your own home, you’ll need to work out whether you have sufficient savings for a deposit. You can work out the associated financial commitment by using a home loan repayments calculator.
You should also account for the other costs associated with purchasing a home. These may include lender fees, mortgage insurance, legal and conveyancing fees, pre-purchase inspection costs and stamp duty.
Ongoing costs such as utilities, car costs, insurance and groceries should be budgeted for as well. You can aim to control these ongoing spending by shopping around, comparing energy and gas suppliers and buying on special.
How You Could Save
The figures can appear a little daunting at first, and you might wonder if you can afford to buy. This is especially true if you’re buying by yourself without the second income of a partner or spouse. However, remember that there are other ways to share the burden of homeownership, provided that you’re willing to share your home with others.
Many homeowners actually rent out one or more rooms in their homes to help cover the costs of their mortgage. These may be long-term tenants or short-term tenants like backpackers.
One easy place to start is to ask around and check with friends and family to see whether they would be interested in renting a room from you if you were to buy a house. You can then account for these contributions as you calculate how much you’d need for mortgage repayments.
Making it Workable
1. Screen Candidates
If you’re renting to a complete stranger, screen your candidates thoroughly to reduce the risk of contractual disputes, property damage or theft. While a character reference or police check can’t predict the future, these basic checks can help you screen out people who are more likely to cause damage and refuse to pay for it.
2. Establish Rules
As the homeowner, you would have a right to set some basic ground rules, particularly for communal areas. Noise levels, cleanliness standards and proper use of appliances and fixtures can all be formalised in your contract for the lease.
Take time to think about what would be acceptable and unacceptable to you. Try and balance your priorities with the standards that a reasonable tenant might be seeking in a property.
It’s not unusual to have periods of vacancy when your rooms are without tenants. You can prepare for these by having a ‘vacancy’ fund set up, so that you can still cover your mortgage repayments, even if you’re without tenants for a few months.
You can also adopt a strategy for addressing longer vacancy periods, such as widening your tenant market to temporary backpackers or doing more advertising for your rooms.