CT Real Estate

Renting Out To Multiple Co-Tenants: What Are The Risks Involved?

The most common way to rent out your property is to a single tenant but should you also start considering renting out to multiple tenants?

In some cases, having multiple tenants can be financially advantageous but it does not come without risks. 

How do you decide? Below we look at some of the risks involved, but first, let’s understand what the different rental arrangements mean. 

Types Of Rental Arrangements

There are 2 main ways that you can rent out your property:

      1. Rent out the whole unit under one contract 

Renting out to a single party involves only one contract, which means it’s fairly straightforward. This is the traditional method of renting out a property, making tenant management a lot easier.

       2. Rent out to multiple tenants under multiple contracts 

If a property has multiple rooms, there is the option of renting out the individual rooms to different tenants. This method of renting, referred to as rooming, is common in areas close to universities as students are usually not able to afford renting out an entire property on their own.

A rooming house refers to a property where 4 or more people live together in rented rooms. The rooming house is managed by an operator, who also has the authority to decide who lives in the property without consulting residents.

Renting out the rooms individually is an attempt at utilising the property to its full potential. Also, in some cases you could generate higher income from renting out to multiple tenants.

Some Units May Work For Multiple Tenants 

Certain properties may be more appropriate for rooming vs. others. Such as, properties that are in close proximity to colleges or universities and have multiple rooms. 

Landed properties are typically more suitable for renting out to multiple tenants because there is more space and privacy involved. However, while renting out rooms in apartments to multiple tenants is also an option, this would depend on how much space is available. 

Having multiple tenants could mean more income. For example, you may only be able to rent out a whole unit to a family for $1500 but if you were to rent it out to multiple tenants, you could rent it at $600 per tenant. This is because, while $1800 may be too expensive for the family to bear, breaking up the charges between 3 tenants would be more affordable. 

All things considered, there are still risks to renting out to multiple tenants.

What Are The Risks Of Renting To Multiple Co-Tenants?

  • Shorter Leases 

Properties that rent out to multiple tenants tend to attract less reliable tenants which are only able to commit to short term leases

As we mentioned earlier, some of these tenants are university students that do not have stable incomes and therefore cannot commit to longer leases. Shorter leases would mean less certainty and the need to look for new tenants more frequently. 

  • Higher Maintenance Costs

Home owners are responsible for maintaining common areas such as hallways, courtyards, parking lots etc. This also includes plumbing systems, roofing, heating and cooling systems and other maintenance costs involved in the home.

Having more tenants would mean more wear and tear and may lead to higher maintenance costs. Keep in mind that each tenant may have their partners or friends dropping by and using the house. 

All of this can add up quite rapidly, which is why maintaining multiple tenant properties can end up being quite expensive.

  • Requires A Licence

Another thing you will need to rent out your property under rooming house arrangements is a rooming house operator licence. This falls under Section 16 of the Rooming House Operator Act and will require you to apply for the licence and provide necessary documentation. This will take time and cost you about $240 in fees. 

You will also need to register your house under Division 4 of Part 6 of the Public Health and Wellbeing Act 2008. Failure to do so can result in heavy penalties. 

  • Higher Chances Of Vacancy 

This relates to our first point where multiple tenant properties typically have shorter leases. In this case, there is a higher chance of a gap in waiting time when one tenant leaves and you’re looking to secure a new one, making it tricky to make full use of the space. 

If this happens, it might be more difficult to ensure that income received for renting out the property covers all expenses incurred. 

  • Less Stability

If you’re renting out your property to multiple people, it is unlikely that you will be able to coordinate the lease periods. As such, rental returns may not be as steady.

Leasing out your property

Leasing out your property? Here’s what’s involved

The leasing process can be a daunting one for many homeowners. How should you price your rental? Do you need an agent? Where do you begin? 

Below we run through the process from start to finish- giving you a brief but sound overview and setting you up for success.

1. Start thinking about prices- research your area

Get a realistic idea of rental prices by first researching your suburb. 

Check out what is being leased and how much for online. Compare properties with similar features to yours- number of rooms and baths, land size as well as the furnishings that come along. Take note of the observed price range and ask yourself if that is what you’re looking for. 

Note the distance to local amenities like shops and medical centers but also find out which school zone your house falls into. Houses in catchment areas of highly popular schools could potentially fetch better rent.

Finally, speak to a local property manager with specific information and experience in your area who can then advise you accordingly.

2.  Prepare your property

Before you start to advertise, it’s prudent to think about what you need to do to add value to your unit. 

Start by removing all personal items and valuables that you intend to take with you. It’s much easier to work with a decluttered house. 

Now look carefully at each part of the property. There may be things that need repairing and others that need some sprucing up. Replace anything that’s broken or faulty and consider upgrades that will make your house more attractive. 

When thinking about upgrades, consider your potential clients. Students will have different needs and wants from a growing family. 

Here is a quick checklist. 


  • Heating and cooling 
  • All lights
  • Windows
  • Doors and locks
  • Appliances (washing machine, dryer, dishwasher)
  • Carpets
  • Walls (consider a fresh coat of paint)
  • Professional cleaning


  • Furniture
  • Beds
  • Decking
  • Stovetop and oven
  • Garden and landscaping

3. Consider a property manager

While you can lease out property independently, there are many advantages to enlisting the help of a property manager. 

A property manager does more than just lease a property. 

In fact their services cover areas like property maintenance, running proper reference checks for potential tenants, checking legal terms, collecting rent and conducting regular inspections. All of this serves to make the process a smoother and hassle-free one for you- the landlord. 

It would be a nightmare for most landlords to deal with middle of the night repairs, tenant disputes and unpaid rent without the guidance and expertise of a trusted property manager. A good agent will take it all in their stride and ensure that your interests are protected. 

So while there is a fee involved, an experienced property manager would provide sound advice and quality service that could lead to less stress, higher savings and better returns. It’s the safest way to go for most investors.

4. Professional photos and staging

A quick search online will show you listings of houses that look inviting and warm- enticing enough for you to see yourself living there. But next to those, you’ll find listings that just don’t have that same attraction. 

Staging and quality photos can make that difference. Staging is the process of styling your house- usually by a professional, to look its best to its potential tenants.

This includes furnishings, pictures and decorations. It does cost a bit and it’s often used for higher end rental units. As a landlord, you will have to consider the cost and work out if it’s worth it for your property. 

That said, quality photos are a must for any type of rental. Use a good camera or hire a professional to get shots that showcase your house in its best light. 

5. Advertise and run inspections

Advertising is about making sure your house is visible and attractive to potential clients. 

If you have a property manager, they will take care of the process for you. If you’re doing it on your own, ensure that your home is listed on popular websites like realestate.com and domain.com. You may consider other websites that you find relevant. 

Listing involves compiling quality photos and creating good copy that will help you communicate value to your target renters. Always include details like proximity to local facilities, school catchment zones and other plus points about the area. Once again, an experienced agent will be able to highlight your property’s best selling points effortlessly to readers. 

You’ll also need to decide on inspections times. Think about the type of person targeted and consider their schedules before setting inspection times- weekends tend to be most popular. Your agent will run the inspections for you and help you connect with potential tenants. 

6. Decide on a tenant and the agreement type

Applications will start to come in and with them, the responsibility to choose your tenant. 

To start, go through applications with a discerning eye. Consider the number of people who will be residing there, if they have pets and how long they are renting for. 

Be diligent to run reference checks and find out about their rental history and employment status. Don’t forget to verify identity documents too. Your property agent will have access to the National Tenancy Database where they will screen for red flags like past disputes with landlords, court orders and even bankruptcy. 

Another thing to consider is the type of lease you will be looking at. These are the 3 types:

  1. Short term fixed (fixed period from 1 month to 5 years)
  2. Long term fixed (fixed period for more than 5 years)
  3. Periodic (month-by-month lease)

Each type of lease varies in terms of flexibility and pricing. Think about your personal situation and decide on what works best for you.

7. Forms and Legal Documents

The tenancy agreement is a very important document. It is a legal document so ensure that the details on it are accurate.

It includes: 

  • Landlord details
  • Tenant details
  • Lease type
  • Rental price
  • Bond collection
  • Obligations for both parties (maintenance, inspections, restrictions on subletting etc)
  • Special terms

For landlords that collect a bond, an application needs to be made by your agent to RTBA to hold the bond during the tenancy period. Make a copy for safe-keeping. 

Ensure that you keep all documents for tax. This includes invoices for maintenance, landlord insurance, rental documentation and other expenses. 

To find out more, speak to one of our agents for a consult.

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