Should Landlords Rent Out To Multiple Tenants Or One Master Tenant?

You finally get your dream home and are leaving your starter house but wait, you now realise that instead of selling the house it would make a really nice investment when you rent it out.

But the big question is; have you decided on how many tenants you want to rent it to?

 Maybe you are unsure of the advantages and disadvantages of having multi-tenants versus a master tenant?

No problem, here are a few things you as a landlord need to know about having multi-tenants versus master tenant before making the final decision:

1. Screening Tenants’ Backgrounds
2. Fair Tenancy Agreement
3. On-Time Payment
4. Conflict Management
5. Property Management

Screening Tenants’ Backgrounds

It is never easy to let other people live in your house, even if you are not living in it. You have to do a thorough background check on the person. 

Checking that the person can afford to pay you the monthly rent is one thing but screening their records for any criminal records is another.

To avoid any probability of a problem, tenant screening does take a while so you have to consider if you are willing to put in the time and effort to do it more than once.

However, do note that sometimes even with a thorough background check, the possibility of getting a headache of a tenant is still there.

Fair Tenancy Agreement

A tenancy agreement is a MUST when renting properties, it is a contract between landlords and tenants stating the policies, terms and conditions of the tenancy. 

It will contain details such as the duration of the tenancy, what are the landlord’s responsibilities as well as what is prohibited when it comes to the property. 

The finer details in the tenancy agreement are negotiable and it usually differs slightly per agreement.

This is why when running a multi-tenancy, you need to set a standard of what is negotiable to keep things fair between all parties. A problem you do not have to deal with if you choose to have an individual master tenant.

On-Time Payments

Real estate rental is an investment regardless of the size of the rental, it still your source of income. Ensuring that you receive timely payment from your tenants is one of the risks of the investment.

You can assume that it is less of a hassle to collect payment from one tenant than dealing with many people, WRONG. You feel more or less like a loan shark trying to collect debts when a tenant is fussy.

Despite that, you cannot assume that the tenant they are giving excuses to delay paying rent as they really could be in dire situations. But you giving one too many chances can lead to you being taken advantage of. Be wary but not selfish.

Regardless of reasons, you are allowed to take necessary actions if tenants do not pay rent, keep that in mind. 

Conflict Management

This is a situation where if you want to do multi-tenancy have to be aware of. It is possible for your tenants to not get along, even if they are friends.

Although it is not something that landlords are responsible for (unless stated in the tenancy agreement) it would make things easier if all your tenants are on friendly terms. 

Regardless of the many ways you can resolve the conflict, it can cause you extra stress having to play mediator all the time. It is also a fuss if you have to find a replacement tenant every few months due to them not getting along. 

Property Management

Finally, all landlords worry about managing their property. Whether or not it is stated in the tenancy agreement, you still have to deal with whatever broken utilities are left behind after the tenants move out.

For cases where multiple tenants are involved, recurring repairs might happen more often. This is not to say that a single tenant will not cause as much or more damage to the house. But with more people having to use the same facilities as the shower, the toilet, the kitchen appliances, things are bound to break faster.

Usually, the repairs are divided equally where any major fixings fall under the landlord’s responsibility such as piping problems and door locks but the minor fixes like lightbulb replacement and house-cleaning are the tenants’. A single tenant means you will automatically know who has to do those minor repairs, multiple tenants can be easy if they get along or the person who broke the item fess up.

However, there are cases where no one will own up to their fault because they would not want to take the brunt of the repair costs, which results in things going unrepaired.

Finally, you need to worry about managing your property. Whether or not it is stated in the tenancy agreement, you still have to deal with broken utilities left behind after the tenants move out.

For cases where multiple tenants are involved, recurring repairs might happen more often. This is not to say that a single tenant will not cause as much or more damage to the house. But with more people having to use the same facilities things are bound to break faster.

Usually, the repairs are divided equally where any major fixings fall under the landlord’s responsibility such as piping problems and door locks but the minor fixes like lightbulb replacement and house-cleaning are the tenants’.

A single tenant means you know automatically who has to do those minor repairs, multiple tenants can be easy if they get along or the person who broke the item fess up.

However, there are cases where no one will own up to their fault because they do not want to take the brunt of the repair costs, which results in things going unrepaired.

Renting out is not just a straight line of “I have a house and here is a tenant”, it comes with many  detours that every landlord have to deal with.

It is a matter of if you as a landlord are willing to take a risk with having many people live under your roof at the same time.