Guide to Backroom and Room Rental Business

Backroom and room rental businesses serve as a solution for many South Africans who seek accommodation near places of work and school. Backrooms were initially known as small rooms located behind a house, but now, that has evolved whereby some backrooms are built as bachelor apartments with built-in cabinets and an en suite bathroom – so these rooms aren’t strictly located at the back of a room.

According to Mthiyane, D., Wissink, H., & Chiwawa, N. (2022), the influx of rural-to-urban migration has played a role in the increased challenges in housing infrastructure. While room rental businesses exist in suburban areas, the bulk of informal property rentals can be found in the townships – mostly accommodating the black population that aims to live closer to work but can not afford to rent a house or an apartment.

The backroom and room rental township economy is estimated to be worth over R20 billion per annum. These rentals have provided the advantage of affordable accommodation, however, many of these rooms are informally rented and aren’t under much government regulation, which may cause challenges.

If you want to turn your property into a profit, renting out your room or backroom serves as a great way to create additional income. In this guide, we’ll explore all you need to know about having a backroom and room rental business.

Whether you’re renting out a room in your home, or back room, renting out a space requires you to follow a thorough process. Here are the necessary steps to take when you start a backroom or room rental business:

Evaluate Your Room to Establish Which Necessary Improvements Need to be Done

This is a very important step in your rental process. You need to check what might be broken and fix it as soon as you can. You should avoid renting out your room with anything damaged as you’re exposing it to potential further damage, which will cost you more in the long run.

Take note of the condition of the room, and include even the smallest details like a tiny crack in the windows. This allows you to avoid disputes with your tenant. For instance, if the window crack spreads, you can not blame your tenant for it as you would have taken note of the issue beforehand.

Start Working on the Improvements

You want to have quality, durability, cost-effectiveness in mind when you’re working on these changes. Maybe your room doesn’t need a total transformation, but a small up-do can go a long way. If you’re going to paint the room, make sure you paint your walls in a way that is durable.

You can also make changes that will make your room more attractive to potential tenants. If you’re renting a room in your house, you can consider adding a door that leads outside, that way, they may have a sense of privacy.

If you’re renting out a backroom, you can add things like built-in cupboards and aesthetic light fixtures.

Establish What Kind of Tenant You Want

You have to establish the kind of tenant you want based on factors like lifestyle factors, rules in your community, and your values. If you live with your family and in a family-based community, you would not want a party animal who would upset your environment.

So, once you start advertising your room rental, you need to specify the type of tenant you want, set rules, and provide clear guidelines on the consequences should those rules be broken.

Create a Contractual Agreement

You might not know where to start when you are privately renting out a room without the help of a property agency. Luckily you can access a free lease agreement template online to help you with that process.

Before you draft your contract, you must familiarise yourself with the Rental Housing Act, as well as the operations of the Rental Housing Tribunal.

Familiarise Yourself With the Complaints Accepted by the Rental Housing Tribunal

The complaints that are typically accepted by the Rental Housing Tribunal include the following:

• Issues related to unacceptable living conditions like hygiene.
• Refusal to pay tenants’ deposit.
• Refusal to pay rent to the landlord.
• Forced entry into property.
• Property damage.
• Maintenance and repairs.
• Contravening the Rental Housing Act.
• Discrimination by the landlord.
• Cutting water or electricity without following the court order process.
• Refusal to issue statements of payments made.
• Eviction without following the court order process.

Finding a tenant can be challenging. To make this process more manageable, you need to conduct thorough research to determine which competitive prices to set for your room. Additionally, you need to find the best marketing platforms to ensure you find a tenant.

How Can I Set Competitive Prices for my Room Rental Business?

Setting competitive prices for your room rental business requires research, as well as consideration of your costs and expectations as a landlord. To establish the monthly rental price, here’s what you need to:

Step 1: Research the Market

Navigate the South African rental market to gain an understanding of the demand, what people afford, and what other people are charging for backrooms and rooms. When researching your competitors, ensure you look at backroom rentals in a similar type of location, as well as the size of the room and what the room comes with.

For instance, an en suite backroom in an area that isn’t close to a town can’t cost the same as an en suite similar close to a town with malls, schools, and access to transport.

Step 2: Consider Your Costs

Consider any costs that went into upgrading the room, whether the rental cost will include the cost of water or electricity, as well as what the general expectation for the type of room you are renting out.

Step 3: Consider What Sets You Apart

If you’re offering nice benefits like Wi-Fi and electricity in your rental price, you can consider pricing your rental higher than your competitors, provided that they do not offer these benefits. It’s very important to be fair in your pricing. You need to make a profit, but not at the extreme expense of your potential tenant.

How to Market Your Rental Room?

Navigating the room rental marketing process doesn’t have to be complicated. To market your room effectively, you can do the following:

• List your room on a property platform like Private Property. Private Property is reported to have averaged around 50 interested tenants per rental, so, when you choose to advertise on such platforms, you’re more likely to receive fast results.
• Work with a rental management company, where you’ll find a real estate agent to help you rent out your backroom. The best part of choosing this option is that they can help you handle the legal aspect of your rental.
• You can independently market your room rental on platforms like Facebook marketplace and gumtree. This option is great if you do not want to spend money on advertising your rental, because they allow you to create a free post to advertise your room.

How to Post a Rental on Facebook Marketplace?

On Facebook marketplace, users do not merely market items they’re selling, but you can market your room rental. This is a good place to advertise your backroom and room rental for free because there are already thousands of users within your reach who use Facebook on a regular basis.

To post your rental on Facebook Marketplace, follow these steps:

1. Login to your Facebook profile. If you do not want to use your own profile, you can create one dedicated to your listing. However, using your personal profile might work to your advantage, as you might already have an audience and wouldn’t want to build one from scratch.
2. Head to the menu in the top-right corner of the page. Next, look for Marketplace and click on it.
3. Facebook Marketplace will open up and display various options. Here, click on Sell.
4. Select Homes for Sale or Rent.
5. Upload the photos of your backroom listing. You can add up to 50 photos.
6. Now you can fill in the details of your listing. This includes the property type, the number of bedrooms, bathrooms, the price, and the property description.

It goes without saying that when you’re renting out any type of property, you need to be well aware of the legal requirements and ensure that you comply with them. The issue with backroom rentals, specifically in the townships, is that these are an unregulated business, which open room to the contravention of legal regulations.

However, even when there are contraventions, you can still take legal action where necessary.

What You Need to Know About Your Rental Agreement

The primary purpose of a rental agreement is to have clear terms and conditions for the period you’ll be renting, until the time comes to renew or terminate the lease. The things you need to include in your rental agreement include the following:

• Who’s included in the agreement.
• Duration of the lease.
• Rental amount and latest monthly payment dates.
• Requirement and terms for the deposit.
• Rights and responsibilities of the tenant.
• Rules of the property.
• Conditions for property inspection.
• Conditions for breach and termination of contract.