7 Ways to Start a Boarding House Business, Costs and Benefits

7 Ways to Start a Boarding House Business, Costs and Benefits

Today, the property business is increasingly in demand as an investment field, one of which is the boarding house business idea. Although it had receded during the pandemic, it didn’t take long for this business to soar again. Given, the number of people who migrate, either to work or study every year.

Well, if you are considering the property business, there is nothing wrong with starting a boarding house business. How to start it and how much will it cost? Let’s read the following article to the end!

How to start a boarding house business

If you are interested in building a boarding house business, but are confused about how to start, consider the following strategies.

1. Choose the right building

Whether you build your own or buy a boarding house, you have to recognize and pay attention to every detail of the building. Make sure that the condition of the building is livable, so you don’t have to renovate.

In addition, if you buy it from someone else, be it an individual or a developer, it’s a good idea to check everything related to the legality of the building. Do not let you buy a disputed building, because it will harm yourself.

2. Know the type of property

Before deciding to make a boarding house, identify your property first. Is the building suitable if used as a boarding house, because boarding houses require many rooms with standard sizes and facilities. Therefore, consider carefully the type of your property.

3. Build with a unique concept

It is better if you build a boarding house with an attractive and unique design to attract the interest of potential residents. Residential with industrial and minimalist concepts lately are in great demand because they are considered aesthetic.

4. Choose a strategic location

The next boarding house business tip is choosing a strategic location. In this case, the intended strategy is close to offices, schools or campuses. The more strategic your location, the more potential residents will target it.

5. Looks clean and well-maintained

Not only about the exterior and the surrounding environment, but you also need to pay attention to the cleanliness and maintenance inside the building. Prospective residents tend to like boarding houses that offer clean air and are not shabby. For that, the element of cleanliness is very important to attract them.

6. Have proper facilities

The price of a boarding house is usually priced according to the facilities provided. General facilities and decent standard boarding houses at least mattresses, wardrobes, tables and chairs. There is also a boarding house offering an en suite bathroom with complete facilities such as AC, TV to water heater.

7. Set competitive rental rates

The last way for a boarding house business is to set a competitive rental price. Before setting a price, you can do competitor research first. This research includes facilities, conditions and prices.

If you have more complete facilities, then you can set a higher price, but still adjust it to the market price at that location.

How much does a boarding house business cost?

Actually, it is not impossible to start a boarding house business without capital. For example, submit a proposal for cooperation with a company. However, this trick does not apply if you want to invest at the same time.

If you want to build your own boarding house business as well as an investment, then the capital needed is adjusted to the area and number of rooms. To be more clear, consider the following example of a boarding house business calculation.

With a land area of 20 square meters for IDR 2 million per meter, you want to build an 8 door boarding house with a room size of 4 x 4 square meters. Then the costs required can be calculated as follows.

Land price x Total land area

IDR 2 million x 20 square meters = IDR 40 million

Furthermore, the cost needed to build each boarding room is IDR 3 million per square meter.

Boarding Room = 4×4 = 16 square meters

8 door boarding = 8 x 16 = 128 square meters

So, the cost of building a boarding house can be calculated by

First step

Area of 1 boarding room x Price

16 x IDR 3 million = IDR 48 million

Second way

The size of the 8-door boarding room x Price

128 square meters x IDR 3 million = 384 million

So, the cost you have to prepare to build a boarding house business starting from land to building rooms is at least IDR 424 million.

Advantages of boarding house business

As seen now, the boarding house business is increasingly rampant. This is because many people realize the advantages of this one business. What are those? Here’s the explanation.

1. Have a lot of fans

Currently, there are many people who choose to migrate far from home to find work or gain knowledge. And of course they need a place to live, no wonder many are looking for a boarding house as a place to stop.

2. Business with high capital gain

In the world of property, capital gains mean an increase in prices per year. However, capital gains are usually obtained over a long period of time, at least one year. The size of this increase depends on the location and supporting facilities. But generally, a boarding house business has a higher capital gain than a home.

3. Attractive capital rate

Compared to a house or vacant land rental business, a boarding house business usually has a higher capital rate, which is around 5-7%. This value, of course, must be supported by appropriate supporting facilities.

Disadvantages of boarding house business

Although it has many advantages, every business must have disadvantages. So your job is to anticipate these weaknesses. Here are some of the disadvantages of the boarding house business.

1. Must have good management skills

If you are at home alone, you only take care of personal interests. Meanwhile, by owning a boarding house, you must consider the interests and needs of the occupants. It requires sufficient management skills to run it.

2. The risk of late paying rent

Usually, for one reason or another, there are residents who are late paying rent. For example, the economic problems of parents. Even though you as a boarding house owner are able to provide tolerance, this situation has an impact on the delay in the turnover of money.

3. There is a risk of desertion of residents

If in building a boarding house, you do not consider the location and facilities, then the risk is that there are no residents. For example, if you build a boarding house that is far from industrial areas or schools, the boarding house will be difficult for potential residents to reach. For this reason, it is not possible to choose a location arbitrarily.

That’s a review on how to start a boarding house business, a successful strategy, the range of costs to the advantages and disadvantages that can be your consideration.

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