In today's world, the answer to every problem lies in the city, whether it's a student's school subjects or people's jobs and careers. In such a scenario, starting a room rental business can be a great opportunity. Many people have homes in the city, but many others live far from the city, making it essential for them to live in the city to advance their future, as they don't have enough money to buy or build a house. In such cases, renting a room is a good option for them. Therefore, fulfilling this need of people also makes it a good business opportunity. Let's learn more about this business in detail in this article.
What is a Room Rental Business?
A room rental business involves people renting private rooms in a property owned by someone else in a specific area. In simple terms, it means a homeowner rents out extra rooms in their house to people for a fixed rent. The owner collects this rent at regular intervals, such as weekly or monthly. These rooms are smaller and simpler than guest houses, allowing tenants to live as if it were their own home. The owner provides basic amenities like a bed, light, and fan, and if any problems arise with these amenities, the owner is responsible for resolving them.
Why is the room rental business necessary?
Nowadays, most people prefer to live in cities, and it is becoming essential for students to live in the city for their studies and for people to live there for various jobs or employment opportunities. Many people want to live in the city permanently, but they don't have enough money to buy a house or a room. Therefore, they prefer to rent. Considering this need of students and other people, the room rental business is undoubtedly very important.
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How to start a room rental business?
Prepare the Rooms
To start a room rental business, first choose a good location near your city and build three to four rooms of your desired size (150-200 square feet). If you are buying a house or rooms from someone, get them repaired. If you are renting out your own house or rooms, thoroughly clean the rooms you intend to rent. Then, furnish the rooms with beds, lights, and fans. If you are renting out 3-4 rooms, provide one or two toilets, and ensure separate locks and keys for each room for security.
Determine the Rent
Based on the Area:
Set the rent for your rooms according to their location. If your house or rooms are in the city center or slightly outside the city, adjust the rent accordingly. If your rooms are in the city center, you can charge a higher rent (₹7000–₹8000) ($400 to $1800+Dollars per month), and if they are a little outside the city, you can charge a lower rent (₹4000–₹5000) ($400-$800+Dollars per month).
Based on Facilities:
If your rooms are very well-equipped, with good lighting, tiles, etc., you can charge a higher rent.
For example – Normal Rooms: ₹4000–₹6000 ($500 - $900+Dollars per month). Furnished Rooms: ₹7000–₹10000 ($700 - $1500+Dollars per month).
Find Tenants
You can advertise your business through your friends, WhatsApp groups, Facebook Marketplace, notice boards, etc.
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Investment and Costs
The investment and costs involved in a room rental business depend on several factors.
Investment
The investment required to establish a room rental business on your own land depends on various factors, such as the quality of construction, the number of rooms, the location, and the level of amenities.
Example –
Rough estimate for a five-room business:
If you want to build a basic structure with five rooms, each approximately 150-200 square feet, then:
Construction cost:
Assuming an average of ₹2000 per square foot, approximately ₹10-15 lakhs ($100,000 to $400,000 Dollars).
Other amenities:
₹1-2 lakhs ($10,000 to $20,000 Dollars).
Total estimated investment: ₹12-16 lakhs ($300,000 to $500,000 Dollars).
Costs
When it comes to costs, several factors are involved, such as mortgage payments, rent, maintenance, repairs, utility bills, insurance, management fees, and marketing and advertising.
Example –
Rough estimate for a five-room business:
If you lease an existing and suitable property and prepare it for rental, excluding the cost of purchasing the property, your initial total costs could range from ₹2 lakhs to ₹5 lakhs ($20,000 to $50,000 Dollars).
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How much profit can you make from a room rental business?
Every business owner is curious to know how much profit they will make from the business they are about to start. Let's see how much profit you can expect from this business. If you have 4-5 rooms and you want to collect rent from tenants every month, then –
Example:
The rent for one room is ₹6000 ($900 Dollars) per month, and there are 5 rooms, so 5 × ₹6000 = ₹30000 (5 × $900 = $4500 Dollars). This means you will earn ₹30000 ($4500 Dollars) per month from 5 rooms.
Laws, Rules, and Taxes
There are legal rules and taxes associated with running a room rental business. Although these rules are not strictly enforced in some regions, they are still important. Therefore, we will look at some essential documents.
Rental Agreement
A rental agreement is essential in this business, as it can protect you from any future disputes related to this room rental business.
Required Documents
Proof of Ownership:
To prove that you are the legal owner of the property.
Documents:
Sale deed, lease agreement.
Identity Proof:
Aadhaar card, PAN card, passport, or voter ID card.
Regulatory and Tax-Related Documents
Business Registration:
Whether your business is small or large, or whatever form it takes, you may need to obtain a trade license from the local municipality or municipal corporation.
GST Registration:
If your residential property is rented out for any other commercial purposes (such as a hotel, guesthouse, or commercial office), GST registration may be required.
Bank Account:
You should have a dedicated bank account to secure your rental transactions and maintain financial records.
Income Tax Return:
The income earned from your rentals is taxable and must be declared in your annual income tax return.
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Your Questions
• Will the room rental business be profitable in 2026?
• How much investment is required to start a room rental business?
• What risks could the room rental business face in 2026?
• Will the room rental business be profitable in 2026?
If we are building a business like room rentals, it will definitely be successful in the future. Nowadays, people are more attracted to cities because they want a good education, a job, and a comfortable life, for which they need to rent a room or house there. Therefore, we can undoubtedly say that the room rental business will be very profitable in 2026.
• How much investment is required to start a room rental business?
Regarding the investment required to start a room rental business, as we saw in the investment and costs section, the total estimated investment for a 5-room business can be between 12 and 16 lakh rupees ($300,000 to $500,000 Dollars). And in terms of costs, excluding the cost of buying the property, if you lease a suitable and existing property and prepare it well, the total estimated cost can be between 2 and 5 lakh rupees ($20,000 to $50,000 Dollars).
• What risks could the room rental business face in 2026?
The room rental business is considered low-risk, but if done without proper planning, this business can also incur losses.
Some main risks:
• Tenants not paying rent on time.
• Frequent tenant turnover.
• Lack of knowledge of legal regulations.
• Risk of property damage.
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