If you ask 10 people how much it costs to start a PG business, you’ll get answers ranging from ₹3 lakhs to ₹1 crore.
Both are technically correct – and both are dangerously misleading.
In 2026, the real question is not “How much money do I need?” The real question is:
“How much money do I need so that my PG does not collapse in the first 12 months?”
This article breaks that down from a business survival lens, not a YouTube-reel lens.
The 3 Layers of PG Investment (Most Blogs Miss This)
Most cost guides only talk about setup cost. In reality, PG investment has three distinct layers:
Layer 1: Asset Setup (Visible Cost)
Beds, cupboards, painting, deposit – what everyone talks about.
Layer 2: Operating Buffer (Ignored Cost ❌)
Cash needed to survive:
- Vacancies
- Late rent
- Repairs
- Staff inefficiency
Layer 3: Control Systems (Silent Profit Maker)
How you prevent leakage, not just earn rent.
👉 Most PGs fail at Layer 2 and Layer 3, not Layer 1.
Let’s go layer by layer.
Layer 1: Setup Cost (Reality Check for 2026)
A. Property Economics (Rented vs Owned)
Rented PG (Most First-Time Owners)
| Item | Typical Range |
| Monthly rent | ₹1.5L – ₹2.5L |
| Security deposit | ₹1.5L – ₹6L |
| Lock-in period | 2-5 years |
Hidden insight: Owners fixate on low rent, but ignore vacancy velocity. A slightly costlier location near colleges / IT hubs often fills 2–3x faster, saving months of losses.
B. Renovation: Where Capital Gets Burnt
2026 truth: Tenants don’t pay more for marble floors. They pay for experience.
| Expense Head | Smart Spend |
| Paint & repairs | ₹1–2L |
| Electrical & plumbing | ₹80k–₹1.5L |
| Bathrooms | ₹1–3L |
| Safety (CCTV, locks) | ₹40k–₹1L |
Owner mistake: Overspending on interiors → underfunding operations.
C. Furniture: Think “Per Bed ROI”
Average per-bed cost in 2026:
| Item | Cost |
| Bed + mattress | ₹5k–₹10k |
| Cupboard | ₹6k–₹9k |
| Table/chair | ₹2k–₹5k |
| Fan & lighting | ₹2k–₹3k |
➡️ ₹15k–₹32k per bed
Insight: Every ₹5,000 extra per bed needs ₹300–₹400 extra monthly rent just to break even.
Layer 2: Operating Buffer (Where PGs Actually Die)
This is the most under-calculated cost.
You MUST Assume These Will Happen:
- 15–25% beds vacant initially
- 10–20% tenants delay rent
- Staff forgets / hides collections
- Electricity, water, food overshoots estimates
Minimum Operating Buffer (Rule of Thumb)
| PG Size | Required Buffer |
| 10–15 beds | ₹1.5–2L |
| 20–30 beds | ₹3–5L |
| 50+ beds | ₹8–12L |
❌ Owners who invest every rupee into setup usually panic within 90 days.
Layer 3: Control Systems (This Decides Profit vs Stress)
Here’s a brutal truth:
A PG without systems is not a business – it’s a gambling table.
Where Money Leaks in PGs
- Cash collected but not recorded
- Partial payments forgotten
- Electricity & food dues unrecovered
- No clarity on monthly profit
- Owner realizes losses after 6 months
This is exactly why modern PG owners use RentOk.
Why RentOk Is Not “Software Cost” – It’s Capital Protection
When you invest ₹20–50 lakhs into a PG, managing it on Excel + WhatsApp is like running a factory without accounting.
What RentOk Controls (Practically)
- Automated rent & dues tracking (no memory dependence)
- UPI-based collections (less cash leakage)
- Tenant-level ledger (no disputes)
- Expense vs collection dashboard (real profit visibility)
- Defaulter & overdue alerts (faster action)
📉 Even 5% monthly leakage on a ₹5L rent roll = ₹25,000/month lost.
📈 RentOk typically saves ₹20k–₹50k/month for mid-sized PGs.
That’s not convenience. That’s ROI.
Realistic Investment Summary (2026)
Example: 25-Bed PG in Tier-1 / Tier-2 City
| Category | Amount |
| Deposit + rent advance | ₹4–5L |
| Renovation | ₹2–5L |
| Furniture & appliances | ₹4–5L |
| Legal & setup | ₹20k–₹1L |
| Operating buffer | ₹4–5L |
| Total | ₹12–27L |
➡️ Break-even: 14–20 months (well-managed)
➡️ Without systems: unpredictable
Final Insight: PG Is No Longer a “Side Business” in 2026
The PG business has matured.
Tenants expect:
- Digital payments
- Clear dues
- Transparency
Owners need:
- Predictable cash flow
- Zero leakage
- One dashboard view
RentOk is built exactly for this new reality.
If you’re committing serious money, you need serious control.