Rooming House

What are Rooming houses?

Rooming House investments offer the opportunity to lease each lettable space separately. By doing this, high yields are achievable, and in some cases 10% or better may be possible.

Whilst each habitable space is self-contained, under Rooming House legislation there is a requirement for a common area that includes 1 shared laundry, kitchen and living area which allows the higher returns to be achieved. This does vary from council to council. Rents achieved from this type of dwelling are far higher than letting a single house in the same location.

Rooming houses are managed by specialised and experienced Property Managers, who have each tenant sign a separate lease. Each lettable space is self-contained and includes an ensuite, small living area, kitchenette, and sometimes may have external access. The maintenance of the shared areas, plus the costs of water, electricity and Internet are the responsibility of the property owner. A Rooming House is a residential dwelling that is certified as class 1B, and specifically designed for separate tenancies. In Brisbane City Council Area, a Rooming House has a maximum of 5 lettable areas, with a maximum of 5 unrelated parties, and a total floor area no larger than 300m2.

Benefits

What are the unique gains for Rooming House prioerty investors:

  • Up to 5 separate rents for the one dwelling/block of land

  • For a low-density residential block this is the highest and best use of the land

  • Each room is completely independent and lockable

  • Risk mitigation by having separate leases. If one person moves out, there are still up to 4 rents coming in until a suitable replacement tenant is found.

  • Only one set of rates are payable for the property

  • It supplies affordable housing in locations where it may otherwise be unavailable

  • High depreciation due to the level of fixtures, fittings, and furniture etc

  • No Body Corporate fees

  • Supplies positive cash-flow and high rental yield to the investor

  • In many instances these properties are code assessable meaning they do not require any specialised development approval

  • Only one set of rates are payable for the property

  • In many instances these properties are code assessable meaning they do not require any specialised development approval.

From The Street They Look Like An Attractive Home

apartment-like studios

 

Whilst on the outside, these Rooming House investments look like an attractive family home; on the inside, they have up to 5 semi-self contained apartment-like studios.

 

These studios are specifically designed to be let out separately. Each of the studios has the following:

  • A kitchenette with rangehood, sink etc.
  • A full ensuite bathroom.
  • Lounge and sitting area
  • Robes and storage
  • Split system reverse-cycle air conditioners and ceiling fans.

Rooming House Investments

Higher Yields and less fees and hassles than apartment projects

These Rooming House investments allow up to five rents from one property. It is similar to having an apartment development. However, If we were to build a comparable apartment project, we would face hundreds of thousands in associated fees from Council. This would include development costs, DA submissions, headworks, engineers, architects, town planners… the list goes on. Plus, we would need more expensive, higher density land. These fees, risks and uncertainty all diminish the yield and viability of an apartment project. But with a Rooming House, we are able to get approvals on a standard residential block of land. 

Major Demand for this type of studio apartment

We have discovered a huge demand from young professional tenants for this type of self-contained product. This has only increased in recent times, with the increasing interstate migration putting pressure on an already stressed rental market. It is predicted that as the international borders re-open, this will only serve to exacerbate the situation. 

For our product, we target suburbs and areas where there is good demand from tenants and not and not of readily available comparative studio or 1-bedroom rentals.

There are a substantial number of singles and couples who require one-bedroom and studio accommodation. According to the Australian Bureau of Statistics (ABS), 23.5% of the total Queensland households are single-person households, and 35.1% are two-person households. 

That suggests that 58.6% of the total households in Queensland are two persons or less. However, according to the ABS number of bedrooms per dwelling data, only 5.2% of dwellings in QLD are one-bedroom, and 15.7% are two bedrooms. Only 20.9% of homes have two bedrooms or less.

So from the ABS data, it can be surmised that there is a massive disconnect between the number of people in a household and the number of bedrooms in available accommodation, with 58.6 % of households in QLD having two persons or less and close to 70% of the available accommodation being 3 – 5 bedrooms plus.

Importantly for our studio accommodation, 23.5% of the population in QLD are single-person households, yet only 5.2% of the dwellings are one-bedroom or studio.

This shows that Rooming House Investment properties serve as an essential and strategic class of investment property.

deal directly with the builder and speak to an expert today!

At New Property Australia, we have literally been involved in hundreds of new property builds for our clients. We are passionate about finding the best Rooming House investment opportunities for our clients and have an extensive network of industry professionals to allow us to offer the best high yielding properties.

We use our team of building designers and draftspeople to offer the most aesthetic facades and effective floor plans. We then have our panel of approved builders tender for the build providing us with the best price and timeframe for the build. This enables us to offer our clients a well-designed and more competitive product.

The rules regarding Rooming House properties can be complex, and in fact, they are different across every State and Council area. We have the expert staff and team members to be able to provide you with up to the minute advice on what you can build and how you can maximise your investment.

Interested in speaking to an expert Rooming House builder?

www.roominghousebuilders.com.au

articles and case studies

Banyo, Rooming House

3 September 2019

In this New Property Australia Case Study A client was seeking their first investment and was looking for a high yielding property that would enable them to receive a positive cashflow.

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