As Brisbane’s leading Rooming House builder, we take pride in our reputation in building Rooming Houses that have the investors return on investment in mind.
Rooming Houses are often called, Micro-Apartments, Co-Living, Share Houses or HMOs, however the correct terminology under the Brisbane town planning code is Rooming Accommodation.
Rooming Houses are 5-bedroom, 5-bathroom houses that provide accommodation to 5 occupants under one roof. Each tenant has a separate lease agreement and pay anywhere between $340-$450 per room. This provides the investor with a weekly income of $1,700 to $2,250 per week depending on the location and design. This in turn also provides affordable accommodation to help solve the rental affordability crisis. They are certified and approved as a class 1B construction and classified as “Acceptable development” by Brisbane City Council.
Benefits to the owner/investor
A Rooming House provides an extremely high ROI and very low risk and offers the following benefits.
Instant equity creation
A Rooming House is valued in a similar way to a commercial property, meaning the value is based on the net yield rather than comparing to a traditional 5-bedroom home. Valuers use a Capitalisation Rate (Cap Rate) which is currently 5.6%. The net rent is divided by the cap rate.
An example of a valuation on a H&L package for $1,000,000 that is receiving $380 per week per room is as follows. Rent per room per week $380 x 5 rooms = $1,900 per week x 50 weeks per year = $95,000 (9.5% Gross).
Deduct the outgoings of approx. $20,000 leaving a net rent of $75,000 per year. (7.5% Net).
Divide the Cap Rate of 5.6% by the net rent of $75,000 to get the Valuation amount of $1,339,285.
Low occupant turn over
The Property Managers generally only accept a minimum of 6-month tenancy agreement; this means that if a tenant vacates there are still 4 other tenants paying rent while a new tenant is found.
There is currently a less than 1% vacancy rate for this type of property and a high demand with all rooms usually being tenanted within 4 weeks if not sooner.
Hands off investment
Altitude Homes offer a complete hands off investment service. We can manage the entire process from finding the site to furnishing the property down to the knives and forks and handing the keys over to the property manager
Quick returns
As Rooming Houses are “acceptable developments” in BCC there is no need to undergo lengthy and expensive development costs that would be encountered on similar density apartment developments.
Construction can commence as quickly as a normal residential investment with certainty around the construction costs and council fees.
Depreciation
Investors can realise greater tax deductions from a Rooming House as they are rented fully furnished and have a high level of fixture and fittings.
