Boarding House

Hi All,

Ive got a couple of Boarding Houses subject to DA, one is almost ready to lodge, Be really keen to talk with people interested or have been able to complete. Im really happy with the team I have organised.

Hope to hear from like minded people, Im in the Illawarra NSW

 

I got a house at Illawarra NSW. 500 metre away from wollongong train station. I am the like-minded people but I have never done any conversion from normal house to boarding house.

Do you just lodge to council for change of use or need architec to design for you?

 

There is a lot of talk on the forums about areas and speculation on whats going up and whats down however there isn't enough talk about specific strategies (outside of timing of markets) such as developing, converting or building certain types of buildings, in this case boarding homes.

I have 2 clients that have done boarding homes in Sydney and they have turned out to be awesome cash cows - we are talking about gross 15% yields on total development costs excluding depreciation or negative gearing.

Resales are also strong as commercial lenders love them almost as much as childcare centres. The development falls under the NSW sepp. It would be great to hear about stories of other investors who have done similar developments.

 

A house I have just purchased is currently being used as a boarding house (transitional housing). From what I understand, the current owner does not have council permit for what he is doing. Its managed by a local property manager. Currently, its a normal house in a residential area, but each bedroom has a lock on it, as do the kitchen cupboards. We are getting vacant possession when we settle, however I am just wondering what are the pitfalls for this style investment property? From what I have come across in my 10 mins of research it seems to just be the insurance and the turnover of tenants? Is it difficult to get council approval usually? We are planning to just use it as a normal IP with one set of tenants, but I thought I should probably look into the boarding house side of it incase it is worth the hassle. Its in Melbourne.

 

Anyone done this in Melb? I've got a huge 4 bedder that would be perfect for this. About to be rezoned RGZ. Tried to rent by the room a while back but wasn't local enough to make it happen.

 

Can't you just ask the seller what it was renting for and why he didn't go for consent. Also why are they selling?

 

Fire safety will be a big issue.
Also area zoning may or may not permit this use.
You will also have to meet boarding house requirements.
Marg

 

According to the sellers PM, the seller is unmotivated and doesn't work, and cannot afford to keep the IP. I don't know how much of this is true though. I have not spoken to the seller, and the agent doesn't seem to know much of the back story.

 

I did think that fire safety would be a big one. Not sure whats involved with this to be compliant. Currently its just like a normal house, but the locks on the bedroom doors. Each room has opening windows. Its actually 70's ex commission home. I might ring the council and find out what is required to make it compliant, then toss up if its worth it. What seems weird is the agent said the seller was only getting market value rent, which makes me wonder why you'd bother with it, unless he didn't want to advertise the fact he was getting above market rent since he isn't doing it legally.

 

Minimum standards in rooming houses

 

Had a chat to my PM, she said rent yield wouldn’t be much better anyway, and definitely not worth the hassle.

 

Yes Fire safety can be a big one .
Several years ago I was a handyman to a company that had like 8 boarding houses . One of the houses was required to have a full fire system installed - cost $ 40,000 + from memory .
They can be a lot of work re the tennants , crime problems , police there constantly and the odd overdose etc .
Fire in the kitchen quite common .

 

Non compliant BHs will see court action. Its not a good outcome to be told you must remove occupants, demo interior changes and reapply for an occupancy cert and DA before the property can be used again.

Councils regulate according to state law. And they arent at all tolerant.

One upside in NSW is the land tax concession BUT only for an approved regulated boarding house. Apply for the concession and its unregulated and its a world of pain. OSR call the council to check, council issues orders to inspect and it gets worse after that. Vic is similar to NSW...called a rooming house and fair trading and council regulate approval for the public register.

 

I’d been dealing with council regarding ours as the previous owner was prosecuted for not the permit. Council wanted to reinspect to confirm it was not being used as a rooming house by us.i have a copy of the building order and the house was o my non compliant as it hadn’t had the correct grab bars/ disabled access and fire alarms were not in positions compliant with rooming house regs.
Council said to me if I wanted to do it down the track that it’s not difficult to comply and obtain the permit, I have no idea why previous owner didn’t go the right way about it. He was fined around 40k I believe.i think he sold the house before proceedings got to the stage where he would be forced to sell to pay the fine. I will be considering turning it back into one in 5 years or so when my IO switches to PI