The rules were stated when you joined up as a member.

If we allow an inch, people tend to take a mile.

– Steve

Hi,

It sounds like you are taking a pre-existing house and then renting it to students (by the room), as opposed to buying a 1-Br purpose built student accom dwelling.

As such, here are some points I recommend you work though:

1. Leasing: are you buying or renting? If you are renting the property then you will be sub-letting to tenants. That's fine, but you want to make sure your lease allows for this. If you are owning, then be aware that there will be quite a few logistical management issues with having 4,5 or 6 sep. tenants.

2. Bathroom: clearly the 1 Ba will be a problem – but only in terms of the appeal and function of the property. I don't know of any legal impairment that prevents you from renting because of only 1 bathroom.

3. Boarding house: check with your local council about what their rules about boarding houses, as with 5 tenants you may be pushing the boundaries. Just check in advance…

4. Tenants: students tend to be transitory – especially if they are from overseas. Therefore, you need to be sensitive to timing and vacancies around the start of the Uni year, holidays etc. Also, tenancies are likely to turn-over quicker as people move in and out. Therefore, your property's fixtures and fittings are likely to depreciate faster.

5. Bond – you will need to collect a bond off each tenant.

6. Harmony – given so many people are co-habitating a small space, you will need to create a good place to live. Given the lack of internal space, I would try to make good use of external areas and converting them into open living spaces that also offer some privacy.

I could go on, but instead send me a PM and I'll put you in touch with someone I know who has done really well from renting a house to tenants by the room.

Hope this has given you some new ideas.

– Steve

Hi,

Beware of the foreign controlled corporation rules, which you should ask your accountant about.

I invest in NZ and use a NZ family trust (not an LAQC).

– Steve

Hmmmm.

Seems like there are many choices.

Melton should hold up well given the price of property and that there are so many 1st homebuyers.

With that in mind though, if you buy new and sell in 1 yrs time then you will be selling to 1st homebuyers, and therefore competing against spec builders. And that's my fear, there is a chance that spec buyers will discount further if the economy falters as they clip profit to maintain volume.

Furthermore, I wouldn't buy a home in a place I didn't want to live… period.

Do your numbers on the student accom… there are sometimes many and large management and ownerships costs (such as servicing, body corp etc).

My pref would be to buy in the area you want, and then to improve the property to maintain your capital so that when you sell, you can sell for more.  That is, stay in Geelong and buy something you can improve to add more in perceived value than actual cost.

I hope this has given you some new ideas.

Warm regards,

– Steve 

Hi,

Can you give me a link to the webpage you are looking at?

Thanks,

– Steve

Hi,

If you are looking to buy for market-based growth (that is , buy something and 'park' it as a rental while waiting for general capital appreciation), I'd agree that holding off is smart. This is because the market is likely to drift or retreat rather than rise in the near term.  The price to jump in is once prices begin to correct.

However, if you want to be an active investor then it doesn't matter when you buy so long as you have a system that can make money in the current market. Active investors apply strategy and skill by buying problems and selling solutions, generally by adding more in perceived value than actual cost.

There is a lot of information on this website about various strategies, so spend some time surfing and reading and by all means ask more questions.

Merry Christmas!

– Steve

Hi,

Thanks for your post and welcome to the community.

To answer your questions:

Option One

1. we buy a 2bd unit for my parents and rent it out to them (they are all for the idea) and we move into their 3bd unit in bentleigh.

This assumes that your parents will go for this and either gift you or lend you their equity. Is this a realistic financial situation? That is, do you rent their unit and they rent yours? I'd like to see the numbers fleshed out or more clarification on the terms.

Option Two

2. we buy a house with a large block and empty the land/build and sell the block (this is obviously a good idea but the problem here is that I don't want to live in a house with a tiny backyard as we have 2 little kids and I want them to have lots of space to play in). Also I don't like the idea of moving from house to house as I want stability for my kids/family.

It's good that you are clear on what you want. Are you able to achieve the space / yard with option 1 in your parents 3Br unit? Also, do you have the financial capacity to buy and fund this option? I think this option will take better shape when you have a potential deal to work through – both land size, potential dwellings and also money,

I would encourage you to also look at a 5 year plan, so that you do the deal and live in the property for five years and then trade up. It is unusual for people to live in the one property for life thesedays.

Option Three

3. we buy a house for ourselves to live in (not necessarily with a large block at the back)… but one that we like and will set up as our family home… and at the same time we buy another place that we can rent and possibly subdivide and sell in the end to make a profit.

This is a possibility, although it will be cash and debt intensive. Only you know what you can afford.

Overall, I like the idea of being proactive of investing, but at the same time it seems like a family home is a large priority. I suggest you work out which one you want more – a home or investment property – and then build a strategy around that.

Be careful trying to turn a home into an investment property as there is a lot of emotion in homes, whereas investment properties should be simply a matter of:

a. how much down
b. how much back
c. how much time
d. how much risk

Merry Christmas.

– Steve

G'day Dave,

Sounds like an interesting project.

I'm not the reno guru by any means, but a couple of tips I have come to find true.

1. Make sure you target your end reno product to the demographic who will buy it. For instance, a spraygun approach works if you want the walls and ceilings the same colour, but this is a basic finish for a budget project.

2. Carpet should be slightly cheaper than polished boards, and a lot cheaper than new flooring. Again though, cheap and nasty may impact your end sales price. That said, I think the new carpet smell is even more important than the new carpet!

3. Bunnings have pretty cheep chrome lighting on banisters. Two and three way lights that can be self-installed. These look modern and do the job. I'm using them for the kitchen, bathroom and loungeroom on my current project.

4. Rehabing the shower / bath will be cheaper if you can get away with it. Go for new tap fittings though.

5. You are on the right idea here. New cupboard handles, perhaps even kitchen benchtops. I'm not sure about the powerpoints. Call a local electrician and find out.

Go with mulch for landscaping and a few flowering annuals for colour.

Hope this has helped. When it becomes available see if you can grab a copy of Renovation Toolbox, it will really help you. It's currently out of print but there are moves to do a reprint soon.

Cheers,

Hi,

I think I'd budget in $1,400 (GST inc) per square meter.

I would have thought you'd get change out of that if it was an M class slab and a basic finish.

Building cost is working out to be about $12,000 per square at the moment for basic construction.

You may do a little better now as construction work starts to dry up at the sub contractor level.

Builders seem happy to quote at the moment, so price it around and see how you go.

All the best,