Does anyone have any ideas/experiences on student accommodation/rooming houses?
You certainly get a better return than simply renting a property to one tenant. I think that if controlled properly i.e. with regular inspections, strict selection of tenants etc.., it could be a positive cash flow right from the start.
patriciaburt
I agree with your thinking, there may be good returns but as a 24 year old property investor with 3 properties I wouldnt want to be renting (a house, a room or a bed for that matter) to some of the people I grew up with or know now who are in my age group! Selection of tenants is very important anyway, but student accommodation could be risky! (they may not sign leases and stick to them, high turnover = higher management)
In saying that I know some people who have 4 or 5 bedroom houses they rent to Japanese students, who are very reliable tenants. They rent the rooms out instead of the whole house.
Im currently renting myself (helps buy more properties) and live in a 5 bedroom house in South Yarra, I am renting 4 rooms out and am paying only $30 a week to live in this awesome suburb! Depends how you work the figures out and what risk level youre comfortable with but it could be a good move, its easy for me to manage this cause I live IN the house so I see my tenants every day
Dev [cap]
yeh I had some Chinese students stay in a brand new townhouse for 6 months prior to be being sold. The damage bill was huge. I felt sorry for them, the new owner expected the house to be sparkling clean and these guys had no idea how to clean… and the more they tried the worse it got, they took a scourer to the stainless steel hob and scratched it to bits. the drains were clogged with hair, filth everywhere, ceramic basins chipped etc etc. Then the PM said it was fair wear and tear and released the bond. The buyer said it was abuse and sought damages. Boy I learnt from that one. Nothing like a good emotional outburst and tears and yelling on settlement day.
The next one that i rented to students was destroyed probably even more. Fortunately they were loaded and were very apologetic and their Dad sent a cheque over for several thousand dollars within weeks.
I would (a) charge a hefty premium (b) appoint a cleaner (c) keep up regular checks (c) make sure your finishes are durable and resilient as they will cop a beating.
That is from my limited experience in letting to students anyway. Personally I wouldn’t bother again.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
I, or should I say, we (a mate and myself) settled on a house last month and have spent a lot of time and money making it into what we hope will be a successful rooming house. Have just put ads in the papers this week for tenants, so we will see how it goes. I’ve met / spoken to people who have done this sort of thing and it works – it obviously takes more time and hands on management than a simple rental, but the returns can be great. Good luck.
I am doing it. It works well for me.
After last years tenants moved out we spent three hours cleaning for the next lot.
I have a system for selecting my tenants and it works great for me. My students are terrific young folks who will grow into impressive young professionals when they graduate.
Currently looking for another place.
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Is it true that in SA income from letting accom to international students is free from income tax ??
I would love this to be the case in NSW, a chance to generate extra income from flat underneath my house.
Sounds almost too good to be true.[blink]JGatland
It has been suggested to me that you put one of the students in charge of the house and therefore they pay less rent. The idea is good, although I have never rented out per room. If the system is in place to do it, it could work a treat. Possibly double the rent that the house would normally receive. This would surely allow the property to become positive cash flow.
What are your thoughts to further expand on this idea.
Achiever
I am currently renovating a house to accommodate students in order to rent it by the room. I have a friend/business partner who has his place up and running and is very happy with the returns. Much better than the rent he was getting when it was rented as a house to students. The best advice is to manage your property. Interview and select the students, inspect your property while showing other students / new tenants available rooms,inform them of the house rules and have the student sign a lease and pay a bond. Importantly focus on the potential returns when it does work. Like attracts like. Regards Bofclark
I have an IP with my Brother and Brother In Law that we rent on a room basis to students – however my brother also lives in the house and is able to look after any problems on a day to day basis.
Another thing to consider is that during holidays (eg Christmas 2 mths)students usually go home to their parents and don’t want to pay rent over that period.
The rooms in our place are vacant during that time but we have factored that in when deciding on room rent rate for the semesters.
Pete
Hi All,
I am currently researching the possibilty of buying and renting out on a per room basis in SA.
Do most investors who do this pay for electricity, water etc themselves and factor into per room rent? I would imagine this is the simplest way. Any thoughts are greatly appreciated. Best wishes
Markus
Originally posted by markusj:Hi All,
I am currently researching the possibilty of buying and renting out on a per room basis in SA.
Do most investors who do this pay for electricity, water etc themselves and factor into per room rent? I would imagine this is the simplest way. Any thoughts are greatly appreciated. Best wishes
Markus
Thats what most do around here!
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Ive done student accom and still do. There is a lot more management required and all the students seem OK at the interview. You need written rules and a lot of inspections. You need to be tough but gentle and sometime you need to be an arbitrator and student councillor. If you get a good cleaner they can be a great source of intelligence. A “site manager” sounds great but many being students themselves do not have the experiance, desire, personality or motivation to alientate themselves by “comming down” on misbehaving housemates. We do our own cleaning and hence our own regular supervision. Lot of work but good returns. Definitely this is not for everyone.
Take a huge bite and chew like mad.
We’ve run a rooming house for a couple of years as one of our IPs.
We cater mostly to non-students/working singles. Some of these people can’t budget and love that one single payment a week pays for everything – rent and utilities and they only have to pay for their food.
One idea for student accom would be to include cable internet as part of the rental package. This could make your accommodation more desirable and thus cut down on the transient factor. Obviously the closer to the uni/tafe/etc the better.
Regards
Kevman
Hello everyone,
Not intending this to be a promotion for my business in any way.
But since I have worked for many estate agents cleaning and gardening, there are a few things that I have observed.Generally the younger the adults are the less likely that they have any idea how to clean.
Cleaning is really simple but like most things there are short cuts, unfortunately with out experience short cuts become standards.Some times to keep costs down to clients I take a short cut so that more time can be spent where there is more obvious dirt or a health risk.
But in no way does it become a standard, as that would affect the quality, thus the value of our services.
On the other hand if you want me to stay all day there will always be something to clean (follow the kids [])I would suggest that to get a quote or two from reliable cleaners.
Remember with services you get what you pay for, the lower the price the lower the service.
Rather than looking in the paper for cleaners or gardeners drop into a real estate agency and ask their property manager for a reference.
In this way you will get a reference for a quality professional with a proven track record.There are three requirements for working with estate agents.
One works for a cost effective price.
Two does a quality job.
Three keeps eyes open and communicates things that need to be fixed or nipped in the bud.Don’t underestimate the third as they could be growing plants in the bathroom, in 91 I was cutting a lawn and needed to go to the toilet, the discovery was made when I needed help to get the bathroom door open, as the hydroponic plants had slumped against it.
The stupidity of people never ceases to amaze me.Or leaving the water running over night in the garden.
The lawn requires a map and compass to find the cloths line.
A pest exterminator must have experience as a lion tamer.
A simple replacement of a washer in a kitchen sink can stop a leak that would cost a complete kitchen makeover.
A broken window can be fixed same day etc.Not to say that all tenants are from hell, few are, the majority are rather nice people.
One of my recent clients tenants came home to find all their furniture missing.
They had little money but had a good rental background so the estate agent helped them out.
An alarm was fitted to the house and there was an arrangement made with a furniture shop to fit out the house as they wished.
The rent was increased by $25 wk and the bond increased by $200 as insurance cost.
The owner will have a larger tax deduction for the furniture and a higher rental return for a few more years as the young couple also signed a 5 year lease replacing their 6 month lease.
The owner is presently on a holiday in Europe and was unreachable.Now I mentioned this for 2 reasons.
One that good management will cost more but the cost is really an asset.
Two many young people don’t have much money thus their furniture requirements can be an additional income opportunity.There are a lot of opportunities out there but definitely do your due dilligence on the people involved and keep your mind open for opportunities.
Your friend Colin.“Children should be allowed to fail and benefit from their experience rather than to be
shown “our” way of success.” Mr. Billi Lim
“The difference between a stumbling block and a stepping stone is how you use them.” — UnknownEmail [email protected].
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For all your CLEANING and GARDENING work.Hi Patsy,
I lived at a student accomadation and was close friends with my land lord. They found it hard work as young ppl are dirty, damage furniture and building but apart from that it is a great business. Although you are getting more income, you will find more will go to repairs. Remember it is best to supply fridge, microwave, beds, furniture etc to entise students. Remember more people = more rent, more people = more costs for upkeep. It is a full time job too. TIP: Buy land or build close to town or uni/tafe. You will have a hard time screening too. They can seem innocent in the interview, have most student won’t have a rental history. You will also need to provide a laundry. Hope I helped, email me if you have any questions. I can also talk to land lord if question is more difficult to answer.
StrawberryHi All,
For those who have been investing this way could you give some idea on how many weeks per year you collect rent (Uni students have many weeks off per year) and how do you manage this.
Thanks
hrm
I collect rent all year except for the summer break.
I will take half rent for anyone wishing to stay in town and also advertise empty rooms for short term rental.
I get about 75% of the normal rate over this period from mostly Asian studnets studying english.
Hope this helps
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi All,
We’re renting out a a couple of houses at the moment to students by the room. We have found that students tend not to know much about cleaning and the evidence is clear from our inspections but its not too bad because we call them up on occasions to remind them to clean because we’ll be visiting soon and 9 times out of 10 they do clean. Actually we’ve produced a roster for this particular house and 2 students have cleaning duty for 1 month at a time. It seems to be working well.
Our other place that we’re managing is a 7 bedroom house and thats been a great experience. This particular house we’ve included the utilities in the rent as well as provided wireless broadband to each bedroom at no extra cost. This house has been easier to fill than the other because of the “all inclusive” rent type deal that we’ve offered.
As we rent to mostly international students, we realise that they go back to their home towns during semester breaks which we’ve covered in our contracts with them. We offer a discounted rent if they want us to hold their rooms (usually 70% of the rent) and so far thats worked ok. We’ve found its just not financially worth it for us to hold the room for them whilst their overseas and get no income because some of them stay away for the entire summer of up to 3mths. We haven’t bothered finding short term tenants either because the time and effort in that is too much for us because we still both work full time.
Kim
I find that not all students leave over Christmas.
Often the students that do, return. Normally I keep rooms for them for one month. If they want to stay longer overseas and want a room they must pay before they go. I also keep their bond and one weeks rent in advance. Overall I would allow a vacancy rate of about one month per tenant per year to be safe.I try to aim at renting the rooms for 2 semesters at a time and never for shorter than 1.
Another good tip is to make sure that the people from different cultures are compatable. Many different Asian cultures in a house can be a big mistake.
Have a look at the Rooming House Residential Tenancies Regulations in your state. You can print it off the internet together with a tennants agreement form.
Cheers,
JohnHi All,
To those who factor utility bills into the rent, firstly how much do you allow and secondly I imagine heaters running in 5 bedrooms cause the bills to blow out. How do you control their use/over use.Tom Ellmer
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