All Topics / Help Needed! / renovate to create a six bedroom, serviced rooms for executives or buy a furnished executive apartment?

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  • Profile photo of 9GoldFisk9GoldFisk
    Participant
    @9goldfisk
    Join Date: 2007
    Post Count: 14

    I am in a point in my career where I am unsure what to do…I would like to develope an inner city  terrace house in Sydney into six individual self contained executive/ boutique style rooms, each with their own private facilities and electricity etc…but am unsure where i begin…

    Or should I buy an executive inner apartment and furnish it for high return…as this is the current arrangement I have with the terrace house at the moment…its four bedrooms, one tenancy though, and rented out for $1000 per week…with loan repayments of $3300 per month….

    My goal is to achieve small boutique style..inner city accommodation for short term to medium term…as this has worked for me in the past…

    Please advice on what to do??

    Profile photo of FreckleFreckle
    Blocked
    @freckle
    Join Date: 2012
    Post Count: 1,680

    I think the exec thing has been done to death in Syd (and other cities) over the last decade or so. I wouldn't describe $1k/wk  for 4 bedders in inner Syd as particularly good. A friends partner was a PM in this market mainly Nth Shore stuff. Returns were triple that 10 years ago with lower entry costs than today.

    I don't think the corporate rental has much mileage left in it at the moment. I expect to see corporate balance sheets take a hit this year and for several years following. The exec market could get a lot tighter fairly quickly.

    An investment area you might like to think about is 55's plus retirees, aged care, gated communities etc. The shear number of retirees hitting the retirement market is growing at a phenomenal rate and not projected to peak until around 2030. 

    See this graph

    and this ABS  java applet that you can manipulate (pretty whizzy)

    The thing I like about this market is that it's; growing, predictable, and because of those things comparatively low risk.

    Profile photo of 9GoldFisk9GoldFisk
    Participant
    @9goldfisk
    Join Date: 2007
    Post Count: 14

    thanks for your comment however…this is not the market I would like to get nito…the terrace house in inner Sydney has not been renovated for 10 years…and the rental for its state is excellent.  I am best to renovate into a six bedroom…self containing rooms, and charge $650 per week in rent, $120 per night for each room. The new level of income and increased value to the property…can than be used to purchase  another investment property…..anyone else with a better idea??

    Profile photo of 9GoldFisk9GoldFisk
    Participant
    @9goldfisk
    Join Date: 2007
    Post Count: 14

    thanks for your comment however…this is not the market I would like to get into…the terrace house in inner Sydney has not been renovated for 10 years…and the rental for its state is excellent.  I am best to renovate into a six bedroom…self containing rooms, and charge $650 per week in rent, $120 per night for each room. The new level of income and increased value to the property…can than be used to purchase  another investment property…..anyone else with a better idea??

    Profile photo of FreckleFreckle
    Blocked
    @freckle
    Join Date: 2012
    Post Count: 1,680

    You're effectively talking about turning a 4 bedder into 6 studios. Sounds alright in theory although it may be an expensive reno to put in 6 bathrooms and kitchenettes and bring the common areas upto exec standard. Will they be serviced?? Your night rate seems a bit cheap. I was thinking $150/ 1 -3 nights for casuals.

    Planning permission??

    Council??

    Neighbors objecting??

    Profile photo of 9GoldFisk9GoldFisk
    Participant
    @9goldfisk
    Join Date: 2007
    Post Count: 14

    What do you recommend as the very initial start on a project like this? Speaking to a builder or archietect first?

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Hi 9GoldFisk

    Something to do right upfront is chat to council about your thoughts, and ask about what sort of permits and costs would be involved with each.  Then cross check that with insurance costs.  For example, council might say that what you intend to do they consider to be a boarding house, and that a special permit is needed, and then you find the insurance bill to be massive.

    You mentioned "My goal is to achieve small boutique style..inner city accommodation for short term to medium term…as this has worked for me in the past…".  If you have a tried and proven formula that makes you money, and you know for sure the demand for such a product is still there in that market (suburb), why not repeat it?  It almost seems inconceivable that making lots of money could be that easy, but remember you did the hard yards learning in your prior properties.  Now you are perhaps really beginning to enjoy the fruits of your knowledge.

    Just because you have seen a chance to make big money which seems really easy, it doesn't necessarily mean the plan is flawed. 

    JacM

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of FreckleFreckle
    Blocked
    @freckle
    Join Date: 2012
    Post Count: 1,680

    I would probably go with an architect first and look at the financial feasibility of a project while also discussing local authority requirements. Architects will probably be able to cover that aspect as well but I would still do the in person thing with council. Someone on this board wrote a not too bad article on this process I believe. Think they were in Melbourne though. 

    You're stepping into the realms of property development now so this may require a whole other skill set if you don't already have it.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    You might have to provide offstreet parking for each newly-created dwelling.  Council or your draftie could tell you if this is required.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Ask council about experienced planners who you could discuss your ideas with. Those who are in good standing with council and who are sympathetic and well versed in the local requirements. Consider how you would market these units, also advertising and website costs, wotif, key pickup and return, payment, cleaning, maintenance.

    Consider what is lacking in the market, and aim for a point of difference, e.g. continental breakfast in stock, vouchers for pizza delivery or fruit delivery, free wi-fi for laptops and ipads/tablets. Big screens, stereos and DVD players are a given.  

    I rent 6 x 2 brm apartments through my motel booking office in regional NSW, very happy with the return thank you.

    Good luck. 

    Cheers

    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

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