student accommodation

I would have thought there was a wealth of info on this, but did a search and it came up zilch. So, could everyone who knows anything about turning a house into student accommodation give me some info. What are regs here in Victoria, do I have to have sprinklers fitted, smoke detector in each room obviously, how do you get on charging for electricity. I thought a common room i.e. the dining room/kitchen, convert the lounge to another br if poss. Locks on all the doors. I suppose closest to the school or pt as possible and only one or two stops away on pt.
How do you get them to pay rent, direct debit? What problems has anyone had with getting them to pay rent. Parents guarrantee? Probably include a gardener in their rent. Is $100 ea a week fair? Any info greatly appreciated

Yes I have a house that I converted to student accom in Melbourne.

The regs vary from state to state, so todays your lucky day

If you have 6 or more people on individual leases in a single house/unit in Victoria then you need to obtain a permit from the council as a provider of prescribed accomodation. There are a number of obligations but they are not too onerous. Cost is ~185/yr but can vary council to council.

Once you get over 10 or 11 habitable rooms then you need to register as a boarding house, and that's another story (sprinklers, fire proof walls/floors etc). Don't go there IMHO, if you have the room on the site and want that many students then go down the road of multi units on the site (say 4 or 5 beds per unit).

$100/wk sounds cheap but then it depends on where you are providing the accom, what is included, quality of finish, number of other students, number of bathrooms etc.

Here's what I include:
- all utilities (except phone)
- broadband internet
- a clean of the common areas once a month
- monthly basic gardening
- furnishings (incl washer and dryer, TV, couches, beds, desks, lamps, microwave, fridge ....)

My rooms vary from $115/wk to $150/wk

Yes you need to provide locks on each room door.

I get my place managed by a PM.

I have very few problems with late rent; this year none, last year one of the students was a bit tardy.

No parental guarantees necessary, but I get my PM to vet each applicant.

I've had a good experience so far, the extra rent I get by offering my house this way has been well worth it.

Good luck

Gotchas:
- banks see these as commercial, this can cause complications if you tell them what you intend to do. Revaluation time is tricky, particually for an on-site one as then the "game" will be up.
- insurance companies definitely need to know what you've done as they too see it as commercial. Cost for landlord insurance is therefore higher as is the excess.

Tips:
- If possible find a house that already has an adequate footprint (ie 3x1 plus 2 largish family rooms) as extending the footprint causes cost increases, planning hassel, time delay etc
- The size of the room heavily influences the rent you can charge, so do your sums when you're tossing up between say 4 or 5 bedrooms.

My costs:
- Purchase $410k (was a 3brx1bth)
- $40 reno to convert to 6x2 and do a few other minor things
- $13 in furnishings

Rent is $740/wk vs. $340/wk which is what it would have fetched on a normal lease in the as-is condition when I bought it.

Twitch said:

Gotchas:
- banks see these as commercial, this can cause complications if you tell them what you intend to do. Revaluation time is tricky, particually for an on-site one as then the "game" will be up.
- insurance companies definitely need to know what you've done as they too see it as commercial. Cost for landlord insurance is therefore higher as is the excess.

Tips:
- If possible find a house that already has an adequate footprint (ie 3x1 plus 2 largish family rooms) as extending the footprint causes cost increases, planning hassel, time delay etc
- The size of the room heavily influences the rent you can charge, so do your sums when you're tossing up between say 4 or 5 bedrooms.

My costs:
- Purchase $410k (was a 3brx1bth)
- $40 reno to convert to 6x2 and do a few other minor things
- $13 in furnishings

Rent is $740/wk vs. $340/wk which is what it would have fetched on a normal lease in the as-is condition when I bought it.

Click to expand...

Nice info mate. I agree with all your points.

Mine was
-Purchase $315K
-$7K to reno to convert to 5+1+extra toilet
-$1000 in furnishing, repairs and sundries when reno'd. I have since replaced a fridge and a TV at a cost of about $1000.

Rent is $540pw compared to about $270 if let as a normal home.

I target a niche market of students and completely recommend this as the way to go. I self manage as I have the time and inclination. Whilst the management effort is higher I quite enjoy interacting with my students and often have them round for BBQs and rope them into helping me go sailing. I mow the lawns every 2-4 weeks depending on season and pop into the kitchen for a drink (and informal inspection) each time. They always make me feel welcome. They understand that they are renting a bedroom and the rest is common area. I just need to give notice to enter their bedrooms unless in an emergency. This has never been an issue in the three years I have been running it.

I am looking to duplicate this project when a suitable property comes available and we determine our PPOR upgrade needs - got to get our priorities right

I reckon 5 bedrooms and 5 tenants is a minimum. Anything less is not worth the extra effort and you are better off to rent as a normal home. My 5 share one bathroom with no complaints. There are two seperate toilets - one upstairs and one downstairs in the laundry.

I include a wireless router but leave the students to organise phone and broadband access. I tried to do both in year one and recovering call costs was a nightmare. Some of my students have organised extra lines to their bedrooms in the past so I now have three phone lines if needed.

The key to my management is mutual respect and good humour. I get invites to all their parties (rarely go tho) and have never had any rental issues with late rent etc.

I generally have 60% of students renew for the following year and this is due to their courses having a country component. One guy has been here 3 years now ...

Good luck. If you approach this with your eyes open you should have fun.

I manage these as part of my property management business, although I don't provide management in Victoria, I have put together a brochure for landlords that may be useful for all states, including commonly asked questions, costings etc...

If you email me, I would be happy to send a you a copy (or you can download one from my web site )

Simon said:

I reckon 5 bedrooms and 5 tenants is a minimum. Anything less is not worth the extra effort and you are better off to rent as a normal home.

Click to expand...

Simon has made an important point. When I did my sums for my place and included all the costs involved, 4 bedrooms was about break-even with renting it on a normal single lease unfurnished basis. Therefore no financial gain for a whole lot of extra effort. It took until the fifth bedroom for the calculations to swing in favour of renting furnished by the room.

AWESOME!!! thanks so much. I wondered about internet access, would they be happy with dial up (therefore 5 lines in) or with broadband can one or more be on at the same time. I will find out about this wireless router. I love the part about under 6 tenants I don't have to worry about council regulations. Would you, for safety's sake, put overhead sprinklers in? Do you give them a little fridge in each room or just one big fridge with, say, their name on each shelf. The property I'm thinking of is not in one of your better class suburbs so I would be way better off renting it as student accommodation than one tenant. Thanks again you all, this gives me enough incentive to take another step

Sprinklers will cost you a fortune! If you are really concerned about fire then perhaps a smoke alarm in each room will suffice.

Forget the five phone lines. They cost $200+ each. My wireless router cost $140 and allows all five students to share one broadband connection which they organise and set up. Students today are computer savvy or know someone that is.

I have one big fridge and they manage.

You need to remember that yo uare not running the household for them. They will organise whatever they need. So just supply the fridge and the pantry and they do the rest

Cheers,

Celica,

Please see tenancy requirements under "Rooming House" at
http://www.tuv.org.au/advice/resources.aspx

Also see the Legislation link to the Residential Tenancies Act 1997 on the above link and do a find on "Rooming House".

Cheers,

The Y-man

celica said:

AWESOME!!! thanks so much. I wondered about internet access, would they be happy with dial up (therefore 5 lines in) or with broadband can one or more be on at the same time. I will find out about this wireless router. I love the part about under 6 tenants I don't have to worry about council regulations. Would you, for safety's sake, put overhead sprinklers in? Do you give them a little fridge in each room or just one big fridge with, say, their name on each shelf. The property I'm thinking of is not in one of your better class suburbs so I would be way better off renting it as student accommodation than one tenant. Thanks again you all, this gives me enough incentive to take another step

Click to expand...

One of the issues is that you can not charge utilities separately unless each room is metered (and even then if the room is not shared). This means that

1. you need to build power, gas, phones and water into the rent

2. your estimates may be well under what they actually use (I am not sure how some of my students managed to rack up the bills they did - most likely left taps running all the time and all lights and heaters on 24x7

We made the phones connected so that only prepaid cards (which the tenants purchased) could be used to call out.


Cheers,

The Y-man

The Y-man said:

One of the issues is that you can not charge utilities separately unless each room is metered (and even then if the room is not shared). This means that

1. you need to build power, gas, phones and water into the rent

2. your estimates may be well under what they actually use (I am not sure how some of my students managed to rack up the bills they did - most likely left taps running all the time and all lights and heaters on 24x7

We made the phones connected so that only prepaid cards (which the tenants purchased) could be used to call out.


Cheers,

The Y-man

Click to expand...

My students aren't too bad on elec and water. In fact my wife and daughters use far more water than my five tenants

The elec bill has that neat chart which compares usage to the previous year. I tell them that if it is higher than the same time last year they will pay the difference. So far it hasn't been higher by more than $20 so I haven't enforced this rule.

You cannot charge rent according to what you need to make. You can just charge the market rent for your place. Call around and see what students pay. Check the local uni websites and you should find ads. This is also where you need to advertise.

celica said:

The property I'm thinking of is not in one of your better class suburbs so I would be way better off renting it as student accommodation than one tenant. Thanks again you all, this gives me enough incentive to take another step

Click to expand...

i dont' have student property - but just wanted to check as a matter of course that the property you are looking at is either very close to the uni/large tafe (walking/cycling distance) or on a direct public transport route (and still close). these are essential for student housing to work, otherwise you'd end up with a simple boarding house.

Twitch said:

My costs:
- Purchase $410k (was a 3brx1bth)
- $40 reno to convert to 6x2 and do a few other minor things
- $13 in furnishings

Rent is $740/wk vs. $340/wk which is what it would have fetched on a normal lease in the as-is condition when I bought it.

Click to expand...

Twitch,

Is this IP mentioned above still positively geared after you pay for the bills and lose rent during the holidays?

I have often considered student accom. as an option but when doing my calculations they still come up as being negatively geared, although to a lesser extent.

How much extra per week would you make from this ip as student accom. over normal rental accom. after all of your expenses have been calculated?

Thanks.

Pablo said:

Twitch,

Is this IP mentioned above still positively geared after you pay for the bills and lose rent during the holidays?

I have often considered student accom. as an option but when doing my calculations they still come up as being negatively geared, although to a lesser extent.

How much extra per week would you make from this ip as student accom. over normal rental accom. after all of your expenses have been calculated?

Thanks.

Click to expand...

Pablo,

The demand is very good in the area, so after offering my rooms on 10 month leases the first year and almost getting knocked over with the demand, this year I successfully signed everyone up on 12 month leases. It still didn't seem to reduce demand

However that is still not enough to get it positively geared The shortfall is ~$3k/yr a.t. Still it is much better than a $12k shortfall which is what it would be rented unfurnished.

Renting it as student accom costs me an extra ~$100/wk in utilities, council registration, extra insurance, internet, cleaning and gardening.

When you're considering student accom, make sure you understand where in the market you are pitching it. There are a few tiers; the brand new purpose built tier (o/s students is the main market), the nicely converted old house tier( and lastly the slum tier??). Make sure you know which tier you want to be in and set your rent accordingly, but also make sure you do the reno, and even the furnihishings accordingly.

Don't kid yourself you can get tier 1 rents in tier 2. Don't offer crap furniture in a tier 1 property. etc etc.

In the area I'm in tier 1 is ~$180-250, tier 2 is $100 to $160.


Good luck