20 Room Ex Hotel

[Elliotte]

I'm in over my head at the moment and would love to know who I could talk to for a bit of advice before I should even consider a project I've been offered. It's a 20+ room ex hotel turned boarding house that has been abandoned since 2007. Squatters have been in parts. Built in 1929 with some rooms still existing wall paper! The new owner of the building is giving me first dibs on an offer to lease it and getting it open again as my own business as boarding house again.

All I can think is it feels a bit like The Block Sky High just with ME as the only contestant and resource for now. I've not undertaken the sort of repairs this place might need - probably new bathrooms, new kitchen, all carpets and painting done and some repairs along with who knows what wiring and plumbing and fire safety jazz. I am only really interested if I don't have to do a DA for the thing or make any real structural changes and if it fits into the existing permitted use. Feels like it could be a money pit if I'm not careful.

Anyway where could I get advice on what proportion of the repairs and renos I fund or if there is any kind of standard for this sort of thing? Owner says he's negotiable on who contributes what as far as that goes, also as far as how much time I can try and get rent free to get it up and going and of course on how much I offer to lease the place for. So everything is up for grabs.

Anyway, any idea, suggestions, starting points would help. And yes, if it's too much for me I'm perhaps able to offer it to someone else here who may even want to buy it eventually - current owner is only in it to strata the whole block he bought, increase all the yields and then move on while selling parts of it.

 

[wylie]

Owner says he's negotiable on who contributes what as far as that goes, also as far as how much time I can try and get rent free to get it up and going and of course on how much I offer to lease the place for. So everything is up for grabs.

I know nothing about this, but this bit rang alarm bells when I read your post. Surely you would not want to spend anything on this without some sort of guarantee of being repaid for your time and labour.

What if you spend money doing it up and he sells it from beneath you to someone who doesn't want you leasing the place?

I'm sure you would have all this covered, but it just sounds dubious to me.

 

[jrc]

If it has not been used as a boarding house for several years you might not be covered under existing use rights if the current zoning does not permit boarding houses

 

[Elliotte]

True about the outlay of cost to fix it up - which is why I don't really want to do any of the repair stuff or set up. Happy to lease it, pay a good monthly cost and outgoings but don't want to do much else. But he would prefer I pay lower monthly cost or get a longish amount of time rent free, but do the hard work and then try and shove clauses in the contract that says any of the fixing up needs to be paid back if lease ends before negotiated date or whatnot. More risk my way and none really his way in that case. I want no work and no risk my way ha! That's kind of the standoff we both have at the moment.

I also agree about the gap in time. I have one other place that we got away with it although had been empty a few years was still on the council books as boarding house and fire safety had been kept up to date so when I picked up the business we snuck in under continued use. But this one would be stretching it!

It's probably more suited to someone to buy it I think once it's strata and separate from the car parks, shops, offices, fish market and dog knows what else underneath, then whoever buys it could spend their money making into a hotel again perhaps or go for a DA even to make it into apartments or an entire new use. My sisters view was just gut the place and go for a nightclub thanks to the awesome roof top and my Dad was just excited he found some 1950's girly calendar. He was opposite to my sister - all it needed according to him was a clean and some light bulbs.

I think it would be a fortune even to get it back to student standards. Carpeting and painting 1000m2 alone would be what $50K? And that's if everything else was okay.

 

[Scott No Mates]

Bit of a scary task for a novice to refurbishing something of this nature but it depends upon how deep your pockets are or the deal you strike with the owner for capital (preferably theirs not yours).

Firstly, you need to confirm whether there are existing use rights (they generally expire 3 years or so after the last use).

Need to confirm zoning - no point in progressing further if you don't have use rights or zoning which allows you to continue using the building as is.

As it has been vacant for 6 years, what are the BCA compliance issues in regards to fire safety (smoke detectors in each room, thermal detectors, exit/emergency lighting, fire doors, paths of egress, fire exits etc).

What issues are there in regards to the provision of facilities? Do the units have cooking facilities, bathrooms (or shared amenities)?

Parking - does the property comply with the requirements for the provision of parking as per the code?

A town planner can go part of the way to addressing some of the issues, an architect to address some of the others, a private certifier (possibly) to address other matters.

 

[chindonly]

Looked at a similar project just recently.

Changing a small aged care home (about 45 beds) into apartments.

Was going to cost a great deal to complete, and there were multiple zoning and DA issues.

I wouldn't even consider it unless I owned it. You will need very deep pockets, and a detailed DD.

Run away if you are not experienced in similar sized developments, or have a very good team around you that you can trust.