Best way to market/sell a high yield investment property?

[Bullbear]

We have an unusually high yielding investment property that we wish to sell. Reason for selling is because we will soon be moving to NSW and need to buy there. I'm posting this here for advice on the best approach to achieve the right value for the property - given that it is unusual. Here's an overview.

It's a regular (modern) 5 bedroom house in a regular residential street in a fast developing area in Queensland. We used to rent it out at $590/week. But for the past two years we have rented it out at around $1,080 per week, with close to 100% occupancy. How did we achieve this appreciation? We turned it into a student house and rented it out by-the-room. Since it's within a 5 minute walk to a university, it seemed a logical way to increase the yield. And I have to say, it's worked a treat. The breakdown is below;

$56,000 gross income per year
$12,800 total outgoings (not including mortgage repayments)

Other houses in the same street sell between $600,000 to $850,000, but (and this is a big but) - they don't return anywhere near what we get.

My question; based on these numbers, what do you think the property should be worth? And who should we contact to market it?

 

[geoffw]

My question is- is this legal in Queensland? Or is it legally registered as a boarding house with all associated controls?

 

[superAndrew]

Other houses in the same street sell between $600,000 to $850,000, but (and this is a big but) - they don't return anywhere near what we get.

Would the other houses on the same street return the same if they were rented out by the room like yours?

Cheers
Andrew

 

[Bullbear]

My question is- is this legal in Queensland? Or is it legally registered as a boarding house with all associated controls?

Fair question geoffw. We called and checked with council before setting it up, so I would say yes. The other authority here is the RTA - not to be confused with the NSW RTA. They also had it covered under 'rooming accommodation'. So again, yes. If that ever changed, we'd revert back to regular residential obviously.

 

[thatbum]

I don't really see it being worth more than the equivalent "normal" residential house.

"Checking" with the council doesn't seem like any formal approval process that I know of.

 

[Bullbear]

Would the other houses on the same street return the same if they were rented out by the room like yours?

Hey Andrew. They possibly could, but we also added a room (so it's 6 now) and did a lot of research on what was required to attract and retain students in the house. It's not as simple as just placing an ad and they coming flooding in. We worked out exactly what they wanted, that wasn't being offered elsewhere, then delivered that. But yes, it's possible - though nobody else is doing it that we've discovered so far. So we do have a bit if a niche.

 

[Propertunity]

I don't really see it being worth more than the equivalent "normal" residential house.
"Checking" with the council doesn't seem like any formal approval process that I know of.

^ ^ what he said.

Bear in mind too, that most student accom property is considered a commercial lend rather than a resi lend - so this will wipe out a large % pool of your buyers.

 

[HeadsOnBeds]

Pretty sure 5 or more unrelated parties means you've got yourself an illegal rooming accom premises. Watch yourself, insurance may be a big problem and a lack of fire regs is another very concerning area.

 

[nhg]

^ ^ what he said.

Bear in mind too, that most student accom property is considered a commercial lend rather than a resi lend - so this will wipe out a large % pool of your buyers.

Again. Is it an automised process or will the new owner have to self manage?

No reason why they wouldn't just buy any house down the road and rent it out in the same fashion.

 

[superAndrew]

Hey Andrew. They possibly could, but we also added a room (so it's 6 now) and did a lot of research on what was required to attract and retain students in the house. It's not as simple as just placing an ad and they coming flooding in. We worked out exactly what they wanted, that wasn't being offered elsewhere, then delivered that. But yes, it's possible - though nobody else is doing it that we've discovered so far. So we do have a bit if a niche.

If you are targeting investors then you can definitely use the income aspect to ask for a higher price. Especially if you have +6 month leases or more in place.

Andrew