From: Keith J
Since the Childers disaster insurance (fire & PL) has sky rocketed, new fire regs for backpackers, hostels, boarding houses etc are being proposed - QLD govt commissioned a report which estimated it would cost the owner between 15K and 250K to implement - check their site - the full report is there somewhere.
Boarding houses usually need an onsite caretaker/manager - you need to find someone reliable, who is a handyman, can handle money, can deal with people & pay them appropriately, usually with free accommodation and a small retainer.
Outgoings are higher, the owner pays gas,elect,insurance, manager, cleaning & cleaing consumables, telephone, grass cutting, commercial (not residential) rates etc etc. So do your figures based on much higher costs. Traditionally, the owner has lived on site and handled all the above.
As you say there returns are good, they should return 12%+. There is no RE manager taking an 8% cut - it's 90% a cash business.
The bottom line is a boarding house is more of a business than your average buy & hold & let the tennant pay your mortgage strategy.