licensed rooming house

[MelbInvester]

Hi all,

anyone invest in licensed rooming house? There is a property got 7 rooms and 7% return of Income. But not sure what are the rules and regulation for these type of investments?

This is closer to the University in Melbourne.

MI

 

[Chilli]

For a lic rooming house, I think 7% gross return is very low. I would not look at anything less than 10-12% gross if not more.
Not sure ab rules and regs in Mel but in Bris they are different depending on whether the the house is strictly for students or not. Easier rules for student accommodations. Diffucult and costly for general rooming ones and most of the time you are dealing with "special kinds' of clientele, not for the faint-hearted.

 

[Peter_Tersteeg]

Finance would generally be considered commercial, so you're likely to pay almost 7% interest.

I also agree, 7% yield is quite low. Operating a rooming house is more akin to running a business than owning an investment. At 7% yield you're not making anywhere near enough for it to be profitable.

 

[MelbInvester]

Hi all,

This Property is 650sqm and in a good suburb with the Median of 850K
So future i can knocked down and build the new house.

In this case i thought getting 7% is bones compared to buying in this location?

So Bank will treat this as commercial?

MI

 

[Peter_Tersteeg]

If the valuation notes that it's a rooming house, most lenders will simply reject the application and suggest you look at commercial funding.

Most commercial funders probably wouldn't be too interested in it either because its (probably) residential zoning. There are some ways that might work to get it done via residential lending, but they're tricky and unreliable.

Why is the current owner selling?

 

[lily11]

Has got covenant on the title.

 

[Chilli]

I am on 5.15% comm loan with NAB currently, not too bad rate I think, if you can't get resi loans. They do do lic rooming.

 

[Foxy Mop]

Hey
Regs will likely be under the local council

I've taken a punt that you are near Brunswick, and would be covered under the Moreland Council.

Took me 2 mins to search - Here's a starting point

http://www.moreland.vic.gov.au/heal...-health-services/boarding-rooming-houses.html

Best of luck

 

[HeadsOnBeds]

I am on 5.15% comm loan with NAB currently, not too bad rate I think, if you can't get resi loans. They do do lic rooming.

Chilli what sort of property is that.
Is it resi backed. Sounds like a very good rate for commercial.

 

[Chilli]

Chilli what sort of property is that.
Is it resi backed. Sounds like a very good rate for commercial.

Hi HeadsOnBeds,
Lic boarding houses, 70% lend but I think the valuation is a bit on the low side.
No, not resi backed, loans are not crossed.

 

[HeadsOnBeds]

Hi HeadsOnBeds,
Lic boarding houses, 70% lend but I think the valuation is a bit on the low side.
No, not resi backed, loans are not crossed.

Thanks Chilli. Time to go back to my bank. I'm the same figures as you just not that great rate! Is it a normal business loan or something else?

 

[Chilli]

I think it is a normal loan for commercial IPs, not a "business" loan.