Thanks for your reply, everyone!
A lot depends on the quality and types of the tenants.
Is it student or traveller based or for those on govt pensions etc?
It got a mixed type of tenants. A couple of pensioners and several young people. However, no student. The selling agent told me it has a very low turnover rate at 2 or 3 move in/out per year.
This boarding house currently contains 10 rooms and 4 self-contained unit at the back. However, the size of rooms are quite small, most between 9-10sqm. Some rooms can only fit in a single bed and another one or two small furnitures. The interiors including fixture and fitting are all in an old state. It only has a call-in only telephone and no Internet connection.
I've got a licenced 6 room share house. It is great for cash flow but it has numerious downsides as I've listed above.
Great helps!Twitch.
The boarding house has a residential 2C zoning and both neighbouring property are 3-story unit complex. (However, even with the 2C zoning, council only allows a maximum floor space ratio at 0.5:1 which seems no difference with a 2A zoning
Quite surprising the boarding house is managed by the same selling agent who only requires a 5.5% GST incl. management fee.
But the figure looks not so attractive. It shows a gross annual return at 7% and the figure will be reduced to 6% if the outgoings (council, water, electricity and insurance) are deducted. Considering the agent management fee and other maintenance/repair cost the nett return will be below 5.5%. I heard some boarding houses can get as much as 10% gross return.
The only plus is it has an approved DA to demolish the existing 4 self-contained unit and then rebuild a two-story 9 self-contained unit. That could increase the future return.
It's a business not a passive investment.
Yes. unless we pay extra to get it managed by agents.
Martin, use the search feature. This has been discussed many times before.
I searched the forum and found several threads are quite useful! thanks!
