renovating into a backpackers

[Truly Exotic]

So I'm currently staying in backpackers with some friends and it's absolutely packed due to the season

And in a drunken state I've done a few calculations On excel

Has anybody actually bought a property and converted into a backpackers?

The way I see it building one from scratch would be too expensive so my guess would be to buy a old house that has a good layout so that you can a few rooms and alterations to get the best possible use of space

Based on 60% occupancy throughout the year the returns seem very good

Obviously the cost would be far higher then a standard build Eg insurances, security keys, larger kitchens, fit out, licenses etc

Just brainstorming at this stage
If its a viable model then I'm sure it can be replicated around the country and possibly overseas

 

[Elliotte]

I'm not sure you'd have a hope in hell of meeting current standards in an existing house. Or getting the neighbours to agree or the zoning right. I did try once to get council to approve an old medical centre/illegal brothel into a guesthouse and lost a bit of money. Scared me off for good. I only look at places that have current approval. Or I'd build one from scratch. Although the standards keep changing. I've spent $25K this week on my legal boarding house which I run as more a guesthouse/backpacker place to meet council requests and soon to spend another $25K. And even then the fire brigade has come through, disagreed with council and I might be getting another round of requests. Insurance for me is 7.5K a year. Management costs, admin, linen, cleaners (even guests working free are a pain and need supervising)...some days I feel like I just bleed money to everyone and their dog. I'd question the 60% occupancy figure - could be more or less or change dramatically during the year - each area would be different.

Not to mention things you probably haven't heard of - like Qld introducing inspections and huge fines for breaches in new bunk bed standards. Other states may follow. You pay for the Australian Standard Manual thingo and find your head explode with requirements for types of mattresses, bunks, fixings, mattress protector laws blah blah blah - in some ways what I've seen backpacker requirements are even worse than boarding house. Plus each council can have their own.

From what I have seen the more cash only, illegal or unsafe you are the more money there is. Every step towards getting legal and safe and being totally transparent leaves you with less money until many of these places just close down. Or people go rouge and set up illegal places.