The Interview #13
- Thread starter Ruby
- Start date
thanks ozperp, i found it very interesting too, but where do your students get the 175 p/w??? must be working pretty hard
I dunno - I'm expecting to do pretty well
Nothing like naivete... once you're in the bottom of a huge hole there's nothing to do but try and climb out!
There are really three, soon to be five. 1) The living area. 2) The deck has a table and 6 chairs, too. 3) The downstairs courtyard is quite pleasant and has two tables and 12 chairs, so people chill there quite a bit, too. 4) If you've looked at the satellite, you'll see there's quite a large shed at the rear. That had previously been a bedroom and I was planning to use it as same, but neighbours objected and it wasn't legal. So I'm turning that into a recreation room, putting in a coin-operated foosball and vending machine (more income), and some chairs etc. 5) And I'm installing artificial grass between the shed and the main building, and putting in a couple of outdoor settings, shade sails, pot plants and a BBQ. So they are doing OK now for common areas, and soon will be spoilt for choice.
Thank you, Mike F. No, none of my tenants have cars. There is a rear access lane and room for about 3 or 4 cars, but at the advice of the PM I'm not allowing any tenants to park their cars on premises. So no, no car parking is offered. Nobody's asked yet, which surprised me, too. I guess we're targeting the market that wants to live in the city, and they mainly want to live there because they don't have cars and want to be able to walk everywhere.
I haven't measured it! Sounds about right though, it's a bit under 400m2 and it's much longer than wide.
Is Enfield likely to be a good location for students? From what I remember of Adelaide I wouldn't have thought it was that desirable, ie not right near a uni (though this could have changed in the 20 years since I've lived in Adelaide!). This strategy primarily worked in my case because Spring Hill is the #1 desired suburb amongst foreign students. Oh, yes, and it's very difficult to get town planning approvals, too - in my case, the "material change of use" DA was already in place. But if it is an area students would want to live in, definitely worth investigating.It's giving me ideas on Enfield!
I have weekly cleaners, so far the kitchens have come up OK. I've put in heaps of rice cookers, gas burners and woks, etc, so hopefully they're happy.
Yes, spending about $25K at Ikea I naively asked if I could have a bulk discount. They said "sure, we offer discounts which cut in at $250K."
Apparently even $100K orders are any everyday occurence for Ikea! And also shows what tiny margins they're working on - even at $250K I think they're only offering a couple of percent.Hey, I think it's bordering on robbery too, but turns out that's way cheap in Brisbane. We're actually offering a discount this semester because there are a few works still incomplete. The PM reckons we can go to at least $195 in June.
Last edited:
Hi Tracey,
Very informative interview and follow-up posts (as always). Inspirational stuff for someone “back a few steps on the PI journey” to see what can be achieved.
Look forward to hearing more successes in the future!
Thanks also to Ruby for coordinating the interview. I enjoy them all and have most bookmarked in my follow-up reading favourites.
Cheers,
Horizon
Very informative interview and follow-up posts (as always). Inspirational stuff for someone “back a few steps on the PI journey” to see what can be achieved.
Look forward to hearing more successes in the future!
Thanks also to Ruby for coordinating the interview. I enjoy them all and have most bookmarked in my follow-up reading favourites.
Cheers,
Horizon
Thanks for that Tracey.
I thought about this for the first time last month, and the more I think about it - the location seems pretty good to me.
I'm sent a PM who specializes in student rentals a PM about the location, so will see what they say.It's 6km from the CBD where the major Uni's are and about 5km from Mawson Lakes campus in the other direction. It's about a 2 min. walk to Main North Rd which has buses in both directions every 15min (about 20min travel time to CBD), and very close to fast food, supermarket, public library etc.
I've drawn up some rough plans this arvo and the site looks suitable for 2 large houses side by side each with 8 bedrooms and 2 bathrooms (total of 4 showers & 4 toilets per house), large common area indoors and a good sized rear courtyard. There would also be potentially room for 6 cars in the front (2 of which in gge.)
I've also got a council planner calling me back with any issues they may have with the idea, but he seemed quite positive. He said to me basically as far as council were concerned it would just be 2 standard houses being built. But he's offered to look into it all the same. I have noticed there is student accomodation in Northfield which is an even less convenient location compared to Enfield - so I'm quite confident.
I thought about this for the first time last month, and the more I think about it - the location seems pretty good to me.
I'm sent a PM who specializes in student rentals a PM about the location, so will see what they say.It's 6km from the CBD where the major Uni's are and about 5km from Mawson Lakes campus in the other direction. It's about a 2 min. walk to Main North Rd which has buses in both directions every 15min (about 20min travel time to CBD), and very close to fast food, supermarket, public library etc.
I've drawn up some rough plans this arvo and the site looks suitable for 2 large houses side by side each with 8 bedrooms and 2 bathrooms (total of 4 showers & 4 toilets per house), large common area indoors and a good sized rear courtyard. There would also be potentially room for 6 cars in the front (2 of which in gge.)
I've also got a council planner calling me back with any issues they may have with the idea, but he seemed quite positive. He said to me basically as far as council were concerned it would just be 2 standard houses being built. But he's offered to look into it all the same. I have noticed there is student accomodation in Northfield which is an even less convenient location compared to Enfield - so I'm quite confident.
Thanks, kaf, skater, Horizon (Sean), for your kind words. And Steve, you may be on a winner; with the buses handy Enfield may be a better location than I'd originally thought. Good luck!
The costs of running this place are certainly higher than with a normal rental. My annual costs are approximately:
property management $15K (when full; flat 10% but NO extras)
insurances $5K
electricity and gas $2K (I only pay for the common areas' electricity; each room is individually metered because of the air-con and tenants pay that)
Foxtel/phones/internet/VoIP $12K
weekly cleaning $6K
fire system maintenance $1K
repairs $8K (est)
land tax and rates $10K
total: $59K
I have 16 rooms, gross rental income $150-165K pa. (Two rooms are doubles). And I also have income from the coin-operated dryers (?$4K pa) and the vending machines (?$2K pa).
And my depreciation deductions are just HUGE the first few years; I've got depreciator on the J-O-B. I wouldn't be surprised if, after financing costs, we make a paper loss of perhaps $100K.
Being in a DT we unfortunately can't offset this against hubby's PAYG income, but this does allow the DT to earn $100K tax-free, which should happen over the next year or two.Thanks for the costing info. Tracey, that's brilliant!
What sort of vacancies do you experience? ie. with that many rooms, is it rare to have them all filled at once?
Also, in your income estimations - how many weeks per year do you calculate there being tenants? And do you forecast vacancies? eg. on average 15/18 rooms full and 40 weeks per year etc?
In my projections so far I have been budgeting full occupancy of 18 rooms, but only for 40 weeks of the year, and completely empty for the other 3 months? (I can't remember how Uni years work, so I just went by school terms - am I being too conservative?)
What sort of vacancies do you experience? ie. with that many rooms, is it rare to have them all filled at once?
Also, in your income estimations - how many weeks per year do you calculate there being tenants? And do you forecast vacancies? eg. on average 15/18 rooms full and 40 weeks per year etc?
In my projections so far I have been budgeting full occupancy of 18 rooms, but only for 40 weeks of the year, and completely empty for the other 3 months? (I can't remember how Uni years work, so I just went by school terms - am I being too conservative?)
It depends what demand is for this accommodation. In Brisbane, demand is high, so we can somewhat dictate the terms. And our terms are that regardless of when you move in, you must be on a fixed-term lease ending in late June or late January - ie the two times of year when it's easiest to re-let. My PMs manage a number of student accommodations and average > 98% occupancy over their whole pool by using this policy.
This is my first whole semester, so it's hard to say, but I wouldn't be surprised if we're close to full from here on in. The 13 rooms that were ready for the start of the year filled up in about 2 weeks at the beginning of February. The 3 rooms still to be let (the attic rooms) weren't available until this week because I was waiting on a retrospective BA (more neighbour's complaints
), so I don't know how much trouble I'll have filling those now that the busiest period is over. The PM still has people visiting for OFIs so hopefully they'll fill up within a week.So in summary: don't let people come and go as suits them; have them on fixed-term leases only, and they have to end at times that make it easy for you to re-let. If the market is not strong enough that you can impose these conditions, you're obviously going to have a higher vacancy rate.
OP, is your PM figure inclusive of letting fee?
I looked at a boarding house a couple of years ago and the insurance, fire levy, and onsite manager killed the bottom line, in addition to the higher turnover pushing letting fees through the roof.
I looked at a boarding house a couple of years ago and the insurance, fire levy, and onsite manager killed the bottom line, in addition to the higher turnover pushing letting fees through the roof.
Sorry, doesn't include letting fee. I meant no postage & petties, or all those other things that some agents charge. But their letting fee is reduced - it's a flat and very reasonable $50. And we have minimum 4 month leases, though 5 or 7 is the goal (ie Jun to Jan, or Jan to Jun). But if they didn't move in until Feb, they have a 4 month lease to Jun.
My property is not classified as a boarding house and I'm not a registered residential services accommodation provider; my tenants are on standard REIQ leases, which has both advantages and disadvantages.
In QLD, if you have more than 4 tenants on separate leases you must be registered unless you fall into an exempt category; students being one of those exemptions. This gave me the option to choose, and I chose not to be registered, in which case my property is considered a "large share house" rather than a boarding house.
If you are a boarding house the fire safety is much more expensive, there is much more compliance overhead, you generally have more tenant problems, and you have higher default rates. But on the positive side, it's easier to evict people (ie once they're 48 hours overdue with rent).
ahhh ok ..... was wondering how you got your fire levy so low.
so how do you do the rent? how many weeks in advance?
so how do you do the rent? how many weeks in advance?
Thanks for sharing
Thanks for sharing Tracey,
I enjoyed the read. The majority of these interviews have a few things in common, but one of the main things I get out of them is, despite set-backs etc, everyone involved seems to still take it on the chin and move forward. Good experiences for beginners like myself.
Cheers Tracy,
Phil.
Thanks for sharing Tracey,
I enjoyed the read. The majority of these interviews have a few things in common, but one of the main things I get out of them is, despite set-backs etc, everyone involved seems to still take it on the chin and move forward. Good experiences for beginners like myself.
Cheers Tracy,
Phil.
Hi Tracy
Just read your interview and comments. Wow. I'd love to try again at meeting you if you have time. My wife and I are currently members of the BIG (Better Investors Group) who meet monthly at Salisbury.
I currently spend my time on our property investments and we are currently looking at the student accommodation area for our next investment.
Regards, Neil
Just read your interview and comments. Wow. I'd love to try again at meeting you if you have time. My wife and I are currently members of the BIG (Better Investors Group) who meet monthly at Salisbury.
I currently spend my time on our property investments and we are currently looking at the student accommodation area for our next investment.
Regards, Neil
Top read. Thanks Tracey for sharing. Kudos to you.
Did you have many objections while applying for the redelopment? What were they? What were the problematic ones?
Does the property require any special permit (or land use?):
- To be used as a large share house?
- To have multiple kitchens?
- To have multiple toilets & showers?
- To use Commercial-like in a residential zone?
- On-street / off-street parking requirement?
- Anything else?
Apart from construction work, what is required to turn a normal Residential 1 Zone property into a student accom house like yours?
Thanks
Did you have many objections while applying for the redelopment? What were they? What were the problematic ones?
Does the property require any special permit (or land use?):
- To be used as a large share house?
- To have multiple kitchens?
- To have multiple toilets & showers?
- To use Commercial-like in a residential zone?
- On-street / off-street parking requirement?
- Anything else?
Apart from construction work, what is required to turn a normal Residential 1 Zone property into a student accom house like yours?
Thanks
Last edited:
