Hi everyone, just thought I’d introduce myself before I ask a question.
I joined here ages ago but have just been upping my knowledge by reading all the old posts. I turned 18 a few months ago but have been interested in property since I was 16, however I feel I’m now ready to actually take action.
I actually work in the Commonwealth Bank so I know a fair bit about financial products and that sort of stuff. My boyfriend is a real estate agent so professionally, we are a good team.Anyway I just finished reading Steve’s new book and came up with a great idea however it may be a bit too ambitious to start off with. I know a great place to invest is where you live however I live in the Campbelltown area (and have lived here my whole life so know the area well) so it is quite difficult to find a positively geared property.
What I was thinking of was buying a 3 or 4 bedroom home and extending it to approx 10-12 rooms. Most rentals around here are at least $150 per week so going with the Problem + Solution = Profit process it would be perfect for uni/tafe students as it can be hard to afford to move out paying that much. With that many rooms the rent could be as low as $90 per week. In terms of it being legal and actually working, my BFs dad has done this and it is in high demand. I was just wondering what everyone’s thoughts were on this. I also thought I could actually move in there as my parents are very unsupportive of my ambitions and are really bringing me down. That way I could also manage the place and save on PM fees.
Should I put more thought into this? Is it too much for my first property? Is it a workable idea?
Sorry for such a long post and I will appreciate all replies.
See the mission’s to get what we don’t got
Until we filthy rich and on top
You betta go get it, it’s yours
The mission’s to get what you don’t got
The struggle it don’t stop until we drop
-Krayzie Bone & Ice CubeHi and Welcome and well done at looking at property investments so early.
Sounds like a great idea, your major hurdles will be
A. Finding an Insurance product for the building that covers a share scenario with this many people. It could be $10,000 +. It is easy enough to get building insurance but when you mention that it will have shared rooms the insurers may baulk. If you don’t include the exact scenario with respect to the shared rooms and there is a fire…..The building won’t be covered and god help you if anyone is killed as your public liability insurance may be waved.
B. Make some anonymous checks with the local council about health inspection requirements for a residential dwelling with that many people.
C. As you probably know, You will have to include the electricity and gas in their rent unless you individually meter each resident. This was a major factor in my shared accomodation houses losing money.
I have tried uni accomodation for the last year with 3 bedroom houses with no more than 4 people per house. (as this falls outside of the extra requirements of insurers, councils and the residential tenancies act)
Do your research and Good Luck.[biggrin]
Live, Learn and GrowLifexperience
Hiya,
Sounds like a Shark bite, rather than a little nibble. Perhaps start off with a nibble and then when you’ve got a few smaller deals under your belt go for the larger fish.
I’m concerned as to the type of tenant you might attract. I know that sort of accomodation has worked well in Melbourne for certain situations, but sounds like almost a ‘backpacker’ type set up.
Or have I got this wrong?
Curious
SooshieWhen a problem is created the solution is created simultaneously
“I was thinking of was buying a 3 or 4 bedroom home and extending it to approx 10-12 rooms.”
This will require a bit more effort than just adding an extra room – you will probably have to DA approval from the council for construction, also with the number of people you are hoping to get you probably have to ensure that you follow council regulations in regards to accom. and also insurance will be expensive. Also yu might have on-going issues with neighbours/residents (if you have that many people staying there) -this equals complaints with council, which equals council inspections increasing.
Do your figures on this, but even better advice would be to start of alot smaller.
Rgds.
Lucifer_auHi,
Thanks for the replies. I understand it would be a lot of work and I have already written down all problems that could occur as well as possible solutions.
lifeX: In terms of insurance, I can get a discount on that although it will still be expensive. How did you find the IPs with uni students? Was it very successful?
Sooshie: The kind of tenants would preferably be uni/tafe students with good history of part-time employment. There are quite a few international students here that prefer not to live at on-campus accomodation. Ideally the lease would be for at least an entire semester.
Lucifer_au: I understand that getting council approval and keeping with regulations may be difficult however it is possible as my BFs dad started with a 4 bedroom house and extended it to 13 bedrooms. I will be talking to him in-depth about this.
Once again, thanks for the replies. I think it may be best to start off a bit smaller but I am intending to look into it completely as I know it would work with a lot of effort. I’m thinking of maybe investing in inner-city apartments to start off with or maybe even in rural areas but I will be keeping my options open. Any other advice would be much appreciated.
Hopefully soon I too will be able to make some great contributions to this board
See the mission’s to get what we don’t got
Until we filthy rich and on top
You betta go get it, it’s yours
The mission’s to get what you don’t got
The struggle it don’t stop until we drop
-Krayzie Bone & Ice CubeI found that when all the room were full, you have great positive cashflow and also get benefit of any property price rises. Seems at face value to be the ideal scenario.
I found that it was a huge amount of work due to a few things.
1. Many more tenants mean many more vacancies. Which means many more applicants to find and process and mucho paperwork. Make sure you have automatic payments
2. Lots of students go home for summer holidays so your actual vacancies are higher. So you may have to hold their room for months with little or no rent.
3. Furnishings…..what a nightmare I had buying second hand stuff and moving it in. Fridges, Beds, wardrobes, washing machines, I also did linen and kitchen utensils. More Time and money.
4. It is very difficult to put quiet students (exchange kids) in the same house as party animal students. I devised a personality quiz to evaluate their temperments. P.M. me if you want a copy.
5. Share houses have many dynamics and it doesn’t take much to throw it all out of balance…..which then takes up more time.I had additional house rules tied to lease which protected peace and privacy of all tenants. PM me if you want a copy.
6. Electricity Bills ….eeeeeeeeeeek.
I do live 2 hours drive from my properties, so the time for me was taken up with travel and petrol money.
At the end of the day, I had hoped to grow a huge business out of this but found that the extra time and money drain restricted me in setting up multiple properties.
Now I am focused on doing property deals that don’t require as much time.I have heaps of info, PM me with email address and I will send you all I have, and hopefully you will build a better business out of it.[
]
Live, Learn and GrowLifexperience
Hi Until_we_rich,
I’m also quite young starting out in the property market (although, no one is ever too young!)
I bought my first home with my partner 7 months ago and will be 18 next month.Although I haven’t really thought about your idea before, I agree with the other guys about, a) the type of people you will attract in a shared accomm environment, where you will have to consider bonds and liabilities, and (b) starting out young, this idea may be too full-on to start with, especially financially..(and if you are unable to fall back on your parents for support)
Have you thought about: if you extend to 10-12 rooms, you will also have to extend the living areas, and add extra bathrooms. (could be costy)
It may just be, you would be safer investing in a block of apartments.Your idea is very creative, though. Good luck with your progress[suave2]
Regards,
Beth MacLeod
[email protected]
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