I have a quick question and would be greatly appreciated for any answers and opinions.
I was talking with a real esate agent today about a market appraisal on my house. I asked him if he invested in property himself as a passing question and he answered that he was trying to start a development near a university that catered specifically for student accomodation. It sounded interesting until he mentioned that it wasn’t possible for him to do it because of council regulations. So in order to get around this have it built like a house with 6-8 rooms and toilets and bathrooms for each room. He would then lease it to a ‘mate’ and he could then sub lease it with seperate leases for each room.
I was just wondering is it an above board thing, (another way to skin a cat…) or is it on the dodgey side of things? If anyone could help answer this question that would be great. If it is dodgey it gives me a good indication into the type of person I’ve been speaking with…
Cheers.Globe,
sounds like you already have the answer, where you say
“until he mentioned that it wasn’t possible for him to do it because of council regulations”
one question – don’t council make the rules regarding occupancy / use of dwellings?
cheers
EastcoastHowdy.
I ran across a situation similar to this in a small NSW city last year. Someone was selling a place (a 6 bedder, I think) near the university there and was advertising it as having the potential for +ve cashflow returns. I took a look at the place out of interest and I have to say that alarm bells were ringing from the minute I walked in.
The place looked good. It was new, had all the mod cons built in, two bathrooms, broadband internet potential in every room, etc. However, I started wondering about how you would find insurance for such a place. And that led me to think about whether or not it was legal to run what was essentially a boarding house in the area.
Anyway, I called the Council and (without giving the specific address of the place away) asked them what the skinny was. The planning officer told me that the zoning of the area didn’t allow for boarding houses but that the Council was aware that, with a heavy student population in the area, people did run this kind of operation by sub-letting (a-la your real estate guy). I got the feeling that strictly speaking it was illegal but that a blind eye was turned for the most part.
I spoke to a RE agent who said that she could let it to one person for a bucket of cash and leave it up to them (the lease holder) as to how they recouped their money (ie sub-letting to other students). To me it just seemed like way too much of a legal grey area headache to get what was potentially a very modest cashflow return. And what if, god forbid, there was a fire? Would the place be covered by insurance? And what if Council got tough and changed some by-law out from under me?
Anyway, good luck to your real estate guy…I think he’s going to need it. That and a bunch of headache medicine.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
I have the same concerns as Art. What if there was a fire or similar and someone was killed. The owner would be sued, and the insurance probably wouldn’t cover this sort of thing.
Terryw
Discover Home Loans
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All of the above are good points. I know that some councils have rules that residence with more than 5 occupants are classed as bording houses.
So my understanding is that if you have a four or five bedroom house it could be very legal.
Talk to the relevant council and find out. Also talk to the insurance company to ensure that you are covered.
Remember Problem + Solution = Profit
Which state do you live in?
Sean Mulligan
NE Sales Consultant
Otis Elevator Company Pty Ltd
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