When I think of “rooming houses” in Melbourne I picture massive run down Victoria-era houses, with lean-tos tacked onto the sides and verandas filled in to create more bedrooms. But it turns out new rooming houses are actually being built around Melbourne, and look almost indistinguishable from the townhouses next door.
Development in the south-eastern suburb of Clayton has been intensifying, thanks to the thousands of students studying at the nearby Monash University campus.
Looks like a normal pair of townhouses, doesn’t it?
But the real estate agent’s blurb suggests otherwise.
Great investment opportunity is now available for astute investor, who is looking for secure and huge rental cash flow (8 bedroom, 8 bathroom, 2 living area), also come with land size of 360sqm approx which is perfect for student accommodation/doctors or nurses who are working nearby or Airbnb. This north facing spacious double storey residence situated within walking distance to Monash University, Monash Medical Centre, Clayton Train Station, local schools & parklands, bus stops, Clayton shopping district, Clayton Community Centre and only minutes away from Chadstone Shopping Centre.
As you walk into this fabulous architecturally designed home (Class 1B – Boarding house) with high ceilings(2.7 meters on ground floor), the flowing floor plan will lead you to the elegant open living room, plus huge modern open kitchen(with 8 bar fridge space, and 8 separate cupboards for each room) and dining area, 4 spacious bedrooms with built-in-robes, 3 rooms come with ensuite, plus disable bathroom. 4 more bedrooms with BIR (3 of rooms with ensuite) plus retreat area upstairs. Spacious outdoor area is perfect for entertainment with friends.
Just count them all – 8 bedroom and 8 bathrooms!
This example from Clayton has two “townhouses” on the block.
Which contain a total of 17 bedrooms.
High returning properties at $186,600 pa approx.
Unit 1: rent @ $100,560
Unit 2: rent @ $86,040Located in the proposed growth zone RGZ3 these modern rooming house registered townhouses are perfect for an investor seeking an amazing cash flow near one of Australia’s largest educational institution Monash University.
Townhouse 1- Offers 9 bedrooms and 6 bathrooms, entry hall, large kitchen and meals area with gas cook top leading to rear courtyard and lock up garage.
Townhouse 2- Offers 8 bedrooms and 4 bathrooms, entry hall with floating floors, modern kitchen with a huge meals area, separate laundry, courtyard and lock up garage.
Though this time around, some residents will have to share bathrooms.
I found a similar looking “townhouse” over in Oakleigh East.
“Only” eight bedrooms and five bathrooms this time around.
The same applies at this block of six townhouses, that provide 29 bedrooms across the development.
This 6 year old block of 6 subdivided townhouses (29 bedrooms) stands alone!
These low maintenance homes have relevant ‘Class 1B Rooming House’ permits and have been modified to suit the strict regulations. The real kicker for investors who may consider purchasing the entire block is the returns with a combined total income of approximately $283,000 per annum making this entire development a business in itself. They are being sold with all associated furniture, bedding and appliances that a student needs to get started.
All townhouses feature a kitchen with stainless steel appliances and stone benchtops, tiled meals area plus a laundry, single garage, ducted heating, a private courtyard and coin operated communal laundry facility onsite.
The 4 street front townhouses are of similar design boasting 4 bedrooms including 2 upstairs rooms with walk in wardrobes and ensuite as well as a bathroom and toilet downstairs. The 2 rear townhouses are larger and feature 5 and 6 bedrooms plus an ensuite, and 2 bathrooms. (Unit 5 boasts a double garage)
Finally, I found this bizarre looking “house” fronting onto Dandenong Road, Clayton.
Once an ordinary quadruple fronted 1950s brick veneer house, a massive flat roofed cement sheet clad box has been plopped onto the top.
Giving a total of 12 studio apartments – seven in the upstairs addition.
And five in the converted house downstairs.
Creating quite a money earner.
The home has been converted to 12 studio apartments of which most have already been renovated and several are also already leased with potential rental return of over $120,000-00 per annum once fully leased.
PLUS the potential to further develop the rear backyard – facing Parker Street into more accommodation/ Town houses with own street frontage.
OR take advantage of the corner allotment as well as this excellent location and re develop the entire site into apartments. Proposed GRZ6 zoning.
And something more ‘institutional’
Over in Footscray I found this less homely looking rooming house.
Featuring 12 bedrooms with private courtyards, sharing three bathrooms.
And a business I hadn’t thought of
This house in Brunswick doesn’t look that weird from the outside.
But inside – 12 bedrooms and 5 bathrooms, with two of them in the garage?
Turns out it was once a corporate ‘guest house’, with rooms rented out to companies needing to accommodate travelling employees for stays of 28 days and up. As for the garage bathrooms – they served a gymnasium next door.
Looking at the sums
I got this advertisement on Facebook the other day – it looks like a normal house, but is actually a nine bedroom rooming house.
Each bedroom has a private ensuite and kitchenette, opening out onto a private courtyard.
Four bedrooms and a kitchen on the ground floor.
And five bedroom on the second floor.
The property developer’s pitch.
💸 9 Studio Rooming House Package 💸
One Property. 9 Incomes.
Capitalise without the subdivisional costs of 9 separate units with positively geared maximum returns of approximately 13.5%.
This site has the plans approved for a 9 Studio Apartment Rooming House, so the build is ready to go.
And the potential returns.
Quick numbers:
– Land: $270,000
– Site clear + service upgrades: $7,500
– Furniture: $25,000
– Build Contract: $670,000
Total Package Cost: $986,000
Gross rental income: $135,000
Gross rental yield: 13.7%
What about classic rooming houses?
The ‘old fashioned’ style of rooming house I picture in my head is like this one at 57 Ballarat Road, Footscray – where shared bathrooms and kitchens are the norm.
Google Street View
But they are a dying breed, as gentrification sweeps through the Melbourne suburbs. I found this writeup on an old rooming house in Elwood at realestate.com.au:
It’s not every day a property with 17 bedrooms hits the market.
Among a large common area, two shared kitchens, three shared bathrooms and a laundry, the whopping 17 bedroom property contains a mix of self-contained apartments, along with old and new boarding rooms.
Professionals Whiting & Co director Dannie Corr said the registered accommodation house, or rooming house, was extremely uncommon.
“You don’t ever see them in gentrified areas,” Mr Corr said.
“All the ones we have sold over the past 20 to 30 years have been converted into private accommodation.”
Mr Corr explained the properties were particularly popular after World War II, in order to provide housing for those migrating from Europe.
“This once was an Edwardian home, and would have been converted in the late 50s or early 60s” he said.
“There are five self-contained rooms that include a kitchenette and bathroom at the front of the home, while the remainder make use of the shared facilities.”
But decaying rooming houses still exist, the last resort for people with nowhere else to go.
Now Barry’s home is a tiny room – one of 14 – at the rear of a dilapidated weatherboard rooming house in Melbourne’s north. His possessions are stacked so high it’s difficult to get through the door. The roof leaks over his bed and the lock is broken.
The house’s volatile and intimidating landlord has made Barry’s life a misery – including throwing his possessions into a skip and assaulting him – and for all of this, Barry pays $200 a week in rent.
Ahead of the Victorian state budget on Monday, the Council to Homeless Persons is calling on the government to increase funding and hire more rooming house outreach workers, arguing they can save the lives of residents and improve their health.
Three years ago the government introduced minimum standards in rooming houses, including that operators must apply for a licence and follow standards of hygiene, safety and security.
But the reality is that many remain decrepit and hazardous environments that damage the physical and mental health of the residents.
Will today’ cheaply built townhouses cum rooming houses decay to a similar state, endangering residents while landlords profit? Only time will tell.
And a techbro related footnote
Not content with reeling in millions of dollars in venture capital to reinventing taxis and buses, the techbros of Silicon Valley also also reinventing the rooming house – from The Atlantic:
Commonspace, as he’s calling it, will feature 21 microunits, which each pack a tiny kitchen, bathroom, bedroom, and living space into 300-square-feet. The microunits surround shared common areas including a chef’s kitchen, a game room, and a TV room.
Worried about the complicated social dynamics of so many Millennials in one living unit? Fear not, Evans and partner John Talarico are hiring a “social engineer” who will facilitate group events and maintain harmony among roommates.
Whatever will they come up with next?
Well i never ! Its a wonder a lot more arnt built – but surely your average residential zoning does not allow a rooming house ? yes it has to be GRZ, which also allows apartment buildings, so i guess these are built only where a developer want to build one themselves to rent.
All of the examples I found were around Monash University – I wonder if the same thing happens around other universities out in suburbia?
Very interesting. I would hope they had higher sound insulation between rooms than is normal, but otherwise what a good reinvention of accommodation that perhaps began here in the 19th century.
I’ve just remembered that how many frontages your 50s and 60s cream brick veneer house had was a status symbol, which really bore no relationship to the interior.
The “Class 1B Rooming House” standards only mention smoke detectors, not noise insulation.
https://www.monash.vic.gov.au/files/assets/public/building-amp-planning/building-permits-amp-applications/bld0390_requirements-for-shared-accommodation.pdf
With regard to “decaying rooming houses”, there’s a bit of a “tension” here if the authorities enforce higher standards on the older-style rooming houses, some of which are still found around St Kilda and other inner suburbs. Coming down too hard on them will likely lead to the property being sold and lost as a rooming house. The type of people who tend to live in them in these areas will find it hard to find alternative accommodation, and in some cases the next step may be homelessness.
This is not to say that society should tolerate the bad conditions and high rentals that we sometimes read about but merely to suggest that the authorities need to keep an eye on the “big picture”.
Of course the “easy answer” is to say the state should make sure there is an adequate supply of low-cost accommodation. In fact, this does occur, perhaps more than the media gives credit for (“hard luck” stories are more newsworthy), but for whatever reason, it’s likely that there will usually be a disparity between supply and demand. And even then, there are issues about the allocation between genders and even the location – people in the relevant demographic tend not to like the idea of moving across town.
It looks like some property investors are looking to take advantage of the “Class 1B Rooming House” standard for new builds:
https://www.yourinvestmentpropertymag.com.au/strategy/class-1b-first-class-investments-251780.aspx
Markus is there anyway i could contact you regarding changing 1a to 1b?
Just a brief question i have to ask?
My knowledge of that subject is rather limited – it looks like a building surveyor is the best person to ask.