A rooming house is a single property divided into five self contained studios, each leased separately. Same land, same mortgage, same rates as a standard house, five incomes instead of one. Nine brand new turnkey packages are available across Brisbane right now.
The economics are simple. A standard investment house carries one land cost, one mortgage, one set of rates and collects one rent. A rooming house carries the same fixed costs and collects five. That is where the yield comes from, and it is why the numbers hold up without needing a bargain purchase or a fringe location.
Every one is a brand new house and land package with five studios. Rents are calculated on a 51 week basis, which allows for turnover between tenancies rather than assuming a full year of occupancy.
| Suburb | Package price | Rent per week | Rent per year | Gross yield |
|---|---|---|---|---|
| Brassall | $1,305,900 | $2,080 | $106,080 | 8.12% |
| Coopers Plains | $1,464,900 | $2,340 | $119,340 | 8.15% |
| Wynnum | $1,481,900 | $2,330 | $118,830 | 8.02% |
| Carseldine | $1,494,150 | $2,350 | $119,850 | 8.02% |
| Bald Hills | $1,495,699 | $2,380 | $121,380 | 8.12% |
| The Gap | $1,571,900 | $2,480 | $126,480 | 8.05% |
| Indooroopilly | $1,736,900 | $2,770 | $141,270 | 8.13% |
A second package is also available at Carseldine and at Bald Hills. Prices are current at the date of publishing and each package is valid for 90 days from generation. Car parking is charged at $10 per week per space on top of the studio rate.
Every one of these is inside Brisbane, not on the fringe. Indooroopilly, Carseldine, Bald Hills, The Gap, Coopers Plains, Wynnum and Brassall are established suburbs with transport and employment around them. Buying brand new in a growth corridor is the reason the yield does not cost you capital growth, which is the usual trade with high yielding property.
Gross yield is the easy number. What matters is what lands in your account after the property is run, and a rooming house costs more to run than a standard rental because you carry the utilities and the common areas. Here is a full year of real trading from a completed property, itemised.
| Management at 9% | $10,228 |
| Insurance, building and landlord | $3,500 |
| Council rates and utilities | $3,000 |
| Water usage | $2,400 |
| Gardening and cleaning | $2,350 |
| Internet | $1,320 |
| Electricity, after 13.3kW solar | $1,100 |
| Fire safety and smoke alarms | $450 |
| Pest inspections | $300 |
| Total for the year | $24,648 |
Deagon, Brisbane. Against gross rent of $113,641 that is 21.7 percent, on 98 percent average occupancy.
| Coopers Plains package price | $1,464,900 |
| Gross rent | $119,340 |
| Outgoings on the same structure | $25,161 |
| Net rent | $94,179 |
| Net yield on purchase price | 6.43% |
A 6.4 percent net yield is the number to hold on to. Most residential investment property is negatively geared precisely because the net yield sits well below the interest rate. Here it sits close to it, before a dollar of depreciation is claimed on a brand new build.
Depreciation on a new $1.4 million build is substantial and is claimed on top of the figures above. It needs a quantity surveyor's schedule on the specific property, which is why there is no number for it here.
Two completed properties, tracked from purchase. Both show the same pattern: the yield you buy at is not the yield you keep, because room rents are reviewed far more often than a single twelve month lease.
Bought at $1,068,900. Rent per room rose from $400 to $446 a week, lifting gross rent from $103,449 to $113,641. Net yield 8.33 percent after the outgoings shown above.
Total investment $1,263,900. Rent per room rose $54 to $470 a week, about $14,000 a year across the five studios. Built slab to practical completion in 146 days.
Estimated value $1,740,000 against $1,263,900 invested, sixteen months in. On a capitalisation approach every $10 per room per week adds roughly $37,000 of value.
How those valuations were arrived at. Both figures use a capitalisation approach, which values the property on the income it produces rather than on comparable sales. That is the standard method for this asset class, but it is an estimate and not a bank valuation, so treat it as an indication of direction rather than a number to borrow against. Past performance on two properties is not a forecast for a third.
Rooming accommodation in Queensland runs under the Residential Tenancies and Rooming Accommodation Act 2008, which governs rooming accommodation agreements, entry rules and provider obligations. The building itself is Class 1b, which brings requirements for emergency lighting, hard wired smoke alarms with battery backup, fire safety and acoustic separation between studios. Council approval applies to the use.
That is more moving parts than a standard rental, and it is the single reason most investors never own one of these despite the yield being public knowledge. It is also why the ones that do get built are worth owning: the barrier that keeps you out keeps everyone else out too.
What we handle. Package selection and the numbers on your income and structure, the one part contract if you are buying through a fund, the builder relationship, and an introduction to the specialist managers who run these properties day to day.
Compliance detail is specific to the property and the council, so it is confirmed on the actual package rather than promised on a web page.
Most investment property costs you money each week to hold. A rooming house at this yield does the opposite, and that surplus has somewhere useful to go: an offset account against your own home loan, where every dollar saves you interest the tax system gives you no help with.
See how the offset strategy works, including the worked example on a $700,000 home loan and why the property you choose changes the answer by years.
Full brochures with floor plans, inclusions and the rental appraisal for each. We will also model what one looks like against your income, deposit and structure, including whether it works inside a fund, and walk you through it on a call.
