As per the graph below from CoreLogic, the Gross Rental Yield (GRY) in Brisbane for existing dwellings averaged 4.19% by the end of 2023.

When we drill down to purchasing a newly builtinvestment property on land in Brisbane, it is very rare to find a rental house and land package within the highly sought-after Brisbane City Council catchment area (we explain why further in this article). Let alone finding a property where you own the land with a 4% return.

Please note that we are not considering apartment returns in Brisbane, as we do not consider Brisbane apartments as viable investments for our clients wanting to accelerate their property asset accumulation. Happy to discuss the reasons with you if you require further information on this.

At the High Yield Property Club, we believe in the magic of 8% or better returns on your investment property. That is the minimum gross rental yield we have found that we can achieve in the Brisbane property market, enabling the property to be a high-performing asset in our client’s portfolio.

Our Brisbane Rooming Houses are all newly built on a block of land within the Brisbane City Council area andhave a gross rental yield of more than $90,000 per annum, which is an equivalent of 8% or better.

Theyhave five lockablesacred spaces per home and are rented out per room by a specialist property manager.

Five separate rents for one block of land from the same dwelling, and rented in areas with high rental demand for accommodation for working singles, creates steady, reliable passive income for the owner. The high yield allows the cash flow generated to cover expenses incurred, which provides peace of mind for the investor.

All our rooming houses are built as brand new, purpose-built dwellings as a class 1B construction within the Brisbane City Council catchment area.

Considered the third major capital city in Australia, Brisbane has emerged as one of the strongest performers in the last few years.

Winning the 2032 Olympic Games bid has fast-tracked Brisbane’s growth, with many infrastructure projects proceeding faster than originally anticipated.

According to the Brisbane Courier Mail, the Brisbane 2032 Olympic Games have given the city a chance to re-think and improve infrastructure. You can view the full article here: https://www.couriermail.com.au/sport/seq-olympics-2032/editors-view-games-a-chance-to-rethink-states-economy/news-story/02f992878f24ee513ae9afe33c48b8eb

For further information about why Brisbane is an excellent location to invest in, check out our article on Property Investment Brisbane.

Many Australian property economists believe we are facing a decade-long housing supply crunch.

Supply bottlenecks have occurred over the last ten years for various reasons, including financing options for residential properties in Australia, labour and material supply issues, lockdowns during covid, and a host of other major contributing factors.

Here is a great article that discusses the situation: https://www.afr.com/policy/economy/australia-facing-a-decade-long-housing-supply-crunch-20220224-p59z8g

This gives investors an excellent opportunity to supply the housing market without fear of oversupply.

At the High Yield Property Club, we focus on building Rooming Houses on land in the suburbs of the Brisbane City Council region that are already established. This means we are unlike a typical property investment company selling house and land packages on large estates developed by prominent real estate development companies.

This also contributes to the capital value of Rooming House investments

It is widely recognized that there has been a vast undersupply of rentals in the Australian housing market post-pandemic. It has been a lethal cocktail of skyrocketing house prices, encouraging investors to sell or turn their rental properties into Airbnbs.

CoreLogic Australia, the leading provider of Australian property data and analytics, published an excellent article entitled: “Brisbane’s Rental Crisis In Five Charts”.

https://www.corelogic.com.au/news-research/news/2022/the-brisbane-rental-crisis-in-five-charts

According to this article, the median housing income required to service new rents has reached its highest level since 2009. As housing affordability improves, the median weekly rent in Greater Brisbane has increased by 13.3% from $468 to $530. Vacancy rates have also decreased to a record low of 0.9%. There is notable competition for rental accommodation due to the decreased number of available rental properties in Greater Brisbane. Also contributing to the increased demand for rental units is the surge in investment property sales through 2021.

Most investors focus on providing housing for two-income households and families, assuming that most people who need housing are couples. This has created a gap in the real estate market for properties suitable for singles. The volume for singles is significantly growing, and they are changing the real estate market’s topography with their spending power. Single people are slowly shifting their image from being perceived as unhappy to independent with spending power that is not based on their relationship status. 13% of adults in Australia live alone, and investors can tap into this market to provide accommodation for singles.

There is a huge demand for the rooms, which are often entirely rented within a few days.While the housing crisis in Australia is not unique, it has been quite extreme due to increasing rents, increasing interest rates, high cost of living, and devastating natural disasters. Households with two people or less are significantly affected by the housing crisis because they are forced to find accommodation at incredibly high prices for space they do not necessarily need. With rooming houses, these households will welcome quality affordable in a market with limited rental stock.

There is an excellent range of young professional tenants applying for these rooms. When tenants sign the lease, they agree to the house rules. If they break the house rules, they are breaking the agreement. There are both prescribed rules (applies to all rooming accommodations in QLD) and rules made by the property manager. This makes the tenants aware of the behaviour standards of the property and gives greater control over leases.

Rooming houses are in high demand from professional tenants. To maximize profits, it is important to focus on providing these units in areas with studio or one-bedroom rentals. The number of singles and couples that prefer one-bedroom or studio accommodation is continuously growing. According to findings from the Australian Bureau of Statistics (ABS), single-person households make up 23.5% of Queensland households, while 35.1% are two-person households. As such, 58.6% of Queensland households comprise two people or less. Still, only 5.2% of residences in Queensland are one-bedroom, and 15.7% are two-bedroom units. 20.9% of households in Queensland have two bedrooms or less.

Going by the data from ABS, there is a huge gap between the number of people per unit and the number of bedrooms per unit. Close to 70% of available accommodation in Queensland is three to five bedrooms or more, but 58.6% of households in Queensland have two people or less. 23.5% of the Queensland population comprises single-person households, but 5.2% of units in Queensland are one-bedroom or studio units.

Over the years, we have put in the work to refine our product and improve designs and inclusions. The result is properties that look great, with aesthetic facades that can compete with family homes with impeccable curb appeal.

The building’s front door and each unit’s door are fitted with smart electronic doors that are Wi-Fi and Bluetooth-enabled. As such, property managers can access the smart locks and change the pins remotely when a tenant moves out. Current tenants can be assured of their safety because they do not have to worry about walking around with multiple keys.

The combined area has a full kitchen with stainless steel appliances and a lounge area for use by tenants whenever they need. Although most tenants prefer to use the kitchenettes in their rooms, the full kitchen is an excellent option for them. There is also a shared laundry with two 7kg to 10kg washing machines, a central Wi-Fi system, Wi-Fi boosters, and Wi-Fi Access points built throughout the property. The properties have five apartment-like semi-self-contained studios that are completely independent and lockable. Each studio has self-contained inclusions. The structure of the entire building has been specifically designed to accommodate the units. We have the option for solar for each property, which allows the tenants to get sustainable electricity. Owners also find solar power to be far more attractive.

Rooming houses are affordable options for people who are happy to live in a 30-square-metre room. This allows the tenants to save money by avoiding units that come at higher rents as well as utility bills like electricity and internet.

https://profile.id.com.au/australia/household-size?WebID=120

If you have registered your property as a rooming house, your land may be exempt from land tax, although you must verify the use and occupation of this property as a rooming house. The Commissioner of state revenue will check to confirm that the property is indeed a rooming house according to the Residential Tenancies Act 1997 and that it is registered under part 6 of the public health and Wellbeing Act 2008. To apply for land tax exemption, you must provide the following:

1. Land tax years for the exemption you seek.
2. Your rooming house address.
3. A description of the structure and facilities.
4. The number and type of people accommodated in the rooming house.
5. Maximum weekly tariffs and type of accommodation provided for these charges.
6. Certificate of registration as a rooming house issued under part6 of the Public Health and Wellbeing Act 2008 for each tax year you seek for tax exemption.
7. A record of tenants detailing the length of stay and charges for their stay for each tax year for the years you seek tax exemption.
8. A copy of the residency agreement or the house rules your tenants abide by.
9. Details about how accommodation arrangements are made and under which circumstances.
10. A copy of materials used for advertising purposes, such as brochures.
11. Evidence showing that tenants in your rooming house are low-income earners.
12. A plan of the property showing areas used for rooming house purposes and areas used for other purposes.

In addition to land tax exemptions, owners can also be assured that the property will continue to appreciate in value due to the quality of materials used in the construction and the careful planning that goes into the construction process. The fixtures, fittings, and furniture used are high quality and timeless. As such, they will stand the test of time and guarantee fewer repairs and low maintenance costs. As a result, owners can enjoy high returns for longer periods long after the first tenants vacate the premises.

We do everything from sourcing the land to liaising with the builder on your behalf and the property managers so that everything is done from start to finish.Investors often have other obligations requiring them to delegate construction duties to a trusted company. Rooming houses can be incredibly profitable. We help you with your strategy, help you find the right location, pick the best design, appoint the best workers, ensure that everything is done in compliance with the law, and follow up after construction to help with property management in order to ensure that you maximize your investment portfolio.

Once the property is built and fully tenanted, it can be revalued on a commercial rate and lower cap rate, giving you an equity uplift. Shared property is becoming more popular in Australia. For every 100 people looking for accommodation, 20 are looking for ‘rooms for rent’. This growing demand for shared accommodationis driven by the demand for affordable housing. You can have more than four people living on your property which equates to a huge uplift in cashflow potential. When done correctly, you can leverage the rental income and increase equity. Your return on investment is based on the income generated by your rooming house, so if you provide high standards of living, you can be assured of high yields and high occupancy rates.

Rooming houses will always be in demand as long as people still need affordable housing. Investing in rooming houses allows you to own financial assets that can be passed down from one generation to another. Providing affordable houses in a market where there is a low supply of affordable housing is quite beneficial. This means that you will have high occupancy rates for extended periods, which helps you accumulate wealth and funnel it towards other income-generating ventures.

According to Poptrack data, 6% of searches on realestate.com.au in 2022 were for apartments. This is 5% higher than in the previous years. Apartments are being built in inner cities, while the suburbs have standalone dwellings that are more suitable for families. As a result, rooming houses continue to gain popularity among singles looking for affordable long-term accommodation in the suburbs.

There is a growing recognition for rooming houses because they allow investors to keep their property and lease units to long-term renters. By maximizing the tenants’ enjoyment and livability, owners can be assured of high occupancy rates, and tenants can be sure of access to modern amenities at lower price points.

For a low-density residential block, this is generally the highest and best use of the land. Most rooming houses look like regular houses from the outside. Still, they are designed to maximize the use of space for tenants to enjoy living in private and safe spaces, with the option to enjoy the warmth of living in a multi-person household. Rooming houses can accommodate four or more people. Tenants feel the comfort of living in a small community and can enjoy the perks of shared modern amenities.

In many instances, these properties are code assessable, meaning they don’t require specialized development approval. A similar apartment development would incur massive fees. If we were to build a comparable apartment project, we would be faced with hundreds of thousands in associated fees from Council, such as development costs, Development Approval submissions, headworks, engineers, architects, town planners, and the list goes on. Not to mention the massive cost of the higher-density land, which diminishes the property’s yield. With this product, we cut all of that out and don’t have the uncertainty of waiting on Development Approval.

Owners can offer different tariffs based on the type of stay a tenant wants, but there is only one set of rates for the entire premises. This means that the tenants are assured of fair pricing for their units, and the owner gets substantial returns from these rates even with a change in occupancy.

High-yield properties come with risks, such as downturns in the real estate market and unprecedented vacancies. However, investors who do their due diligence and are willing to handle the responsibilities of being a landlord can generate huge profits from rooming houses.