NewGen Rooming Houses produce over 100% more rent than traditional residential homes
In this blog we discover that rooming houses can return over double the rent and offer more security and cash flow certainty with multiple tenants.
The New Generation Rooming Houses are returning from $140,000 to $180,000 P.A.
In the world of property investment, there's often a multitude of options to consider. Two popular choices are traditional residential homes and rooming houses. While both can yield attractive returns, there are significant differences in their potential profitability and investment outcomes.
In this blog post, we'll compare the feasibility of investing in a typical residential property versus a rooming house using real-world examples.
Let's take a closer look at two properties: 24 Regent Street in Mount Waverley and
110 Herbert Street in Dandenong.
24 Regent Street, Mount Waverley:
Purchase Price: $1,816,000
Annual Rent: $48,516
Starting Net Rent P.A.: $37,516
10-Year Net Rent (with 5% rental increase): $471,435
Property Value in 10 years (5.9% P.A. increase): $3,213,464
Gross Return EBIT P.A.: $186,889
Percentage Return P.A.: 9.7%
110 Herbert Street, Dandenong:
Purchase Price: $751,000
Development Investment: $1,049,000
Total Investment: $1,800,000
Annual Rent: $174,720
Starting Net Rent P.A.: $121,968
10-Year Net Rent (with 5% rental increase): $1,559,980
Property Value in 10 years (5.9% P.A. increase): $3,816,382
Gross Return EBIT P.A.: $357,636
Percentage Return P.A.: 19.8%
The comparison between these two properties reveals some striking differences. While the traditional residential property at 24 Regent Street offers a respectable return, the rooming house investment at 110 Herbert Street in Dandenong presents a significantly higher potential for profitability. With a substantially lower initial investment and a much higher rental income, the rooming house investment outperforms the traditional residential property by a considerable margin.
Additionally, the rooming house investment demonstrates a higher percentage return per annum, indicating its superior profitability and potential for wealth accumulation over time.
It's essential to note that these examples are based on assumptions and hypothetical scenarios. Actual investment outcomes may vary depending on various factors, including market conditions, property management, and unforeseen expenses.
In conclusion, when considering property investment opportunities, it's crucial to weigh the potential returns and risks carefully. While traditional residential properties offer stability, rooming houses can provide significantly higher returns for investors willing to explore alternative investment strategies. Ultimately, thorough research and due diligence are essential for making informed investment decisions.
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