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Exploring Rooming Houses and Co-Living as Investment Opportunities

In the face of Australia's escalating housing shortage, understanding the nuances of various real estate investment opportunities is crucial. As an expert in the field, I will guide you through the dynamics of co-living and rooming houses, outlining their key differences and how they serve as both a solution to the housing crisis and a profitable investment avenue.

The Housing Shortage Challenge: Australia's projected population growth and demographic changes are creating an unprecedented demand for housing. This situation calls for innovative solutions that can accommodate the diverse needs of a growing populace. Investors exploring high-yield property opportunities are increasingly considering Rooming Houses and Co-Living spaces. These distinct property types, gaining traction in the investment landscape, have unique characteristics, particularly in terms of their approval processes and investment returns.



Property Co-living Rooming House (Bed)


Property Key Differences: Approval Processes and Investment Potential

Co-Living Properties:

  • Nature: Co-Living properties are essentially standard residential dwellings. They do not require extra approvals for renting out up to three rooms to unrelated individuals.

  • Legality and Design: Legally, an owner can accommodate up to three boarders without special permissions. These properties might feature individual rooms with amenities like ensuite bathrooms. However, they do not allow lockable doors for each room and are not bound by stringent inclusion standards like Rooming Houses.

  • Investment Appeal: The appeal lies in their simplicity. They don't demand compliance with specific Rooming House policies or structural modifications

Rooming Houses:

  • Approval and Design: Classified as 1b dwellings under building codes, Rooming Houses are designed in accordance with local council guidelines for Rooming Accommodation. These properties can feature independently lockable rooms, adhering to 1b approval standards, including specific amenities and safety features.

  • Capacity and Compliance: The number of rentable rooms varies based on local regulations but generally does not exceed twelve. Compliance with higher safety and construction standards is a requisite.

  • Investment Returns: Due to the higher number of rentable spaces, Rooming Houses often yield higher returns compared to Co-Living properties.




Property Co-living Rooming House (Chair)


Investment Considerations: Pros and Cons

  • Co-Living Advantages: Affordability, flexibility in location, higher yields than traditional residential homes, and ease of conversion back to a standard home.

  • Co-Living Disadvantages: Legal limitation to renting out only three rooms, lower yields compared to Rooming Houses, and potential complexities in property management and safety provisions.

  • Rooming House Advantages: Higher rentable room numbers leading to higher yields, attractiveness due to independently lockable rooms, and standardized tenancy agreements.

  • Rooming House Disadvantages: Higher initial capital requirement, restricted building locations, and stringent compliance requirements.




Property Co-living Rooming House (EState)


Making the Choice: Budget and Yield Considerations

For investors with a larger budget, Rooming Houses in favorable locations can offer higher yields due to the greater number of rentable rooms. On the other hand, Co-Living properties are suitable for those with a lower budget, providing a simpler entry into the investment property market, albeit with potentially lower returns.


While both Rooming Houses and Co-Living properties present lucrative opportunities for property investors, the choice largely depends on budget constraints, desired yield, and willingness to navigate varying levels of regulatory compliance. Ready to Explore Your Investment Options?

If you're considering investing in the Australian property market, don't go it alone. Contact us today to leverage our expertise and insights to find the ideal investment property for your portfolio or to simply engage our services on your next property purchase.

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