Why investors are turning Gold Coast homes into student accommodation

first_imgInvestors are taking drastic measures to increase their rental return on the Gold Coast.STUDENTS are cramming into family homes that investors have converted into share houses with almost double the number of bedrooms, a new report reveals.The latest Month In Review from leading property valuation firm Herron Todd White said some investors were using the “interesting strategy” to increase their rental return.Southport and Parkwood were reported to be popular suburbs for the practice, in which a typical four-bedroom, two-bathroom house is modified to include seven or eight bedrooms.It said the laundry might be converted into a third bathroom while the garage was partitioned to form two additional bedrooms.“Rentals on these are reported at circa $150 per bedroom,” the report said.“A $625,000 outlay for a property may return as much as $50,000 gross per annum (allowing for vacancy) reflecting a gross yield of 8 per cent.”The report states that rental yields for residential properties on the Gold Coast ranged between 2 and 6 per cent. Property experts say it would be difficult to get council approval for the practice.“We caution that many of these operations may not strictly be council approved and lending policy will value or assess these properties on typical residential use only,” the report said.Herron Todd White director Tod Gillespie said there were many factors that needed to be considered before the council could approve a house’s conversion into what was effectively a flat building, including a suburb’s zoning. MORE NEWS: Title for priciest mega-mansion heats up Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:13Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:13 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p360p360p216p216pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenGet Rental Ready!01:14 MORE NEWS: Health food pioneer lists long-time family home “It’s not super common but it has been done. They’ve been doing it in Parkwood for a long time.”Real Estate Institute of Queensland Gold Coast zone chairman Andrew Henderson warned investors against the practice.He said there might be a need for more accommodation in certain suburbs, including Southport and Parkwood, but doubling the number of bedrooms in a house would be difficult to get approval.“Given that area around the university and hospital … there’s a need for accommodation,” he said.“It makes it price affective accommodation wise, but council approval would make it difficult for it to be achieved.” “What some people do to try to get around that is do one lease for eight people,” he said.“You can’t do eight leases because then that becomes a flat building.”He said it was generally a short-term strategy because wear and tear on the property meant the owners would need to refurbish it.More from news02:37International architect Desmond Brooks selling luxury beach villa9 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag1 day ago“While the … property might be getting a good return, how sustainable is it going forward?,” he said.last_img