What if a purpose-built co-living home came with a rental guarantee from the rental manager of $350 per bedroom per week for five years? On a five-bedroom home that is about $91,000 a year, or roughly a 10%* gross yield on the property’s value.
Who gives the guarantee?
Any rental guarantee described on this page is given and underwritten by the rental manager, not by the tenants, not by properT network and not by the co-living industry. The rental manager decides at its own discretion whether to take a property on, and the terms are set out in its own rental management agreement with you.
How the 10%* head lease model works
- Regional hospitals already rent many older, unsuitable homes for their doctors, nurses and staff, and need better accommodation close by to attract and keep skilled people.
- The rental manager advises it has signed, or will sign, a head lease with the regional hospital to rent the whole home. properT network has not sighted the head lease.
- Under its agreement with you, the rental manager guarantees $350 per bedroom per week for five years, whether one room or every room is occupied.
- Rent reviews during the term are set out in the rental management agreement.
- At the end of the term you may be able to negotiate a new guarantee or move to standard rental management. Renewal is not guaranteed.
*The 10% is not a guaranteed yield on any price. It is the rental manager’s guaranteed rent of $350 per bedroom per week, expressed against the property’s value. For example, 5 bedrooms × $350 × 52 weeks = $91,000 a year, about 10% of a $910,000 property. A higher purchase price means a lower percentage. The head lease is between the rental manager and the regional hospital; properT network has not sighted it.
Two separate rental guarantee models
1. Open market: 75% of market rent guarantee
The general open market model, with no head lease. It is offered on co-living homes of any size, from three bedrooms to eleven or more. It applies only once the property has first reached 100% occupancy. If occupancy later falls below 75%, the rental manager tops the rent up to 75% of market rent to cover the owner.
2. Head lease model: 10%* rental guarantee
A separate product for doctors, nurses and other staff in regional hospital towns. The rental manager advises it holds a head lease with the regional hospital. Whether one room or every room is occupied, the rental manager guarantees $350 per bedroom per week on a five-bedroom home: 5 × $350. The head lease applies only to this model.
The homes
Purpose-built, fully furnished co-living homes designed for healthcare and university staff, as described by the developer and rental manager:
- A private, self-contained suite for each resident with bedroom, bathroom, kitchenette, study area and outdoor space
- Furniture for each suite and the common areas, such as bed, TV and couch
- Air conditioning in the suites and common areas, solar power and landscaping
- Shared full kitchen, dining, laundry, storage and bike rack
- A generous floor plan of around 268 m², designed for both privacy and shared living
- Cleaning, maintenance, WiFi, electricity and water included in the rent residents pay
- A full turnkey build by an established builder
Finance and valuation
Not all lenders finance co-living. Specialist brokers can access lenders that do, and those lenders may value the property on its income. Some investors have seen a higher valuation once the home is tenanted with a guarantee in place, which they then use toward their next purchase, but valuations vary and are not guaranteed.
Before relying on any guarantee
- Have your solicitor review the rental management agreement, and any head lease you can obtain
- Check the rental manager’s track record and financial strength: a guarantee is only as strong as the business behind it
- Confirm when the guarantee starts, how long it lasts, how rent is reviewed and what can end it
- Confirm the rental manager has accepted your specific property
- Make sure the numbers still work without the guarantee
Ask us about this co-living opportunity
See also Rental guarantee FAQs and FAQs on share houses.
Related reading
- Rental guarantee FAQs
- Why I wouldn’t invest in a co-living property
- What to be mindful of before buying co-living
- Co-Living Investment Guide: 9 factors to consider
- Co-living and rooming house rules by state
Considering co-living? Book a complimentary strategy session with Stephen Lazar at properT network, get our free Co-Living Investor Checklist, or read why Australia’s shared living boom is just getting started.
General information only. Rental guarantees are provided by rental managers under their own agreements, not by properT network. Nothing on this page is financial, tax or legal advice. Seek independent advice about your circumstances before investing. See our disclaimer.
