High income and capital growth potential delivered to investors
Coliving market has around 55,000 individuals who are looking to share accommodations right now. This is a significant market and a growth market as inflation bites into their budget, more people living out of home now want to share in order to survive financially and still be able to save some dollars at the end of the month.
This market is not being catered to right now and as per websites such as Flatmates.com.au which demonstrate a consistent demand for just over 19,000 users actively looking to share accommodation today.
The average age of searchers are 33, stably employed and looking for 4 – 5 year tenures. Their number one need is their on private bathroom and other lockable cupboard in the kitchen to secure their own supplies. Their need is for dedicated shared accommodations, not to share with an owner who they feel has their own set of rules. They are also after common area furniture and heating and cooling in their bedroom which they can control themselves.
The market is also evolving to meet the needs of our ageing population who do not want to live in an apartment, do not want to live alone and are seeking suited accommodations that are new, clean and purpose built to meet their lifestyle now and going forwards.
Supply versus Demand
Supply to suit the demand and the above requirements equates to less than 10% of accommodations that is being advertised available online today. That means that over 90% of available accommodations are largely unsuited to the demand coliving participants want and need.
There is a huge imbalance between demand and supply. Demand outstrips supply in shared accommodation space in general and more so in terms of not being able to meet the requirements tenants who were surveyed want and need and are prepared to settle for. Very few owners are purpose building to meet this growing need.
Building Regulations
A dwelling needs to comply to shared accommodation regulations in Australia or owners can be fined. Depending on how many people you want to accommodate, one needs to meet the Australian Standard 1428 regulation (AS1428) which relates to Accessible Design guidelines as well as Fire Safety in some States.
Meaning if you are an owner and wanting to generate a higher yield out of your investment property, it is best that you seek legal advice on compliance prior to putting your property on the market as a shared accommodation dwelling.
Tenant Requirements include :
- Own private bathroom
- Lockable bedroom
- Lockable cupboard in kitchen for own supplies
- Own heating and cooling system in their bedroom they can control
- Data and TV point in their bedroom for connectivity
- Preference for Solar Panels to reduce energy bills
- Common area furniture package
- House Rules all tenants must stand by
- Each tenant signs their own lease agreement
- The property is inspected by the agents on a regular basis to ensure all tenants are looking after the shared home
Growth and exit strategy
Your investment looks and feels just like the new home next door and by all accounts should thus achieve capital growth just like other similar homes in the same area. Perhaps higher than the average growth having an improved floor plan and bathrooms en-suite.
Your investment can be on sold to an investor based on the investment returns you are achieving or to an owner who wants to live there. When you can sell to an owner or an investor, you double your potential market and create more purchasing competition in doing so.
