Group Homes Australia

Rooming House

GROUP HOMES

Rooming House

Investing in Group Homes in Australia: A Growing Opportunity

Australia’s investment landscape is evolving, and one sector that’s gaining traction is group homes. As demand for inclusive and supportive living arrangements grows, investing in group homes presents a compelling opportunity for investors. This blog delves into why group homes are becoming an attractive option and how you can benefit from this emerging market.

When structured correctly, a Group Home otherwise known as Share Home can be cash flow positive in your hands.

What Are Group Homes?

Sometimes referred to as Share Homes and or Rooming Houses …

Group homes are residential settings designed to accommodate individuals wanting to share accommodations, providing them with an environment tailored to their needs. These homes are integral to the rental market, to cater to the need of people who don’t want to live alone, prefer shared style living, and those on a budget.

In a group home setting, residents typically live together in a shared house with both private and also common shared spaces. This model not only offers a more personalized and community-oriented living experience but also aligns with the need for renters not wanting to be alone, but also have their private spaces.

Why Invest in Group Homes / Rooming Houses?

1. Increasing Demand: Australia’s population is includes a mix of young and aging individuals, and there’s a growing need for accommodation that provides high-quality, tailored floor plans to suit. This market is expanding rapidly, and with it comes an increased demand for suitable housing solutions, including group homes. Investors have an opportunity to tap into this expanding market by providing quality, compliant accommodation.

2. Higher Rental Yields: The market has the demand and also offer sound market rental yields. When combining the total rental incomes these homes can produce yields around 7% to 9%. Having a mix of tenancies adds a layer of security and stability, making it an appealing option for investors seeking reliable returns, if one tenant leaves you still have ongoing income from the others until that tenant is replaced.

3. Social Impact: Investing in group homes offers more than just financial returns. It provides the opportunity to make a positive social impact by improving the quality of life for individuals who don’t want to live in an apartment, who don’t want to live alone and or cannot afford to be the sole tenant. By offering well-designed, supportive environments, investors contribute to the broader goal of creating inclusive communities.

4. Long-Term Investment Potential: Group homes are typically designed to meet specific regulatory and accessibility standards, ensuring they remain in demand for the long term. Properties that are well-maintained and compliant with local requirements can provide steady returns and appreciate in value over time. This long-term stability is a key attraction for investors.

Key Considerations for Investors

1. Location : Choosing the right location is crucial for the success of a group home. Areas with high demand for shared accommodation, proximity to amenities, and strong community support are ideal. Investors should work with experts to identify locations with unmet needs and growth potential.

2. Design : Group homes are not regulated but should adhere to strict design and accessibility standards set by the market. Ensuring that the property meets these requirements is essential for attracting tenants and holding onto them longer. Investing in well-designed homes that cater to the needs of residents can enhance both the appeal and functionality of the property. A group home that includes both lockable and secure private and communal space will work best, and one that each tenant has their own ‘kitchenette’ will be advantageous over one that does not.

3. Management : Effective management is key to the success of a group home. Investors should partner with experienced rental managers who can offer high-quality services in securing tenants and keeping them satisfied.

4. Financial Planning: Investors need to consider the financial aspects of running a group home, including initial setup costs, ongoing maintenance, and management fees. Conducting a thorough financial analysis and planning for potential expenses can help ensure the investment remains profitable.

How to Get Started

1. Research the Market: Understand the current demand for group homes in different regions and identify areas with growth potential.
2. Consult Experts: It makes ‘Investment Sense’ to work with professional groups such as properT network for the purposes of leveraging off their vast market experience and industry contacts. This will save you time and help you make an informed investment decision, for the purposes of your investment working that much harder for you. For you to gain insights and guidance on location, suited builders and setting up and managing group homes.
3. Evaluate Properties: Look for properties that meet industry standards and are located in demand areas. Ensure the design is suitable for the needs of residents.
4. Partner with Rental Managers: Collaborate with experienced providers who can source tenants and manage the day-to-day viability of the group home.
5. Plan Financially: Have an experienced mortgage broker on board who understands Group Homes and understand setup costs, ongoing expenses, and potential returns – the numbers that will drive and underpin your investment.

What to Be mindful of and Avoid

It would be obvious that for a Group Home, that is comfortable for tenants will attract and hold onto tenants that much longer. Yes?

If you agree, you would also agree that a larger floor plan is required. Being factual, a larger floor plan is a more expensive build. Yes?

To fit a larger floor plan onto a block of land, one requires a larger block of land which is also a more expensive piece of land compared to a smaller one. Yes?

BUDGET : to attract tenants the above indicates that a higher entry value is required to secure a Group Home than the house next door. The house next door will get a yield of around 4.5%, where a group home could achieve 7% to 9% give or take. Meaning the lower the package price being marketed to you is, results in something being sacrificed. (Floor plan size and design and or Land Size).

Saving a dollar in this instance can result in punitive returns going forwards to you. Secure a generous sized floor plan on a block of land that suits.

Conclusion

Investing in group homes in Australia offers a unique blend of financial returns and social impact. With growing demand, the potential for long-term stability, this sector presents a sound opportunity for savvy investors. By focusing on location, design, management, and financial planning, you can navigate this market successfully and make a meaningful contribution to the lives of individuals who seek out group homes to rent and live in.

If you’re considering entering the group home investment sector or want to explore your options further, feel free to reach out for expert advice and guidance tailored to your investment goals.

* Cash Flow Positive Investment Properties.

Example of a Current Group Home