FAQ’s on CoLiving Homes in Victoria
How does CoLiving Property Work?
NB : this page and information on this page is only pertinent to our Co-Living Property, suited to 5 x Tenants, that comes with a 10% Yield Rental Guarantee for 5 years, and located in Victoria. Please apply the info shared below accordingly.
Where does the Rental Guarantee come from?
- Answer : The Rental Guarantee is between the Rental Manager and you the investor
- The Rental Manager signs a separate Head Lease Agreement with the blue chip company (hospital or university etc), [separately from your rental agreement] who rent properties to house their staff, they are renting the whole home in it’s entirety, the Head Lease is the Guarantee for the period the head lease is signed for.
How long is the Rental Guarantee for?
- Answer : The Rental Guarantee is fixed at 5 years.
What happens after the five-year Rental Guarantee period?
- Answer : At the end of five years, there will be an opportunity to negotiate a new rental guarantee or transition to standard rental management. the Rental Managers are fully confident they will fill all the units as required.
How can we be certain that the Lease will be enforced?
- Answer : It is a legal binding document between the Rental Manager and the Hospital. Aside from that, the Hospital have been involved in helping design the floor plan and selecting the furniture package included, to suit their staff requirements. The Hospital is a Legal Entity, a sound business and only has plans to continue to grow and provide medical services to the community.
What happens if the Hospital, in this circumstances does not renew the Head Lease?
- Answer : As per above, the Rental Managers are confident they will keep the homes filled. See below why …
- The Hospital is currently renting around 100 homes. The current format of residential housing it is renting for staff is unsuited to staff needs. Staff are dissatisfied with current accommodations in many instances as they are sharing bathrooms and other private spaces, or a single tenant is in a whole, expensive home to themselves, costing the hospital a lot of money.
- The Hospital has been renting these primarily unsuited properties to date and as the hospital is not planning on closing down and is there to stay, there is an ongoing need for the Hospital to continue to find suited accommodations for their staff. Hence their satisfaction to sign a Head Lease for 5 years and probability to renew the Head Lease after this period.Yes, this is a generalisation but comes with a strong likelihood.
Do I get rent per room or per Tenant?
- Answer : Whether the Lessee accommodates one person there or 5, you still get rent on the whole house as per agreed rent in the Lease.
Who controls rent increases and do we as owners receive rental increases?
- Answer : The appointed property manager negotiates rental increases as per market circumstances. The incremental increase in rent is passed onto you the investor. These increases are not fixed, they are on a pro-rata adjustment.
Do local councils approve of Co-Living homes?
- Answer : Yes, councils are more accepting of a coliving house, depending on design, parking, Class of Build etc.
What Class of Build is a Co-Living home?
- Answer : a 5 bed coliving house is built to Class 1B classification, meeting all the legal requirements of a Class 1B
Land Tax on a Co-Living?
- Answer : Class 1B properties are exempt from Land Tax, as an added financial benefit to you the investor
Do property Valuations stack up?
- Answer : Yes, the CoLiving home receives a Commercial Valuation on the property.
Can any bank lend for CoLiving Homes?
- Answer : Not all banks offer loans for co-living property. Lenders will provide finance through qualified finance brokers, this source of funds require the Commercial Valuations and only these qualified finance brokers have access to these funds.
What is the equity uplift at time of build completion and tenancy?
- Answer : A property with current package value (house and land) at say $890k, could potentially be appraised at around $1,1m once tenanted. Individual results vary, but experience shows equity uplift once the Rental Guarantee is in place.
What are the benefits to me of an equity uplift?
- Answer : Investors can use the increased equity to leverage into additional investments, accelerating their property portfolio growth.
Is this deemed to be a Commercial Property?
- Answer : No, the property remains a Residential Property
Who is responsible for potential damage by tenants?
- Answer : CoLiving property falls under the Residential Tenancies Act and thus your tenant is responsible for damage, as would any other residential tenant be.
Who else is providing rental properties to the Hospital?
- Answer : The Hospital is already renting many residential properties for their staff, as mentioned above, primarily unsuited as they were not purpose built for CoLiving purposes and lifestyle with Privacy. The general residential property market is thus providing rental properties to the Hospital.
Why would the Hospital want a Co-Living house and shift tenancies into them?
- Answer : Purpose designed and built homes to suit professional staffing needs and requirements are better suited to keeping staff using these homes in a ‘happy state of mind’. Unsuited accommodations has the opposite affect. Simply put, the Hospital prefer staff members who are content and can thus attract other professionals to work at or teach at the hospital.
How long does it take to find tenants and get my rental income?
- Answer : You will start to receive your rental income in 14 days from handover of the property to you. How long it takes to fill the home is the Hospital’s issue as your income is fixed whether there is one tenant, three or five.
What is the projected vacancy rate?
- The investor does not experience vacancy loss since rental payments are guaranteed for five years. Whether the property is fully occupied or not, rental income remains consistent.
