My students Nathan and Shaz, had to think out of the box with a baby on the way. They found a home to live in that they could convert into rooming accommodation, making $55K rent in the process.
Nathan and Shaz moved from Aukland to Victoria 7 years ago and started their property search. They lived in a Rooming House for six months while they saved enough money to buy their first investment. So they understood that the demand for micro-apartment conversions (sometimes referred to as HMO or Rooming Houses) was high.
After completing my High Income Real Estate System program, they learned how to convert properties to Rooming Houses safely, appropriately, and, more importantly, legally.
They set about looking for a cash flow positive investment property that they could also live in, and found one in suburban Melbourne.
With a baby on the way, they realised they could convert that 5 bedroom family home into a Rooming house with 7 – 8 rooms, making much-needed cash in the process.
Critical to their success early on was the ability to tap into my knowledge and that of the Small Is The New Big community via the students-only Facebook Group.
As Nathan puts it, “One of the first things we did is put a drawing of the layout on the Facebook site, and Ian actually said there is the potential of converting it from a five-bedroom into a seven-bedroom. That was the first step.”
They spend just under $36K on the conversion and expect a return of $55K per year in rent. And Nathan did the majority of the renovation work on the property himself to save some cash.
They’ve now set themselves up for success!
“Now that we’ve got a baby on the way, having a rooming accommodation will replace my income, not working for another year. So we’ve got positive cash flow coming in,” says Shaz.
“As a mum, I can support my partner, and also have a great future for our little one that’s arriving soon.”
Nathan concludes, “Now that we know something like this works in this property, we know the next investment property that we will be purchasing will be for HI-RES or Rooming.”
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PURCHASE PRICE: Not Provided
RENOVATION COST: $36,000
RENTAL RETURN WEEKLY
$1060 per week
$1060 per week gross cash flow
$55K per year
$55K per year gross cash flow