A rooming house is a property divided into multiple self-contained rooms that are rented out individually.

Tenants share common areas such as kitchens, living spaces, and bathrooms. This model creates multiple income streams from one property.

Multiple Income Streams: With several tenants paying rent, you reduce the risk of vacancy affecting your overall income.

Higher Rental Yields: Rooming houses typically generate higher returns (often over 10%) compared to traditional single-tenant rentals.

Cash-Flow Positive: The combined rental income can significantly exceed your mortgage and maintenance expenses, delivering strong monthly cash flow.

5-Bedroom Model: Offers a more intimate setting with fewer tenants, which can simplify management and ensure a comfortable environment for each tenant.

9-Bedroom Model: Maximizes rental income by accommodating more tenants, potentially increasing overall cash flow, though it may require more intensive management.

Rooming houses often attract a diverse range of tenants, including students, young professionals, and individuals seeking affordable, flexible housing options.

The ideal tenant profile depends on the property’s location and amenities.

While individual rental amounts vary, our data shows that a property generating a traditional rent of around $500 per week can be transformed into a rooming house that brings in approximately $2,900 per week in total rental income.

This translates to over $30,000 in annual positive cash flow—subject to property specifics and management efficiency.

Traditional Rentals: Typically offer 3–4% returns, often impacted by single-tenant occupancy and rising mortgage costs.

Shares and Stocks: Average returns might range between 5–7% but come with market volatility.

Rooming Houses: With returns often exceeding 10% and multiple income streams, they offer a stable and higher-yield alternative to these traditional investment types.

Vacancy Risk: Mitigated by having multiple tenants; even if one room is vacant, others can cover the expenses.

Regulatory Compliance: Ensure that the property meets local council requirements for room sizes, safety, and amenities.

Management Demands: Many investors opt for professional property management services to handle day-to-day operations and maintenance.

Maintenance Costs: Regular upkeep is necessary, but high rental incomes can offset these expenses if managed efficiently.

Regulations can vary by council. Generally, you need to comply with standards regarding minimum room sizes, fire safety, and adequate provision of common areas.

It’s crucial to consult local guidelines or work with a specialist who understands these requirements in Melbourne.

Lender Appeal: Rooming houses are attractive to lenders because of their cash-flow-positive nature.

Financing Options: Many investors finance these properties through traditional loans, and some even use corporate structures or their super funds. It’s advisable to discuss your specific situation with a mortgage broker or financial advisor.

Management Fees: If you opt for professional property management.

Maintenance and Repairs: Regular upkeep to keep the property compliant and attractive to tenants.

Insurance: Adequate coverage for the property and its specific risks.

Utilities & Common Area Upkeep: Depending on your arrangement with tenants, some utilities and maintenance of common areas may be your responsibility.

Many investors plan to refinance after increasing the property’s value through improved cash flow and occupancy.

Others may choose to sell when market conditions are favorable.

The strong cash flow and asset appreciation often provide multiple exit opportunities.

Step 1: Review our detailed property report and case studies.

Step 2: Book a free consultation with our property specialists to discuss your investment goals and the best option (6-bedroom vs. 9-bedroom) for you.

Step 3: Proceed with financing and acquisition with our expert guidance every step of the way.

Pre-Leased Tenants: Leveraging decades of industry expertise and our vast network of property managers, IEPG Group secures quality tenants for your rooming house before construction even begins.

This pre-leasing strategy guarantees immediate rental income upon completion and minimizes the risk of vacancy from day one.

If you would like to see some floor plans we have a link to a Google Drive Folder below.

https://drive.google.com/drive/folders/1evNMv0QQ4jykkwHeINwF2nw4-yVyAk8V?usp=drive_link