10 Key Insights for Investors Before Exploring Co-Living and Rooming House Investments
The demand for affordable housing solutions is rapidly increasing across Australia, especially in major cities like Melbourne. As a result, co-living and rooming house investments are emerging as attractive, cashflow-positive opportunities for savvy investors. At Jabel Property, Melbourne’s leading rooming house investment and consultancy agency, we have helped countless clients navigate this dynamic sector.
If you are considering investing in this space, it is crucial to understand the unique nuances that come with co-living and rooming house properties. Drawing on years of industry experience and insights from recent tenant trends, we have compiled a list of key considerations every investor should know before stepping into this rewarding asset class.
1. Cashflow Can Be Consistently Strong—But Requires Active Management
Rooming houses and co-living properties tend to deliver higher yields compared to traditional residential real estate. This is largely due to the per-room rental model, which spreads risk and maximises rental income. However, unlike standard rentals, these properties require ongoing proactive management, including tenant screening, routine inspections, and prompt maintenance. Investors should factor in either the time commitment or the cost of professional management to ensure the returns remain strong.
Learn more about rooming house returns here.
2. Regulations Are Strict and Ever-Evolving
Rooming houses in Victoria are subject to specific regulations under the Residential Tenancies Act and local council by-laws. These dictate minimum room sizes, safety standards, and licensing requirements. It is crucial to ensure compliance from the outset, as breaches can lead to fines and potential downtime. Working with a specialist agency like Jabel Property helps you stay ahead of regulatory changes and maintain full compliance.
Get the latest on Victorian rooming house laws.
3. Tenant Profiles Are Diverse—Understanding Their Needs Is Key
Co-living properties attract a wide variety of tenants, from students and young professionals to retirees and essential workers. This diversity can help reduce vacancy rates but also means different tenants have different expectations for communal spaces, privacy, and amenities. Investors should design properties with flexible communal areas and private facilities to appeal to a broader market and ensure ongoing demand.
4. Lease Structures Differ from Traditional Rentals
Each tenant typically signs an individual lease for their room, rather than a single lease for the entire property. This provides greater income stability, as the departure of one tenant does not leave the entire property vacant. However, it also means more administration, which reinforces the value of effective management or outsourcing to experienced operators.
5. Location Remains a Critical Success Factor
The best performing co-living investments are found in areas with strong demand from target tenant groups—think proximity to universities, hospitals, or major employment hubs. Investors should prioritise locations with good access to public transport, amenities, and employment opportunities to ensure their property remains attractive and tenanted.
6. Design Matters: Balance Communal and Private Spaces
Modern co-living tenants expect well-designed spaces that offer privacy where it matters (bedrooms and bathrooms) as well as communal spaces for social interaction. Properties that strike this balance command higher rents and lower vacancy rates. Consider including features like ensuite bathrooms, shared kitchens, and comfortable living areas.
7. Maintenance Is More Frequent
Higher occupancy turnover and shared living can result in more wear and tear than traditional investments. Routine maintenance and regular inspections are essential for keeping the property in good condition and ensuring tenant satisfaction. This proactive approach also protects your investment and maximises cashflow in the long run.
8. Community Culture Can Impact Your Investment
Creating a positive living environment fosters longer tenancies, reduces conflict, and decreases turnover. Choosing the right tenants and setting clear house rules are essential steps. Some investors appoint a tenant “house manager” to help mediate and resolve issues before they escalate.
9. Insurance and Risk Management Are Non-Negotiable
Rooming houses have different insurance requirements compared to standard residential or commercial properties. Investors should ensure they have specialised landlord insurance that covers shared accommodation risks such as tenant damage, liability, and income loss.
10. Professional Support Makes a Difference
From navigating planning permits and building codes to ongoing property management and tenant selection, the right professional support can be the difference between a hassle-free, profitable investment and a costly misstep. At Jabel Property, we offer a full suite of services tailored to co-living and rooming house investors, ensuring you are supported every step of the way.
Wrapping Up: Why Now Is the Right Time for Co-Living Investments
As the need for affordable, flexible rental accommodation continues to soar across Melbourne, co-living and rooming house investments offer unique cashflow opportunities for investors willing to embrace their distinct requirements. With the right property, location, and professional support, these investments can deliver both strong yields and long-term capital growth.
If you are ready to explore this sector further, or want to know how to get started with a new or existing rooming house, our team at Jabel Property is here to help. Book a free, no-obligation consultation with our experts today, and let us show you why we are Melbourne’s leading rooming house consultancy.