Affordable Housing Solutions: Rebuild Community, Provide Positive Returns
Growing population demands on Australian dwellings present the perfect opportunity for investors to add affordable housing solutions to their portfolios, creating sustainable communities and generating higher than usual returns. In what’s a win-win situation, investors receive positive cashflow whilst supporting those in need and tenants get affordable accommodation. The solution lies in implementing intelligent design, better utilising space to create smaller homes and micro-apartments which enable multiple people (or family units) to share a dwelling. Not only are these properties more accessible and affordable, they bring a sense of community and security to those that live there.
Affordable housing: separate spaces, higher cash flow
Acknowledging affordable housing is an issue that must be addressed in collaboration, state and local governments throughout Australia are now offering incentives for investors to provide this style of accommodation. The broad range of demographics seeking affordable housing are professionally employed i.e construction workers, doctors and nurses, the middle age tenant living on $399 or less and women over the age of 55 (who are now most at risk of homelessness). Our research shows that they want their own bathroom in a dwelling that contains their own smaller, self-contained area requiring no maintenance, often with utilities included. Letting each space separately, across a 4 bedroom home this kind of set-up could provide an extra $120 to your rental income, making a positive impression on cashflow.
Turning to a sustainable solution provides returns
Left with an unsaleable lemon after a mining town investment went south, Debra and Jamie sought expert advice for how best to salvage their losses. They’d made their initial investment to prepare for their financial futures and thought they’d found their “Golden Goose” in an area with big infrastructure plans. When the mining company built accommodation for its FIFO workers, rents in town dropped drastically. Locals had previously been pushed out of town by skyrocketing rents, leaving Debra and Jamie unable to sell. Holding a sizeable debt, they needed help to turn their situation around.
For their next project, a new development, they worked with us and the council’s planning department, to maximise a property’s floor plan and create micro apartment accommodation within the same dwelling. This property could then respond to a market desperately needing functional and appropriate affordable housing, a strategy that works readily in regional or metropolitan areas. The gains from this new development were able to offset the debt and pain from their previous mistakes.
Outside the box solution filling unmet needs in market
By helping Debra and Jamie to think creatively and work out alternatives to achieve better outcomes from such a difficult situation, they were able to get back on their path towards financial freedom. They re-established their goals and started again very small, this time using the alternative affordable housing strategies they’d learnt through working with us. Instead of the traditional 4 bedroom, 2 bathroom single family rental investment, their confidence was re-ignited with excellent rental returns from applying their newfound strategies, providing the positive cashflow needed to begin subsequent projects and continue developing. Debra and Jamie acknowledge the greatest thing they learnt was to start small and focus on cashflow, instead of staying in a holding pattern for too long. Rather than following the herd to the hot-spots, they now think out-of-the-box, with a strategy based upon fulfilling an unmet need in the market.
Emerging market segment with substantial gains
Debra and Jamie’s journey illustrates a great way forward for investors. By providing micro-apartments within their developments, not only are they bringing back a genuine connection for residents, they’re also achieving superior rental returns that are enabling them to repurpose more dwellings. As the need for affordable housing continues to rise, so too does the opportunity for investors to enter this emerging segment of the market and make substantial gains. Whether you’re a ‘mum and dad investor’, a full-time seasoned investor, or somewhere in between, the opportunity is there for you to fill a hole in the market. Government incentives, increased yields and the chance to activate positive change within the community are just some of the benefits that providing appropriate housing solutions can give.