Why Rooming House Investments in SEQ Deliver Better Returns Than Traditional Rentals

When investors think of residential property, the default is often a single-family home, townhouse, or unit leased to one tenant. While this model has served many investors well, it comes with significant limitations, modest rental yields, high reliance on tenant stability and limited adaptability to today’s shifting housing market. In contrast, rooming houses are emerging as a superior investment strategy, combining stronger returns with greater resilience.

The most compelling advantage of rooming houses lies in their rental yields. Traditional units or homes typically generate gross yields of 4–5%, which can quickly be eroded by rising interest rates, maintenance costs and periods of vacancy. A rooming house, however, operates on multiple tenancies under one roof, delivering gross yields upwards of 8%, often nearly double the return. This means investors enjoy stronger, more consistent cashflow that can weather fluctuations in the broader property market.

Another key difference is risk diversification. In a standard rental, one vacancy equals zero income. With a rooming house, rental income is spread across five tenancies, so even if one room becomes vacant, the property continues to generate revenue. This multi-tenant structure creates built-in resilience, protecting investors from the volatility that comes with relying on a single occupant.

Beyond the financials, rooming houses also respond to a genuine social demand. Southeast Queensland, like much of Australia, is experiencing a rental crisis. Affordable housing options are scarce and rooming houses provide safe, compliant and cost-effective accommodation. Investors who choose this model are not only achieving superior returns but are also contributing to a solution for housing shortages, making this a socially responsible investment with long-term relevance.

Rooming houses also offer tax and compliance benefits. Purpose-built properties allow investors to maximise depreciation allowances, while operating within Class 1B building codes ensures both safety and long-term value. Unlike older, traditional units that often require ongoing upgrades or renovations to remain compliant, modern rooming houses are designed from the outset to meet current standards and deliver low-maintenance performance.

Finally, when comparing long-term growth potential, rooming houses remain highly attractive. As demand for affordable housing grows alongside infrastructure developments particularly with the 2032 Brisbane Olympics reshaping SEQ, the combination of steady cashflow and capital appreciation makes rooming houses a compelling dual-play. Investors position themselves to enjoy both immediate income and future equity growth, something traditional rentals struggle to balance effectively.

In short, rooming houses provide a smarter, more resilient and more profitable path for investors. By delivering superior yields, reducing vacancy risk, meeting a pressing market demand and aligning with long-term growth, they outperform traditional property models on every front. For those ready to elevate their investment strategy, rooming houses are not just an option, they are the future.

By Greg Khan CPA FGIA

September 2025