Glebe property market 'on fire' as boarding house owner hopes to cash in on boom

The property market has been so hot in Sydney’s inner suburbs, even long-term boarding house owners are selling their “cash cows” in the hope of making a substantial profit.

In Glebe, where grand old estates are mixed in with public housing, home owners, as well as with the government, have long been taking advantage of the property boom.

And now boarding house owners are getting in on the action, with price growth proving too irresistible to resist.

In Glebe, prices are up 72.4 per cent since the boom began in 2012 to a median of $1,681,000, Domain Group data shows.

On Bridge Road, on the brink of Forest Lodge, a vendor has put two neighbouring terraces, both running as boarding houses, up for auction.

Dominic D’Ettorre, co-agent for the property principal of D’Ettorre Real Estate, said about 20 groups of people showed up for the first open home on the weekend.

“It has always been a good cash cow, being close to universities, the hospital and shops,” he said.

“[The vendor] is an elderly gentleman who has had them for 40 years and is cashing in after all that time.”

While no details were provided about the cash flow of the property, Mr D’Ettorre said single bedrooms were leased at $225 a week and double rooms at $300 a week.

The first board house, 225A, has 14 bedrooms on 505 square metres, while 225B has 12 bedrooms on 500 square metres. While there’s often a high turnover rate and vacancies in boarding houses, if each bedroom was rented out as a “single room”, the total weekly rent would amount to $5850.

The owner has yet to determine a reserve, as they are waiting for market feedback, but the current expectation is for the homes to sell for about $3.3 million to $3.5 million each at auction on February 25.

The two terraces, among the larger offerings in Glebe, could be used by investors as boarding houses or to develop into a different business, or to be converted into a home, McGrath Leichhardt sales agent Michael Glynn said.

“These types of homes are few and far between … Places of this scale and size are pretty rare,” he said.

The 1870s Victorian terraces are close to Sydney University and local shops, which has made them desirable for boarding house tenants.

“There are plenty of people looking, there’s no shortage of buyers, but the market hasn’t been tested for a long time [with boarding houses].”

The last boarding house sale of relatively comparable size was in February 2013, when a 12-bedroom boarding house at 64-66 Glebe Point Road on 446 square metres sold for $2.2 million.

The price record in Glebe was broken in May 2016, when 1500 square metre Lyndhurst on Darghan Street sold for more than $7 million.

The mix of large terraces, heritage properties and freestanding houses has made Glebe attractive to a range of buyers.

Peter Kelaher managing director of buyer’s agency PK Property Group, said buyers of boarding houses should always check with council about any restrictions when redeveloping or altering the homes, and should consider any heritage overlays.

“Glebe is on fire at the moment, it’s as strong as Surry Hills and parts of Redfern,” he said.

He expects another 10 per cent growth for the Glebe market this year, citing a shortage of homes for sale.

And general manager of Cohen Handler’s inner west office, Natalija Tanevska, said Glebe had performed “exceptionally well” for many years.

“There is a mix of entry level terraces suited to first home buyers or young couples, and homes with large blocks more suitable to a growing family,” Ms Tanevska said.

She noted some areas are tightly held, in excess of 10 years plus, resulting in “low turnover”.