New build or conversion?

Great question—and one that depends heavily on your goals, budget, and timeline. Here's a structured comparison to help you weigh the pros and cons of building a new rooming house versus converting an existing dwelling:

Building from Scratch

✅ Pros:

  • Optimised Design: Purpose-built layouts allow for ensuite bathrooms, kitchenettes, and compliance with Class 1B standards from the outset.
  • No Legacy Issues: Avoids hidden structural problems, outdated wiring, or plumbing surprises.
  • Fast-Track Permits: In Victoria, new Class 1B builds may bypass planning permits and go straight to building permits.
  • Modern Appeal: New builds attract higher-quality tenants and command premium rents (often $280–$320/week per room).
  • Depreciation Benefits: Greater tax deductions due to new fixtures and construction.

❌ Cons:

  • Higher Upfront Costs: Land acquisition, design, and construction can be capital-intensive.
  • Longer Lead Time: From site selection to completion, expect 9–18 months depending on council approvals and builder availability.
  • Zoning Complexity: You’ll need to ensure the land is zoned appropriately and meets overlays for shared accommodation.
Converting an Existing House

✅ Pros:

  • Lower Initial Investment: Conversion costs typically range from $20,000 to $30,000.
  • Faster Turnaround: Renovations can be completed in weeks to a few months.
  • Established Location: Existing homes are often in mature suburbs with strong rental demand and infrastructure.

❌ Cons:

  • Design Limitations: Retrofitting may restrict room sizes, layouts, and compliance with fire safety and disability access standards.
  • Permit Complexity: If structural changes are involved, you’ll still need building permits and possibly planning approval.
  • Reduced Yield: Converted homes may not support as many rooms or amenities, limiting rental income potential.
Strategic Tip

If you're aiming for maximum yield and long-term scalability, building from scratch is often the better path. But if you're testing the waters or want to minimise upfront risk, a well-located conversion can be a smart entry point.