The short version
- Across our current projects, land plus a nine-suite Class 1b rooming house costs $1.13 million to $1.61 million in total.
- The build is the fixed part: a base contract of $790,000 plus a $30,000 furniture package on every project. Land is what varies, from $290,000 to $720,000.
- Our Noble Park example costs $1,553,270 all-in and is projected to rent for $3,420 a week, a 11.4% gross yield.
- Running costs are about 20% of the rent, because the owner pays the bills. Budget separately for land tax and finance costs during the build.
The short answer
On our current projects, the total cost of land plus a purpose-built, nine-suite rooming house runs from $1.13 million to $1.61 million. Here’s how the 21 projects compare:
| Lowest | Highest | |
|---|---|---|
| Land | $290,000 | $720,000 |
| Total project cost | $1,130,470 | $1,606,270 |
| Rent per room, per week | $330 | $400 |
| Gross rent, per year | $154,440 | $187,200 |
| Projected gross yield | 10.7% | 14.5% |
Keyspace feasibilities, September 2026. 12 of the 21 projects are sold.
The build price is the same on every project. The land is what moves the total, and the land also sets the rent, because better-located blocks attract higher room rents.
A worked example: Noble Park
Here’s the full cost of one available project, a nine-suite rooming house in Noble Park, straight from its feasibility.
Buying the land
| Cost | Amount |
|---|---|
| Land purchase price | $670,000 |
| Stamp duty (land transfer duty) | $35,270 |
| Demolition and site preparation | $20,000 |
| Valuation fees | $5,000 |
| Conveyancing | $3,000 |
| Total land costs | $733,270 |
Building the rooming house
| Cost | Amount |
|---|---|
| Base build contract | $790,000 |
| Furniture package | $30,000 |
| Landscaping | Included |
| Utility connections | Included |
| Total construction costs | $820,000 |
The total
| Amount | |
|---|---|
| Land costs | $733,270 |
| Construction costs | $820,000 |
| Total project cost | $1,553,270 |
At $380 per room per week, nine rooms bring in $3,420 a week, or $177,840 a year: a projected gross yield of 11.4%.
How stamp duty is worked out
In Victoria, stamp duty (land transfer duty) is charged on the land you buy. You don’t pay it on the build contract, which is one reason building new can be cheaper than buying an existing rooming house.
For an investment property, the State Revenue Office’s general rate for land worth more than $130,000 and up to $960,000 is “$2870 plus 6% of the dutiable value in excess of $130,000”. On Noble Park’s $670,000 block, that’s $2,870 plus 6% of $540,000, which comes to $35,270. On our lowest-priced block, $290,000, it’s $12,470.
Costs people forget
- Interest during construction. A construction loan draws down as the build progresses, and you pay interest on each draw before any rent comes in.
- Loan fees. Establishment fees, valuation fees and any lender’s mortgage insurance.
- Land tax. Charged each year on the site value of all the land you hold. At the general rates, a taxable value of $670,000 would attract about $2,670 a year if it were your only land. A rooming house exemption exists but the conditions are strict. See our risks guide.
- Council registration. The rooming house must be registered with the council before residents move in, and councils charge a fee.
- Filling the rooms. Allow for a few weeks after handover while the first residents are found and screened.
- A depreciation schedule. A quantity surveyor’s report so your accountant can claim depreciation on the building and fittings.
What it costs to run
Rooming house rent usually includes bills, so the owner pays power, water and internet. In the Noble Park feasibility, running costs are $35,424 a year:
| Cost | Per year |
|---|---|
| Property management (10% of rent) | $17,784 |
| Council rates | $2,500 |
| Power | $4,000 |
| Water | $1,000 |
| Internet | $1,440 |
| Insurance | $5,000 |
| Waste management | $1,700 |
| Maintenance allowance | $2,000 |
| Total | $35,424 |
After those costs, the property is projected to net $142,416 a year. With an 80% loan of $1,242,616 at 7.5% interest-only, the interest is $93,196 a year, leaving projected cash flow of $49,220 a year before land tax and income tax. The 20% deposit is $310,654.
Across our current projects, running costs range from $33,084 to $36,360 a year. The difference is the 10% management fee, which rises and falls with the rent. Everything else is the same.
What the build price includes
The $790,000 base contract is for a purpose-built Class 1b rooming house of about 295 m², just under the 300 m² limit for that building class. It has nine self-contained suites, each with its own ensuite, kitchenette and courtyard, plus a shared kitchen, dining area and laundry.
It also includes the things that keep running costs and compliance risk down: interconnected smoke alarms and emergency lighting, acoustic insulation between suites, a 7-star energy rating with a 10 kW solar system and double glazing, heat-pump hot water, split-system heating and cooling in every suite, digital locks and CCTV. Inclusions can vary by site.
Building new or converting a house
Converting an existing house can look cheaper, but the house has to be brought up to Class 1b, with the fire safety and other upgrades that involves, and it still has to meet the rooming house minimum standards. Layouts designed for one family rarely give nine private, self-contained rooms. Get a building surveyor’s advice on the upgrade cost before you buy, and read our guide to Class 1b.
Questions
How much deposit do I need?
It depends on your lender and how you fund it. Our feasibilities assume a 20% deposit, which on current projects ranges from $226,094 to $321,254. Many investors use equity in a property they already own rather than cash. A broker will confirm what applies to you.
Why is the build price the same on every project?
Every Keyspace home uses the same nine-suite design and specification, adjusted to each site. A standard design lets the builder price it consistently. Site-specific costs, such as demolition, are listed separately in each feasibility.
Is it cheaper to build a smaller rooming house?
The build is cheaper, but you have fewer rooms to earn rent. Much of the cost of land, approvals and shared spaces is the same either way, which is why our homes use the full nine bedrooms that Clause 52.23 allows.
Sources
- State Revenue Office Victoria, Land transfer duty: non-principal place of residence (current rates)
- State Revenue Office Victoria, Land tax (current rates)
- State Revenue Office Victoria, Land tax exemption for rooming houses
- Victoria Planning Provisions, Clause 52.23 Rooming house
- Australian Building Codes Board, NCC building classifications
- Keyspace Property, current project list and feasibilities
Written by Keyspace Property
We find the land, arrange the build and manage purpose-built rooming houses for investors in Victoria. We’re paid by the builder, so we’re not independent. How we’re paid.
General information only, not financial, tax or legal advice. Figures from Keyspace feasibilities are projections based on the assumptions shown, not guarantees. Rules and rates are as at 26 September 2026; check them before you act, and get independent advice about your own situation.