Bizarre way Hawthorn East family doubled home value and scored a $440k income stream
This Hawthorn East home will be turned into a childcare centre.
A Melbourne family have more than doubled the value of their home, and are set for a more than $400,000-a-year income stream after an unconventional downsizing move.
The Hawthorn East homeowners had been considering their next step, after owning the property for 30 years.
Rather than sell, Vantage Architecture director John Kachami suggested converting the old heritage home into a childcare centre.
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With just two others operating in the suburb charging up to $167 a child, and only one with vacancies, its one of a number of inner-city suburbs grappling with an undersupply of support for young families.
“The position, size of the landholding, and ease of access had all the hallmarks of a potential high-end and bespoke childcare facility,” Mr Kachami said.
“But finding the right operator for the project was critical in turning the idea into reality.”
JLL healthcare and life sciences senior executive Mark Stafford helped lock in an ASX-listed operator who will pay $442,000 a year in rent — with annual increases built into the contract.
The suburb’s median weekly rent for houses is $880 a week, or $45,760 a year.
A render of how the Hawthorn East home will look once it is operating as a childcare centre.
While a heritage home might rent for more, it would still be a fraction of what the family will now collect.
Beyond the huge rental returns, the property is also estimated to be worth $9m once the childcare centre opens in about 9-12 month’s time.
Today, automated valuations suggest the home is worth about $4.5m.
Mr Stafford said while turning existing homes into childcare centres wasn’t as common as it had been in the past, it could still work in many more Melbourne suburbs where land values were beyond what most operators could afford to pay to establish a new site.
“In inner-city, established locations it’s very much an opportunity — just because of the cost of land,” he said.
Block size is important, and typically homes need at least 1000sq m of land and typically 2000sq m to work as a childcare centre. Proximity to local school hubs where parents might already be travelling can also help.
Homeowners in many parts of Melbourne’s inner-city areas could try the same trick to boost their property’s value. Picture: Tony Gough
Mr Stafford added that value increases and rental returns would vary from suburb to suburb, with an area like Toorak likely to yield higher numbers, while Collingwood might generate lower figures — though could be just as viable.
He added that with government support for childcare increasing, reflecting a growing number of families needing a second income and childcare support, it was likely there would be rising demand for more centres.
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