13 Aug Squash courts into micro-apartments – Ian Ugarte
Have you ever thought about investing in a squash court and re-developing it into mass accommodation? Ian Ugarte has been doing it very successfully. He talks about how to do and how he gets 4 apartments out of every court. 4 courts equals 16 apartments.
Kevin: I always love talking about making housing more affordable. The more affordable we can make it, particularly as investors, the better return we’re going to get. You know what they say: a happy tenant makes for a happy life.
I want to talk about affordability now with my next guest, Ian Ugarte from Small Is the New Big. Also, about his product, HI RES. G’day, Ian. How are you doing?
Ian: Hi. Good, how are you?
Kevin: Good, mate. Congratulations on the work that you’re doing because I know, off-air, we spoke. And we spoke in a recent Skype that I did on behalf of your investment property about what you’re doing with affordable housing, in particular around squash courts. Interesting. Tell me how that’s working.
Ian: Firstly, thank you. I appreciate it. I’ve met a lot of people who are really enjoying what we’re doing and the reasoning we’re doing it. When we come to the squash court component of it, we create micro-apartments. How we do that is use communal residents or rooming house or boarding house policies across the country depending on what state you’re in. Every state has a policy.
What we’ve found is that, obviously, squash courts – I’m giving away a couple of my trade secrets here.
Ian: Really, an area of the ‘70s, ‘80s, and possibly part of the ‘90s where it was quite a vibrant industry, but it has now died down a lot. The days of everyone having a squash racket or a tennis racket in their cupboard doesn’t happen anymore.
So the businesses are failing, and we’re going in and looking at the structures. With the right zoning in place, we’re actually taking those squash courts – the squash court is essentially about six meters by nine meters, so 54 square meters of space that is usually two to three stories high. What we do is we go and get approval and convert each one of those squash courts into four individual micro-apartments of about 22 to 25 square meters each. That means that, out of one squash court, we get four separate micro-apartments, which can rent, depending on where you are in the country, anywhere from $200 to $250 – maybe $300 sometimes. So essentially a minimum of $800 a week per squash court is what you get in cash flow.
Kevin: So the squash court that we would apply to match on, as an example, you’d turn into two apartments, or would that be one apartment?
Ian: No, into four. Two up and two down. [2:30 inaudible].
Kevin: Oh, yeah. Forgetting the air space, the ground floor is two and then there are another two above that.
Ian: Correct. With the structure and the way it’s built, we can actually [2:40 inaudible] fire rating is easily. Then, within each one of them, we create a bathroom area and a kitchenette area. Through the rest of the squash courts, we have a communal area – a little kitchen and a little living area where people commune if they want to. If not, they just go back to their own space.
Kevin: Quite incredible. You’re right about the construction because my memory of the squash courts that I used to play on is that they’re quite robust – very well built.
Ian: Yeah. There’s no give in the walls when you run into them. That’s for sure.
Kevin: I found that out on a few occasions. Or more precisely, my racket did. Obviously, this is providing a very good return. Are you finding that it works better in some markets than others, or is it pretty much wherever there is a squash court?
Ian: Wherever there’s a squash court. Whether it be regional or whether it be metro, the return on them is really great, remembering that my main focus always has been and always will be, since we started this process with HI RES, is to make sure that community has a benefit and an outcome.
When you’re providing someone a small studios space that’s self-contained for nearly a half to one-third off their normal rent, then they benefit in a bigger and greater way because they’re saving money towards them actually getting into their own housing in the next three to five years. So we’re not talking low socio people. We’re talking professionals that are working big hours and are just trying to get ahead. We’re talking about the 55+ single woman. We’re talking about 70-year-olds who are just trying to get a breather and have some money at the end of the week so they can pay those extra bills or just go to the club or go for a holiday once a year.
Kevin: This is really great news. I imagine that the councils worthy of doing it, too, would embrace this because they’re out to get more people into more affordable housing as well.
Ian: Yeah. Some councils and locals have some perception issues because, as soon as we say boarding house, they start to go for the hills. But what we do is high-end hotel rooms. Most councils understand it, especially when I show them the facts and figures. The facts and figures are we look back at the 2011 census and the 2016 census, and almost with every area we look at, 80% of the new households that have moved into that new area are singles and couples, and 80% of the housing are three-, four-, and five-bedroom houses. So all new housing is way too big, and all new households need smaller housing. So what we’re doing is fixing a massive marketplace.
Kevin: You need to create another name. The name “boarding room” doesn’t really describe what you do.
Ian: No. I like the term “communal residence,” which is the Tasmanian version of it. What we’re creating is communal living. The reason they use the boarding house policy is because there are exemptions and cash being offered across the country, and they need to actually tie the policy into legislation. The word “boarding” has to be used in it.
As an example, in Victoria, New South Wales, if you build these, you actually have a zero land tax – so a full land tax exemption if you build style of a combination.
Kevin: Wonderful stuff. If you’d like to know a little bit more about this, the website to go to is SmallIsTheNewBig.com.au. Ian Ugarte has been my guest. Ian, thanks again for your time. Congratulations on the work that you’re doing. I think it’s outstanding.
Ian: Awesome. Thank you, Kevin.