What should I look for in the numbers to know if a co-living deal actually stacks up?

Answering: What should I look for in the numbers to know if a co-living deal actually stacks up?

Estimated reading time: 11 min read

Yes, a co-living deal stacks up when eight specific numbers all pass scrutiny, with gross yields hitting 10-12% in Melbourne markets and verified occupancy rates exceeding 98%. The process involves calculating yields using the formula (weekly rent × 52) ÷ purchase price, cross-referencing room rates against Domain and REA comparables, and confirming 1B certification status with the Victorian Building Authority before committing funds. Based on Harmony Group’s 8 critical numbers derived from evaluating 200+ projects worth over $210 million, properties meeting all benchmarks across Melbourne, Adelaide, and Perth show 93% of selected investments meet or exceed initial income projections.

You have likely encountered co-living opportunities promising exceptional returns, only to find the projections feel optimistic or the supporting data seems thin. This hesitation is warranted. Property investors across Melbourne understand traditional residential metrics but often lack specific benchmarks for co-living due diligence. Without clear numbers to verify, separating genuine opportunities from fantasy deals becomes nearly impossible.

The reality is that success depends on rigorous verification of every claim made by developers and property managers. Most co-living deals fail one or more critical tests when examined closely, which explains why experienced analysts reject 85% of opportunities they evaluate. Your ability to identify these failures before purchasing determines whether you achieve positive cash flow from settlement or spend years recovering from an underperforming asset.

This guide covers the exact numbers used in a proprietary 118-point analysis framework, adapted for investors conducting their own co-living due diligence Melbourne research. Each benchmark comes from operating assets across Melbourne, Adelaide, and Perth rather than theoretical projections.

Key Insights

  • Melbourne outer growth corridors typically yield 10-11% for compliant co-living properties, while Adelaide delivers 11-12% due to lower entry prices.
  • The biggest red flag remains projected room rates sitting 20% above current market comparables.

Keep reading for full details below.

Table of Contents

The Core Numbers That Matter

Gross yield calculation forms the foundation of co-living due diligence Melbourne analysis. The formula is straightforward: multiply weekly rent by 52, then divide by purchase price. Properties must hit 10-12% using this calculation with verified comparable rents, not developer projections. Anything below this benchmark typically indicates negative cash flow from settlement, regardless of what marketing materials suggest.

Room rate verification through Domain and REA comparables is non-negotiable for any serious investor. Search current listings in your target suburb and compare advertised room rates to what the developer projects. Inflated projections sitting 20% or more above current market comparables represent the single biggest red flag in co-living deals. When you spot this discrepancy, walk away immediately.

The 118-point analysis framework applied across $210+ million in portfolio evaluation shows specialist property managers achieving 98%+ occupancy rates on managed portfolios. These benchmarks come from operating assets, not theoretical models. Vacancy rates should sit under 2% in well-located properties with competent management. Request 12-month occupancy data from any property manager involved in your deal.

Victorian Building Authority 1B certification must be confirmed before construction starts in Melbourne. Properties without this certification are legally non-compliant and effectively unsellable. Adelaide and Perth have similar compliance pathways, though Melbourne maintains the strictest requirements. Never accept verbal confirmation of certification status.

  • Calculate gross yield yourself using actual comparable room rates from current Domain and REA listings in your target suburb
  • Request occupancy data from the property manager for their last 12 months and compare their performance to the 98%+ benchmark

Builder and Management Track Records

Builders need 10 or more completed co-living projects minimum across Melbourne, Adelaide, or Perth to demonstrate genuine competency in this specialised construction type. First-time co-living developers consistently blow budgets and timelines, creating settlement delays and cost overruns that destroy your projected returns. Track records spanning 200+ projects over 15 years separate proven operators from one-off developers learning on your investment.

Property managers must specialise in co-living with documented tenant waitlists proving genuine demand in your target suburb. Generalist residential managers often underperform in co-living occupancy and rent collection because they lack systems designed for multi-tenant properties. Ask any proposed manager for their current waitlist numbers and average time to fill vacancies. If they cannot provide this data, find someone who can.

Partnerships with SQM Research validate actual rental demand in target suburbs using independent data rather than developer optimism. Specialist property managers holding financial interest in every project ensure alignment between their incentives and your investment performance. This structure means managers prioritise occupancy over shortcuts because their returns depend on your success.

Council approval status must be verified personally by pulling the development application from your local council. Never trust verbal confirmations, particularly in Melbourne where Victorian Building Authority requirements create additional complexity. Approval timelines vary significantly: Melbourne takes 4-6 months, Adelaide 2-3 months, and Perth 3-5 months. Factor these windows into your settlement planning.

  • Visit three completed projects by your proposed builder to verify quality standards, actual occupancy rates, and current tenant satisfaction
  • Pull SQM Research data yourself for your target suburb to confirm vacancy rates and rental demand trends

Melbourne, Adelaide and Perth Benchmarks

Melbourne co-living due diligence requires understanding local yield expectations across different precincts. Outer growth corridors with strong public transport links, including Dandenong, Footscray, and Broadmeadows areas, typically yield 10-11%. Adelaide delivers 11-12% yields with lower entry prices but requires careful suburb selection around university zones and transport hubs. Perth markets show 10.5-11.5% yields with mining town proximity premiums but carry higher vacancy risk if resource cycles shift.

Each market carries different council compliance costs affecting your true cash flow. Melbourne ranges from $5,000 to $25,000 with the strictest 1B certification pathway. Adelaide offers more flexibility in compliance requirements, while Perth sits between them. Factor these costs into your gross yield calculation to ensure your numbers reflect reality rather than pre-compliance projections.

Transport infrastructure plans directly impact future demand across all three markets. Melbourne’s suburban rail loop developments influence rental demand in affected corridors. Adelaide’s lower barrier to entry attracts investors but requires suburb-specific due diligence to identify areas with genuine tenant demand. Perth’s mining town accommodation needs create different council priorities compared to capital city requirements.

Local council relationships matter significantly for approval timelines and ongoing compliance. Melbourne councils scrutinise shared amenities and density carefully. Adelaide councils prioritise affordability alignment with local housing strategies. Perth councils focus on mining town accommodation needs and resource sector support. Understanding your target council’s priorities helps predict approval outcomes.

  • Compare your property’s projected yield to these specific market benchmarks and model different vacancy scenarios using a conservative 5% assumption
  • Research your target suburb’s transport infrastructure plans via local council and PTV, Adelaide Metro, or PTA to project future rental demand

Closing

Co-living due diligence Melbourne ultimately comes down to verifying eight specific numbers before committing capital. The gross yield formula, room rate comparables, vacancy benchmarks, 1B certification, specialist property manager data, builder track records, council approval status, and SQM Research market validation together reveal whether a deal genuinely stacks up or relies on optimistic assumptions. Run every opportunity through these tests using conservative scenarios, and walk away from any deal where the numbers do not hold up under scrutiny.

For a deeper look, visit https://theharmonygroup.com.au/co-living/

Frequently Asked Questions

Q: What’s the biggest red flag in co-living investment numbers?

A: Projected room rates that are 20% above current market comparables on Domain and REA listings. If a deal relies on premium rents that don’t exist in the market today, walk away immediately—that’s the clearest sign a co-living investment is speculative rather than cash-flow positive. Other critical red flags include missing 1B certification or unclear council approval status, builders with fewer than 10 completed co-living projects, property managers without documented tenant waitlists or 12-month occupancy data, and anyone promising yields above 12% without showing operating properties in your target suburb actually achieving those returns. Use a property cashflow calculator to stress-test the numbers yourself rather than trusting developer projections alone.

Q: Do I need specialist advice to evaluate a co-living due diligence Melbourne opportunity, or can I do this myself?

A: You can absolutely run the core numbers yourself using free online cashflow calculators and public data from Domain, REA, and SQM Research—that’s the whole point of understanding the 8 critical numbers we’ve outlined. However, specialist co-living advisors bring two critical advantages: they’ve evaluated hundreds of projects and can spot assumptions that look reasonable on paper but won’t perform in practice, and they have relationships with property managers and builders that let them verify claims you’d otherwise have to trust verbally. If you’re investing over $500,000 or buying your first co-living property, getting independent rental appraisals from two specialist managers is worth the investment—it typically costs $500–$1,500 and can save you from a six-figure mistake.

Q: How long does the co-living due diligence process actually take, and when should I expect to see positive cash flow?

A: Thorough due diligence takes 4–8 weeks if you’re pulling council approvals, getting occupancy data from property managers, and running multiple cashflow scenarios. Construction timelines vary significantly by market—Melbourne typically takes 18–24 months from approval to completion, Adelaide 12–18 months, and Perth 15–20 months depending on council and builder workflow. Once settled, a co-living property structured correctly should deliver positive cash flow from day one with a specialist property manager in place; if the numbers don’t work immediately after settlement, the deal wasn’t fundamentally sound. Harmony Group’s analysis of 200+ projects shows that 93% of properties selected using the 118-point framework meet or exceed initial income projections when these 8 critical numbers are validated upfront.

Q: What’s the first step if I’ve found a property and want to start evaluating it properly?

A: Start by calculating the gross yield yourself using the formula (weekly rent × 52) ÷ purchase price and compare it against the 10–12% benchmark for your market (Melbourne outer growth corridors 10–11%, Adelaide 11–12%, Perth 10.5–11.5%). Download a free cashflow calculator from The Property Forge or Fresh Start Advisory, input conservative assumptions (5% vacancy, not 0%), and model three scenarios—best case, realistic case, and worst case. Then request 12 months of actual occupancy data from the property manager and pull the council development application yourself to verify 1B certification status. If those numbers stack up, book a consultation with a specialist co-living property manager to get an independent rental appraisal before committing further.

Want to Learn More?

We’ve drawn on decades of experience and industry expertise to create this comprehensive guide for property investors across Melbourne, Adelaide, and Perth. Our approach is grounded in evaluating over 200 co-living projects worth $210+ million and partnering with specialist managers and researchers who live the numbers every day.

Citations

For Melbourne properties specifically, co-living classification requires verification of Victorian Building Authority 1B certification requirements before construction commencement—Adelaide and Perth have similar compliance pathways through their respective state building authorities. SQM Research rental demand and vacancy metrics for each suburb provide the market validation that separates speculative deals from genuine opportunities.

If you’d like to learn more, visit https://theharmonygroup.com.au/co-living/ to explore how we approach co-living due diligence and the 118-point analysis framework we apply to every property evaluation.

Ready to see how your co-living investment stacks up against these eight critical numbers? We’ll review the numbers with you honestly—showing you properties that actually pass all eight tests, and being direct if a deal isn’t right for your situation. With skin in the game on every project we partner on and specialist property managers achieving 98%+ occupancy rates on our managed portfolios, we’re confident you’ll know exactly where your investment stands before you commit a single dollar.

BOOK FREE STRATEGY SESSION
EXPLORE CO-LIVING →
86%

Quality Verified

This content scored 86% in the Probably Genius Publication Readiness Assessment, meeting standards for direct answers, section depth, proof points, citation quality, and AI extractability.

Recent Posts