Finance question
How do I finance a co-living development?
Co-living is usually funded through specialist non-bank and private lenders, because most major banks have limited appetite for it. Construction debt commonly runs at 65% to 75% of total development cost, or up to 70% of gross realisation value, with your equity covering the rest, subject to lender assessment.
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The short answer
Room count decides which lender looks at you
Lenders treat co-living as a specialised asset, and the line that matters most is the number of rooms. Specialist lenders generally assess up to six rooms as a residential-style application, with gearing to 80% LVR against the property and the rent used in serviceability. From seven to twelve rooms or more, the scheme is assessed as commercial and valued on both the bricks and the rental income (co-living development cost guide). A 26-room scheme is firmly in commercial territory.
For the build itself, non-bank lenders commonly fund 65% to 75% of total development cost, or up to 70% of gross realisation value, with interest capitalised through construction. Private first mortgage lenders can reach to 80% of cost in the right location, at a higher price, and are often the only realistic option for a boarding house carrying the NSW affordable housing condition. Build costs give you the number to test: $80,000 to $130,000 a room in Western Sydney including common areas, before land, approvals and furniture.
The exit matters as much as the build. Once the scheme is complete and income has settled for three to six months, it is refinanced to a term loan against the commercial income valuation, generally at 60% to 70% rather than the 80% a standard residential term loan allows. Ventas is a broker across 40+ lenders, so we line up the construction lender and the refinance lender together, with no upfront fee to you; the lender pays us on settlement.
Do you qualify?
What a co-living lender asks to see.
Approval status
The co-living or boarding house pathway, and whether the DA is in hand.
A costed build
A builder's quote or QS estimate for the rooms, common areas and fire systems.
Projected rent per room
All-inclusive rent, occupancy and operating costs, not a standard rental yield.
Your equity and track record
Cash or property equity in the deal, and any prior projects.
Why the exit shapes the funding
Specialist lenders understand it
Furnished, all-inclusive rooms on short tenancies are priced by lenders who know the income model.
Interest is capitalised
No monthly cash drain during the build.
A refinance is planned up front
The term loan after completion is tested before you commit.
A worked example
A developer plans a 26-room western Sydney scheme with a total development cost of $4,418,000. At 70% of cost a non-bank lender might advance about $3.09 million, leaving about $1.33 million to find from the land deposit, savings or equity in another property. At 93% occupancy the scheme earns about $215,800 net a year, a 4.9% yield on cost. Illustrative only.
Common questions
Frequently asked questions
Will a major bank fund a co-living build?
Rarely. Most major banks have limited appetite for the asset class at any scale, so the market runs through specialist non-bank and private lenders who understand furnished, short-tenancy income.
How many rooms before it counts as commercial?
Specialist lenders generally treat up to six rooms as a residential-style application at up to 80% LVR. From seven to twelve rooms or more it is assessed as commercial, which changes the valuation and the pricing.
What does the refinance look like after completion?
Once income has stabilised for a rental history, typically three to six months, the facility is refinanced to a term loan. Gearing is generally 60% to 70% because of the specialised-use classification.
What should I send to get a number?
The site and approval status, the room count, a builder's quote or QS estimate, projected rent per room, your equity and any prior projects.