Colourful Redfern boarding house tipped to fetch about $4 million

“It’s well known in the area as the tallest, blue-est house on Cleveland Street,” said agent Scot Robertson, director of sales and leasing at commercial real estate agency TGC.

“It’s a magnificent building and you can imagine it ending up as a beautiful boutique hotel, a B&B, a backpackers’, or even being converted back into a grand residence.”

The grand terrace was named ‘Gracelands’ after graffiti was scrawled on the front wall. Photo: Supplied

Currently still being operated as fully-licensed budget accommodation, the house at 461 Cleveland Street returns about $190,000 a year gross, although rents have been kept deliberately low. Outgoings are about $30,000 a year. A cottage to the rear is separately let at $750 a week.

The main building and cottage, sitting on 455 square metres of land and with 486 square metres of internal space, are being auctioned on November 22. The owner, retired doctor Dr Suzanne O’Connor, who used to run a series of backpackers’ hostels all around Sydney, is selling in order to free up some cash for her children.

She bought the residence in 1996 for $725,000, after bikies set the place alight, apparently because the S&M brothel upstairs had fallen behind in its protection payments.

Its unknowing elderly owner had previously refused Dr O’Connor’s overtures to buy the property – one offer left in a note by her front door tied with a single rose – because she was a pious Christian and feared a backpacker hostel might mean boys and girls might be in the same room. But following the fire, she approached the doctor, knowing the necessary renovation would be beyond her means.

The property was renovated by the current owner. Photo: Supplied

“But I loved the house; I always had,” said Dr O’Connor, who gave the house its name ‘Gracelands’ after a wit scrawled the word in graffiti (and irony) on the side of the boarded-up, derelict-looking building. “I agreed to buy it on the spot, sight unseen.

“It was a shock going inside, though. The fire had simmered for three days, and destroyed the wooden staircase, so I had to climb a ladder to get to the first floor.

“Then seeing what was up there – all sorts of quite spectacular paraphernalia like manacles – was quite revelatory for us. But the place was always as solid as a rock.”

The mansion was built in the mid-1800s, its walls made from convict bricks – still indented with their thumbprints – as a grand residence for Patrick Stanley who served as the mayor of Redfern from 1876 to 1880. It was then named ‘Meath House’ after the town in Ireland from which he hailed.

The cottage at the back of the property. Photo: Supplied

The house was then owned by several families and then became cheap, shared accommodation. In the 1970s and 1980s it was home to a range of musicians, designers, artists and writers, including Nick Cave. Founder of design label Wheels & Dollbaby Melanie Greensmith remembers those days vividly.

“We all got on pretty well and thought we were so cool living there,” she once recounted. “I remember waking up to [musician] Tex Perkins in the kitchen early one morning looking so hot.”

Later, in the 1990s, it became the brothel Club Madea under ‘Mistress Sandra’. Following the fire, Dr O’Connor completely renovated the building to bring it up to date as a boarding house while still retaining many of its heritage features, such as ceiling roses.

Sadly, however, the last original black marble fireplace was lost when squatters were interrupted carrying it out by a magistrate who’d arrived to evict them, and dropped it, smashing it, in their haste to get away.

For the last 10 years operated by accommodation agency Furnished Property, it still garners positive reviews for its comfort, balconies off the rooms and shared facilities like the ground-floor lounge, dining room, kitchen and laundry, and outdoor paved terrace, and city views from the top floor. It has parking for four cars out the back.

A lot of the original details have been kept, and a few recent ones have been added. Photo: Supplied

Nick Tuxworth, Savills Australia associate director metropolitan and regional sales, who has sold a number of boarding houses, said the market for such properties was very strong.

“There’s a really low vacancy rate especially in such areas in the inner city near train stations, universities, and hospitals,” he said.

“Boarding houses used to have a stigma but not anymore with Sydney accommodation so unaffordable, and they’re very popular assets.”

Agent Scot Robertson said that with such high demand for accommodation complexes on the city fringe, he imagined it was likely to be picked up and converted, with extra vacant land, into a boutique hotel.

A 16-room boarding-house complex on Oakley Street, Paddington, recently sold for $5.25 million, and a 14-room building at Flinders Street, Darlinghurst, sold for $4.2 million.