Looking at furnished apartments, let out short term. Returning 9.4% after rates,insur,maint etc.
This return does not account for cost of management. Currently manager lives on site and his housing cost not part of above return.(house is part of total value but no rent allowed for it)Management wage ($15,000)to come off above return, which brings it back to 7.6%, nett after everything.
These apartments are saleable as is, or strata titled, or as ord res flats, so possibility of future capital gains for normal residential units remain.A few options.
Buildings and furnishings only 2 yr old.Price is as per valuation as normal res flats, and this is the figure I have used to work out returns.
Is 7.6 % enuff? It is in a city of 90,000. I wish to keep it as is for about 3 years, then lease out as a going concern.
Sorry if I have confused you with the convoluted way I have explained this. I am new to this. Please be gentle with me!
Giddo[cigar]Giddo,
More detail please….for example
1. How big (ie size sqm)- this might impact financing
2. How many in development?
3. Who is the the target market for rentals eg students
4. Comparable sales in area. What do you mean by valuation (is that sales price or a valuation by valuer?)
5. Wish to keep for 3 years & then lease out – What does that mean?? Aren’t you renting out anyway?
6. Finishes, quality of constructionThank you WOODSMAN,
I’ll try to clarify. Two title deeds side by side. Each block is 690 sq m.One has a triplex on it built 2 years ago. (1x2br 2×1 br) The other has a 1954 2 br and s out chamfer home, and two single bedroom units at the back of the block. these were built only 1 year ago. All the units match and are of brick veneer construction w/- tiled living areas. Also each has a complete kitchen and laundry. I E> Able to be tenanted on a permanant res. basis.
House is used by manager and is in good order. All have full curtains and wood blinds and split system air cons.
Situated as the closest accommm near a major private hospital, servicing an outback area.
Occupancy is no problem, with almost nil advertising.
Re – leasing I was thinking about leasing as a block to a person interested in managing them. The management is more hands on than av res property management. They are serviced weekly and include linen crockery etc.
Although I haven’t had a valuer look at this stage, I am confident of the value based on normal res rents at 5.5% gross (normal for this town).This makes it worth $850k, bringing in $80k before cost of management, but after every other cost.
Sorry if this sounds a bit complex the way I have explained it. Can you help with any advice? Any body else’s advice v welcome too.
Thank you
GIDDI GIDDO[cigar]ALLO ALLO – Anybody there?
I am a little concerned that I have explained this situation poorly and scared off valuable assistance….
Any ideas anyone?
Giddo[eh]This sounds like a motel room…?
[blink]hello foundation,
No actually not motel rooms but one and two bedroom accommodation units. 3 of them average about 86 sq metres and the other two are 45 sq metres each. The house is 100 sq metres.
Thank you
GIDDO[handlebars]It is generally much harder to finance serviced apartment, even more so if in a country area and if under 50 sqm. This can limit gains as your resale market is restricted.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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