i have come across what seems to be a pretty good deal. it’s a small pad (5 – 6yrs old) in a motel type complex where the rent is pretty good. it’s leased to a third party for five years with further options available. the rent is guaranteed irrespective if it’s tenanted or not. the tenant pays all, body corporate fees, rates insurance, maintenance etc. with my particuler sircumstanes, it appears that it’ll be cashflow positive in it’s second to third year, depending on my negotiating skills.
has anyone come across these sort of investment opportunities before, and what are your thoughts. i expect that in 4 years when the lease runs out and is not renewed, and i sold, i would probably be in front by a couple of grand.
for a property in a metro area it doesn’t seems at all bad (or maybe that’s wishful thinkingon my part), but i wonder if i shouldn’t be better off using what funds i have on something else.
your thoughts would be greatly appreciated.
Serviced Apartments/hotel rooms are very hard to obtain finance on.You are looking at maybe 50%-65% lvr and lenders do not like doing them as a stand alone deal and expect other security to be lodged as well.
They can be very hard to sell, as there is a limited market.
Lenders do not like rental guarantees as they are often inflated rents and once the lease is over the rent likely to be received is much less than the rental guarantee.
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Originally posted by wubbdubb:has anyone come across these sort of investment opportunities before, and what are your thoughts. i expect that in 4 years when the lease runs out and is not renewed, and i sold, i would probably be in front by a couple of grand.
As per Kwilko’s comments – there are also a number of other comments made in the past so I recommend a search of the forum. Use the ‘search’ button top left under ‘forum boards’ for previous discussions.
I would also add to a couple of grand after putting on the line XXXX dollars – is it worth it?
Rent guarantees generally serve to attract beginning investors – having the security of rental income does give certainty but there is a ‘cost’ involved (Kwilko’s comments).
If you have a well researched property in good areas with good employment prospects and you price the rent right then finding tenants is not usually a difficult matter.
Derek
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0409 882 958
Property investment advice and researched property in quality locations available.When you say ‘small’ how small do you mean? Size matters.
I would be extremely weary of any so called guarranteed leases etc. These are essentially meaningless if the company closes down or the person goes bankrupt. Could you re-lease it at similar rents if this happened?
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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