Purpose built uni housing opportunity

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IMCharlie
Member
@imcharlie
Join Date: 2006
Post Count: 3
April 2, 2006 - 8:57 am
Hi all.
I’ve stumbled across an opportunity to buy either three bedroom or four bedroom units built specifically for uni students. Each bedroom has its own ensuite and the units are fully furnished. The 3 bedder is approx 250K and returning $325 per week.
What I’d like to know is: –
Do these numbers require further attention?
Taken that it is a purpose built thing does it makes the financing of such a unit more difficult? I seem to remember reading/hearing that banks may not be too happy about lending on such units. I would be looking at holding these long term.
Please help
Mortgage Hunter
Participant
@mortgage-hunter
Join Date: 2003
Post Count: 3,781
April 2, 2006 - 11:07 am
Are they similar to a standard three bedroom townhouse in which case you may get a residential loan. Or are they more like a college setup which requires commercial finance.
be aware that you can have an extended vacancy over the summer in mosy places.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
crusher
Participant
@crusher
Join Date: 2002
Post Count: 186
April 3, 2006 - 12:10 pm
Hi IM Charlie,
It can be difficult to get a residential loan for these dwellings and they can be hard to sell for that same reason. Once costs are taken into account the yield is usually not that good, especially if they are only tenanted for the Uni year (not the full 52 weeks) or if students are moving in and out.
You will probably get reasoanble depreciation but find out what the running costs involved in owning the dwelling are because they are usually quite high. Remember it is NETreturn that counts.
I suggest you find out the following (along with normal due diligence):
1. Are they only rented for the Uni season (about 42 weeks)?
2. What is the rental history (are all rooms usually filled)?
3. What are the management costs?
4. What are the body corp, sinking fund, insurance, cleaning costs and any other compulsory outlay.
5. How much do management charge to find a tenant for each time a room needs to be filled?
6. Can it be rented to non-student tenants?
I hope this helps…
Todd Burns
http://www.freepropertyhelp.com.au