All Topics / Finance / Investing in Managed Apartments in Melbourne CBD

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  • Profile photo of cazmeistercazmeister
    Participant
    @cazmeister
    Join Date: 2006
    Post Count: 5

    I came across some stata titled apartments for sale in the CBD. This interesting thing was that all the outgoings are paid by the the management company with a guaranteed rental income.
    These are typically one or two bedroom apartments. The price is not dictated by the the land value but the by the rental return.
    I was thinking of this as an entry level in to investing in property.
    However when I approached the banks they replied that they would not fianance against this type of property.

    Has anyone had experience with this type of property before?
    Where can I get finance?[worried]

    Profile photo of Mr MortgageMr Mortgage
    Member
    @mr-mortgage
    Join Date: 2006
    Post Count: 7

    Most lenders don’t like serviced apartments because they are looked on as a specialty security, ie not everyones cup of tea. If the bank is left holding the property due to a default by the borrower, they feel that the property may be harder to sell and subsequently revovery for the lender becomes harder. As a consequence their risk is increased and thats why most lender either refuse to lend on them or will do so but at a much lower ratio, normally 60%

    Good Luck

    Mr Mortgage
    [email protected]

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Think you would get more than 60% LVR (we recently did one at 75%) but i agree with MrM.

    Cheers

    Richard Taylor
    Residential & Commercial Finance Broker.
    Licensed Financial Planner. Ph: 07 3720 1888
    [email protected]
    Looking for life cover – We Guarantee to beat any quote you have in writing.

    Richard Taylor | Australia's leading private lender

    Profile photo of cazmeistercazmeister
    Participant
    @cazmeister
    Join Date: 2006
    Post Count: 5

    Thanks guys for your replies. I guess waht appeals is the simplicity of the deal. For instance the Manager pays all the outgoings and a guaranteed increased in income of 3% PA. And there is no vacancy risk. Hence the lower return. The down side is that there is nothing I can personally do to the property to make increase its value. Looks like I need to do more homework on the true returns.[blush2]

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