I have seen a deal where you can buy 2 units in a retirement complex for 200k & get $400 per week gross rent. I’m interested in comments on why someone should or shouldn’t invest in these types of prop. BTW, although they are termed “units” they are free standing houses.
Hi jambv,
The weekly rent appears to be good but there are few things you need to consider:
* Units in retirement village usually have limited capital growth
* You have no option but to rent the units through the management company.
* You can’t really add much value to the units because of its limited usage (that is retirmement unit)
* Check the body corporate, sinking fund etc and therefore the net yield.
* I am not sure what LVR the banks will offer but thats worth checking as well. If the units are small(ish) you may only get around 70% LVR.
Hope this helps.
Sanjiv
*******“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
jambv
Sanjiv has made some good points already.
On the financing front to be honest dependant on the terms of the managing agreement you might be lucky to finance the property full stop let alone get anywhere near 70% LVR.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
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I agree look into the sinking fund, maintenance costs etc. Do you have to resell through the managers? What horrific cost will they charge?
I never like the sound of any property where I can’t appoint my own manager, or selling agent, or tenants, or am locked into putting money into maintenance and sinking funds without having control of those costs. I don’t even like strata units. I have had a strata unit as an PPOR and I couldn’t put up a TV antenna as the old biddies had more voting power. When it was time that they though we should paint the place, I had no say in colour or cost, I just got slugged with a special levy as there was not enough in the sinking fund. I didn’t even think there was a problem with the current paint or its colour, but in a block of 7 units I had the sound of one hand clapping.
Do your research, and find out how long these units have been for sale also. You may have a hard time offloading them too.
kjs
Hi.
FYI, there’s a good piece on retirement property in the new (Feb) API mag.
Cheers,
Art‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
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