Hello,
I am looking at a couple of properties in Highton/ Waurn Ponds, where Deakin University is located. There are 2 properties that are for sale in Highton within 2 minute walk to the campus. Both properties have the same return but there are a big difference in the price tag. One priced at low $395-425K and the other at $495K. The property that is at the lower end of the price range was actually purposely built to be rented out to students. The other is a family home and rented out to students. Both built 2 years ago and both fully furnished. The cheaper one has been furnished with new furniture 2 years ago.
Confused, which is the better offer. The family home with a higher price tag or the purposely built home for students. I feel the family home would be easier to re- sell but then compare to the purposely built home there is a good positve cashflow. Both returning approx $720 per week.
Help
I guess it is very much a horses for courses choice.
The cheaper property has been specifically built for student accomadation and therefore if you are happy in having multiple tenants in the property then this appears to be a good investment. The more expensive property obviously has an alternative tenant market and therefore may have more attraction to a future buyer down the track.
If however you have any non deductible debt on your own PPOR then why not look at the cheaper option and use the surplus cash flow to pay down some personal debt. Interest on the additiona $75-$100K debt is a reasonable amount to find each year.
Might want to think about the structure you use to acquire the property so as to provide you with options when it comes to distributing the income stream.
Richard Taylor | Australia's leading private lender
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