Forum Replies Created
No rates and no water. The only fee is a small GST management fee. But just FYI I have managed to contact Steve and he has mentioned that there are some alarm bells over here. If you are thinking of it, pls tread carefully.
Best regards,
PatLowPS sorry for the late reply but was out of town and thank you Steve for your insight and time. I do really appreciate it.
quote:
Pat,Is there no body corporate fees for this apartment? No rates or water charges?
kay henry
TQ for the ctc for Heritage BS. Will try them however yours was not a service apt while mine is so….
Best regards,
PatLowquote:
Hi Pat,I’ve bought an Apartment similar like the one you mentioned (mine is a 2BRM of the plan). Settlement day will be in January 2004.
The developer is going to place the Caretaker of the building in the Apartment. So practically it will be leased back to the developer but under a different company name (a $2 company?)
Location wise it’s very good, between a Shopping Centre and the Railway Station, 3 minutes walk either side. Restaurants and Cafes are in front of the door.
Lease is 1×5 plus optional 4×5 years.
Rent is 5% less then the normal rent for a new 2BRM apartment in the area, which is acceptable because there’s no need for a PM and no cost to look for other tenants in the future and for the lifetime of the loan.
There’s nothing mentioned about Bond money in the Contract though which according to my Solicitor is all right. Also I have to pay Rates and Body Corporate fee.
Unlike serviced apartments this is just a normal unfurnished apartment.
In your case you might pay for the renewal of loose furniture every so many years in the future probably.The price is lower then the usual 2BRM new apartments in this popular suburb in Brisbane.
(old price, about 30K difference now). It’s a High rise 8 storey building and located about 8 km from the CBD.So my strategy is Buy and Hold (Negative Gearing and CG) since I still believe that there’s still room for a price increase in the coming years especially because I got it for a lower price.
At the moment all the tax money I paid goes to the Taxman.I might sell it one day to another investor who also doesn’t want to be bothered by the task to look for good PMs and new tenants all the time.
Or I might keep and make it cashflow positive in the future?
Please let me know if somebody thinks I made a mistake here and any other comment would be appreciated!The down site re finance is because the apartment is leased back to the developer. The Financial Institutions just don’t like that. Don’t ask me why not.
But try Heritage BS., I have no problem to get finance from them through a Broker.
Later on I’ve split and restructured the loan, 80% IP and 20% PPOR (which has been paid off) plus LOC from 2 different Lending Institutions.Try that out if you still wish to purchase that apartment especially if it is cashflow positive.
Good luck!Dear Tim,
Thks for all the input. It was great and answered some questions I had too.
Best regards,
PatLowquote:
Hi PatLow,You may find that the room must be refit with new carpet, paint, etc every five or so years. The management gets the work done and the bill often goes to the investors. This should be in the contract.
I looked at a similar situation in Brisbane, but after having a long talk to some of the onsite management guys, I discovered that the rooms had depreciated almost every year since it had been built 12 years ago (very scary). The rent had gone up over this time, however.
Another thought that might be worth checking out…. if the place is trashed by a tenant the management puts in there, you may be up for the repair bill.
I liken this situation with that of a business… they raise capital by selling ‘shares’ (rooms) to build the place, and then pay the investors weekly ‘divedends’ (rent). Meanwhile, they run their business, with revenue (rent paid by tenants), expendature (maintainance, share paid back to investors and others) and profit (the difference).
Obviously, there are investors that find these arrangements attactive, otherwise they dont get built in the first place. I’d just say to tread carefully, as there are many of these units for sale all the time in Brisbane, which may not be a good sign.
The upside is that once you take the plunge there is very little contact with the place, just buy it and forget about it until you want to sell. No hassles chasing up tenants or anything, and like you said, no vacancies… ever.
Good luck in your hunt,
timMoney is an elastic resource, it can be created. Time is not.
TQ guys for the input.
David: there’s nothing in the contract to say the rental has to be in place if sold.
They do arrange finance but give only 70%. I had hope for higher to spread my equity, know what I mean.
Nic: vendor’s – Austpac PRD. I had a bank rep give me a conditional approval for 90% after going through my docs but not for service units.Regards,
PatLowHi Chris,
IS there a quick formula to calculate the LVR??
quote:
Blowie, you might also struggle with a loan dependant on the m2 of the unit.
Several banks would require a higher LVR if the unit is below 50m2 thus increasing your deposit to purchase.Chris
Hi Steve,
Just got online with you after reading your book which I bought a while ago but could not get to until now. Thks a million. It was an eye opener. I just need a little advice for the moment.
To make it short, I put a down on a high end property in Sydney b’cos they offered me a 10yr guaranteed rental which made money in the first month and is also pegged to the CPI, whichever is higher.
After reading all the gloom, is it still good to go into it or shall I defer as high end properties do have a higher chance to fall during bust. Furthermore interest rate just rose again in just 2 months.
Best regards,
PatLowquote:
Hi,Call me simple, but I would have thought that property prices coming off record highs would single the start of “buying season” for astute property investors.
As such, it also marks the end of “seller’s season”, where anything vaugely called a property increased in value.
I expect that I’ll buy more property in a down time than in a good time, provided I can:
Find the right property
At the right price
With the right person
Using the right strategyNow is the time to stand firm, take a position and act accordingly.
Buy your straw hats in the winter time [8D]
It’s only doom and gloom for those who bought without a strategy or became greedy.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********
