Hi ajayayyar,

the Rental guarantee sounds good in theory but should the company who manages it goes bankrupt or another company takes over management, that rental guarantee wont be worth the paper its written on, I would definately find out the vacancy rate of the building is
because if the above happens you might have to rent it out as a normal aparment and it might not achieve $440pw and that will hurt your cashflow ..

there is also 220 units in the block, there will always be a percentage for sale at any one time there is no scarcity their and therefore I believe thats why you wont get the growth out of it and not to mension the banks will want a lower LVR which means you have to tie up more of you own cash in it..

rental yields are good at the moment in Sydney CBD

eg. I just went uncondional (on friday) on a 53sqm studio with annexed bedroom(looks like a 1 bedroom) with balcony and district views(5th floor) 
a sercure carspace in a modern(1998) sercure residential apartment block (31 apartments in the block) right near central station in Surry hills on chalmers st I got it for $325,000 on 95% finance at 7.63% (CBA) interest rate IO loan, its currently renting $400 pw
strata $750pq the lease runs out soon and the one next door is renting $420..

all im saying is you can get good yields and better growth from residential apartment than you would from this executive apartment without the risk..

good luck happy investing

Hi Kev,

An investment loan is an Interest only loan (IO), 

the repayments are less than a Principle & Interest loan (P&I) (the usual home owners mortgage) because you are only paying the Interest  on the loan (so as long as it stays IO the principle debt will remain)

an IO loan is usual for a set period of time (mines 5yrs) at the end of this time it converts to P&I..

most property investors use them because they help free up cash flow which in turn allows them to hold more properties

eg.  A) $300,000 IO loan monthly repayments at 8.63% will be $2,157 per month (Commonwealth bank) (this is an actual loan I have a pre-approval for)
        
         $300,000 P&I loan monthly repayments at 8.63 will be 2,442 per month     (Commonwealth bank)

so if you use option A you will be $285 per month better off.

most people only use IO loans for property in growth areas like capital cities

also its the Interest part of the loan that is tax deductible…not the princible

all the best happy investing

Hey give90, 

my fiance and I have a one bedroom apartment in Sydney cbd, we have done very well out of it.

main points Ive found is:

-Get one in a small block (up to 30 units) as it has more scarcity, than a block of 150 apartments where there will always  be some for-sale at any one time

-Avoid ground floor apartments due to crime and ugly bars on your windows, Ive found tenants would rather pay a bit more rent and be off the ground floor and feel a bit safer without bars on the windows

-Avoid blocks  with gym/pool/concierge and alot of elevators as the strata fees are high due to the maintenance and this will eat into your cash-flow

-if you need LMI they dont like anything with a floor space less than 50 metres

all the best

Hi Calvinci,  

I would get a another building inspector in, if he comes back with the same findings and says its a minor fault,
I would get some quotes of how much it would cost to fix it, take that to the vendor and ask for a cheaper sale price or

if you have a pending finance clause in the contract (you should have one) you could say that you cant get finance the deal will fall over..  its a last resort but could be the difference in you getting an expensive lemon, you could lose part of your deposit as well(im assuming you put a deposit down)

Tip 1) always take digital camera photos(ask first) when looking through a property, so you can refer back to them later when you have seen 8 potential IPs that day…

Tip 2) talk to the neighbours, they are a wealth of info and usually more than happy to chat.

Tip 3) take a note book and pen it makes you look more professional

Tip 4) Money saved is money made

Hey Guys,  

I agree with Linar, set up a line of credit to help with repayments if your struggling.
 Your 2.3 million property portfollio will grow more than 30K a yr… I dont believe it will effect you greatly by drawing down 30k  from a line of credit per yr

have a look at a book called "How to achieve wealth for life"

its written by Tony Melvin & Ed Chan it discusses this in more detail..

all the best