2021… be careful here.

Varsity Towers is an apartment block which is zoned “student accommodation”. It is within a short walk of Bond Uni which attracts well-funded students. There are a few one, two and three bedroom units, but the massive majority are 66sqm dual-key units with a wall down the centre dividing them into two separate studio apartments.

Owner occupiers don’t buy student accommodation for obvious reasons. Added to this, very few lenders will lend on student accommodation, and the few that do will only lend 60%. These factors mean that the vast majority of buyers don’t come anywhere near this segment of the market, so there are very few potential buyers if you ever want to sell. First warning.

Over the past 16 years since Romanza developed these apartments they have fallen in price by over 40%. Second warning.

The building leaks when it rains and the rectification bill is estimated at $millions. Special levies have started to accrue these funds (suspended due to COVID), but a lot more money will have to be raised from the unit owners. So, factor this in if you make any offers. Third and final warning.

Current rent for studios is around $250/week with some getting more. Budget at least 10% for an outside manager (7% +fees) or at least 15% for the on-site manager (12% +fees). Budget $9k+ for your levies and rates. Avoid the opaque pooled investment scheme, last financial year those owners only received $15k from which they then had to pay levies and rates. You do NOT get a parking space included with any type of unit (they are communal property).

If you only want the income (no capital growth) and are happy to tie-up your equity indefinitely Varsity Towers might be for you.