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  • Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225

    My partner and I are looking to invest in a serviced apartment, however when we approach the banks we are finding resistence to this style of property. We know that this will be a good investment because we have seen the returns and the proposal includes rental guarantees, so why won’t the banks accept this as security ?

    Profile photo of G-MAN007G-MAN007
    Member
    @g-man007
    Join Date: 2003
    Post Count: 37

    Make sure the head lease is an extremely secure well known company, banks tend to stay away from small accomodation below 50m2 as the believe it to be unlivable. Due to the size, the actually real estate is worth very little, thus If the head lease was to go under you would be left with an unsaleable apartment.

    Profile photo of truebluetrueblue
    Member
    @trueblue
    Join Date: 2003
    Post Count: 142

    Suggest you have a look at Blueboy’s post on page 9. You might find your asnswer there.

    Profile photo of Stuart WemyssStuart Wemyss
    Member
    @stuart-wemyss
    Join Date: 2003
    Post Count: 598

    Hi Cazdean

    One of the lenders concerns about serviced apartments is that they feel that the value of the rental guarantee is reflected in the purchase price. That’s why most lenders will restrict the LVR on such properties.

    Cheers

    Stu

    Property & Finance News
    at http://www.prosolution.com.au

    Profile photo of davidfemiadavidfemia
    Member
    @davidfemia
    Join Date: 2003
    Post Count: 89

    Hello Cazdean,

    I think stuart summed it up best. Its simply too high a risk, and they generally have a bad reputation with banks.

    Take a close look at the management contract also. They may require the apartment to be refurbished at your own expense, after a certain period of time.

    David Femia

    Femia Property Group
    Property Investment Consultants
    http://www.femiapropertygroup.com.au

    Profile photo of PropertyInvestorPropertyInvestor
    Member
    @propertyinvestor
    Join Date: 2003
    Post Count: 28

    Hi cazdean,

    Can you tell me which serviced apartment you are thinking about purchasing?
    I have some experience with them, so I may be able to give you some more insightful information. I may know the development very well.

    Regards,
    Mannie.

    “It’s too late to go back and make a brand new start, but from today you make a brand new end”.

Viewing 6 posts - 1 through 6 (of 6 total)

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