I am seriously thinking about investing in a serviced apartment in the ACT CBD. This apartment is letted to a government agency for 5 years, guaranteeing a rental return for this time. The figures given to me indicate that the property is negatively geared (just). Similar sized apartments in the same area are appreciably higher in cost. I like the sound of having ‘guaranteed’ rent for the next 5 years, however can anyone indicate the appreciation of apartments as compared to other investments.
Thanking you
Hi Mark,
Welcome to PI forum! [
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Have you asked a bank how much they will give you towards the property (how much they will loan you)? I think when we tried to get a serviced apartment, they would only lend 70% LVR as the banks are not so keen on serviced apartments. They are not as easy to sell and they don’t experience the same capital growth as standart apartments.Cheers
Sooshie []“small steps make the journey” (SAS)
Hi Mark,
Some banks have stopped lending on these all together, due to the associated risk.
Take a close look at the management contract also. When selling, some will stipulate that the new owner will need to undertake the same agreement with the managers.
David Femia
Femia Property Group
Property Investment Consultants
http://www.femiapropertygroup.com.auHi Mark
I bought a 2 br apartment in a serviced apartment complex in ACT CBD 2 years ago & let it privately (+ve cashflow). Owners there have the options to join the serviced apartment group or live-in/let-out. I borrowed 80% from the bank without any problem. Its capital gain is not as good as houses but not too bad either & it’s easy to get tenants with good rental return.
Check if you have the option to let it privately after the lease ends. Recheck net return (rent – rate – body corp – insurance – managed fees …) & obtain a depreciation schedule if you can.
[
]Huey
Personally I think capital gains in ACT could be a bit hard to get as the market has already boomed.
Not only that, the Serviced apartment market is probobly the least likely property type to get capital growth in as they are sold primarily as an income positive investment, created largely through large depreciation schedules. Buying a negitive cash flow serviced apartment, in my opinion would be a bit dicey to say the least.
My 2 cents for free.
MJKBuying property in Canberra at moment is not a ‘investment’ and is not an ‘asset’. Prices have no relationship to earnings and somebody please tell me how it has any capital gains potential.
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