I am new at this so I thought I would write to you all for your feed back.
Their was a 1 bed * 1 bathroom unit approx 60sqm selling for $62000 and renting out at $115 per week. The strata fees were around $600 per year. The unit is located in the costal centre of town on the main strip. The town is a popular holiday area with a lot of canal development around it and lot of retires living their. On school holidays the units get rented out at $600 per week.
I have been told by the real estate agent that several more of these units will be available soon.
I passed on this unit as was unsure and I suppose nervous of the idea purchasing a investment property rather than buying to live.
My family keep convincing me that it would be a silly thing to do, because their are too many units or apartments and they are worth less.
Would you consider this unit a good buy?
I could have bought the property outright and still have money left over. Do you think paying just the deposit would be better?
Are units worth investing in compare to free standing houses?
Signed – Confused[?]
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] hi ,will it make you a profit? personally i dont own units but would consider buying them if the right deal came along,but a 1 bedroom i’m not too keen on[]Personally I stick to houses as all the value is in the land. Value of the dwelling goes down over time, value of the land increases (theoretically).
I definitely don’t do holiday rentals – house or unit. Too many variables, too many extra costs, too much of a niche investment if I ever wish to sell.
I agree with polar_bear. land goes up in price whilst buildings go down. Also – I actually live in a strata complex and would NEVER EVER recommend them to either an investor or an owner occupier. With a strata unit – you’re investment is never your own. You’re always “governed” by the Body Corporate. Also – if the corporation is “managed” by a strata assistant, then he/she almost assumes more power in the corporation than the owners. I have never owned a strata unit which is managed by the owners but I could imagine that the situation could be even worse. Everyone seems to get very POWERFULL when it comes to strata ownership. I think the best thing is to steer clear of them.
Manos,
If you can buy this outright it might be a very good addition to your investment portfolio if it’s in a booming holiday town. On the flip side be wary of the size of 1 bedroom units. Ask the agent what the ‘living area’ is – ie excluding balconies, exterior storage areas etc as these don’t count in lenders eye’s and if you wanted to use this unit as security in the future and it has below 50 sqm ‘living area’ you might get a nasty shock. [
]. True serviced apartments are also a bit hard to lend to or use as security, plus if it is a serviced apartment get a solicitor to read the contract very carefully to see what other obligations you may be taking on, eg paying for new furniture and fittings regularly etc.Keep us posted!
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Mel
[email protected]Hi All
I own both houses and units and the units we own we have both body corporate done by a company as well as by the owners. The owner one is a small complex of 4 and we all talk regularly to keep things going the units with a company is in a large complex and would be nearly impossible to manage with just owners.
It is true that the land has the value but sometimes you cant get the location without buying a unit. 2 of our units in Brissie are on the river and have uninterupted veiws to the city they have experienced v.good cap. growth because of this location which we would not have been able to afford as a house.
Look at why you are buying for cap.growth or + gearing. For positve gearing you dont need the best location just good tenants. If you can get both more the better.
For holiday rentals just check how much the banks will lend first sometimes they are not as keen on these.
My best bit of advise is if your family are not investing in property dont listen to them My mother in law used to have sleepless nights because of the debt we are in she was soooo negative we simply dont talk to her about it now saves the stress.
Do your homework have a look at what people like to rent in the area do they want one br units or are they after 3 br houses sit in the realestate agents for a while and see how many people come in for rentals. Talk to more than one realestate agent.
But eventually you have to start to beleive in yourself and take action.There are certainly pros and cons to buying houses and units. I had a guest blogger write and article about the cultural shift Australians have had from owning the quarter acre block to living in units. It might be helpful? http://investmentproperty-howto.com.au/cultural-shift-investment-property/
Look at it this way: as a holiday letting how many weeks are you going to get at $600 per week? What are your costs ie management will be much higher, advertising, cleaning etc will also eat into your returns – how does that compare to a normal lease?
As Scott said- do your research. You can';t make a decision on rent alone.
Do not buy it outright. You then tie up all your funds and you may not be able to draw the money out later. Remember interest is tax deductable. If you have no interest you will pay tax on the rent. It will be added to your income. If you earn a decent wage you'll pay over 40% tax on it.
You need to do more reasearch into rental vacancies, demand for both rent and sales, capital growth, etc.
Manos, don't let the comments about Strata holdings put you off. Our first purchase was a small unit in a coastal town, and it is still our best decision. The strata don't bother us, and it is handled professionally and it has never been an issue.
A little later after buying this, we looked at a strata unit in the city, and decided against it, because it was managed by the unit holders (rather than a manager) and the boundary fence was falling down, so it depends on the individual circumstances.
I agree 100% with Erica. Sometimes bad advice – albeit well meaning – can get us off track. Unless your family knows what they are talking about, don't discuss your plans with them. My mother would have a heart attack if she new how much debt we had…
] hi ,will it make you a profit? personally i dont own units but would consider buying them if the right deal came along,but a 1 bedroom i’m not too keen on[
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]. True serviced apartments are also a bit hard to lend to or use as security, plus if it is a serviced apartment get a solicitor to read the contract very carefully to see what other obligations you may be taking on, eg paying for new furniture and fittings regularly etc.
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