Hi everyone.
I’m new to investing and wondering what property investors feel about pensioner units.I found a set of three one bedroom flats in a pensioner complex in Brisbane. They’re very secure, though on a busy road, close to shops and rail. $80,000 for three, each renting at $179 per week (85% of of the tenants pension). This includes meals.
The return is phenomenal, but I’ve heard investors don’t like them. Are they hard to resell or is it that the rent can’t move much because it will always have to be 85% of the pension, and let’s face it the pension ‘ain’t goin too far.
I’d appreciate anyone who can share opinions or experience with me.
Regards
Jillwow that does sound good. who cares about resale – hold it for 20 years and bulldoze them!
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I’d look into the rental history and see how steady it’s been.
I think pentioners are good esp the elderly.
Based on your figures it would be very cashflow positive. 16 weeks vaccancy a year..each flat, and its still CF+.
I don’t think you could loose.
pensions from centrelink are indexed to inflation or cpi or something like that so it does go up automatically every year but what you need to look out for are the running costs like strata, council, laundry, meals, onsite manager, maitenance etc. Generally if a well run business the onsite manager can provide full figures so you can see your net amount. Also if your on a high income (paye) there can be a lot of depreciation like industrial kitchen, common areas, furniture and of course the builing depending on age of all. So you have a lot of homework to do.
good luck.the freedomfinder
Who provides the meals?
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It may not be as good as you think. [
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Like Freedomfinder said, there are heaps of outgoings, like the meals provided, linenservice, sinking fund and body corp, especially the management fees for the on-site manager and administration costs and letting fees are usually high. A whole list of outgoings and they go up every year (In the contract it will probably say -I read it in the one I had- that these costs will increase EITHER in line with the CPI increases OR 3% whichever is more!!![xx(]
ALso, the manager may charge HEAPS, like $150 an hour or so if you need anything done out of the ordinary every-day managing.Also be verrrry aware that they might not have included GST in all the prices they are giving you, so if they are saying that the return will be say 7.20% or so, when you add the GST to it yourself the return will be reduced to something like 6.90% or something.
I recently looked into these units (again for the umpthiest time and the LAST time this time I think LOL) and the best return I have ever found was 6.99% and meant not CF+ for me if interest rates are 7%. [V]Depreciation, yes, but how good that will be depends on your income, of course. If you already have reduced your income through other depriciation claims or other means, then I wouldn’t like to rely on this.
I’m no expert by any means, just speaking from own experience, so you’ll have to do your own very detailed due diligence, and maybe seeing an accountant first. May be it will work for you.[] But BUYER BEWAREThanks for all the advice. The Body Corporate on these units is $8000 per year (for all three) and I earn $20k and my husband $55k per year.
As to who actually provides the meals – I’m assuming they pay an in house cook. I will have to do the homework on the specific things you’ve all mentioned.
I’m a little skittish though. I feel I have much more say and control in the one negatively geared property I have now. Still everything is worth a look, right?
I forgot to say that the $8000 includes management fees.
Jill
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