In Adelaide there is a huge block of apartments (98 in total), most of which have been sold and I am looking to buy 1 of them. They are small 20m2 fully furnished units. The units are strata titled and are managed by Student Lodging Australia (SLA) via a lease for 30 years. SLA find the students, pay all expenses and then pool the profit, then divide out to the owners. The owner can sell at any time or have a relative live in them.
I have never invested in an apartment under such a system. I don’t know how to research to understand the risk, nor anything about it at all. What should i do? I have tried to contact SLA but cannot find them listed under the whitepages (they are listed under the Business names registry).
All I have is the real estate agents brochure on it, and as you guys would appreciate this is most likely doctored up to sell rather than make we aware of the pitfalls etc.
Any pointers or wise words from you guys would be greatly appreciated…
Daaussie,
Obviously you have your doubts about this company and it sounds to me like gut feeling saying something isnt right here.Sometimes it pays to listen to your intuition.
When in doubt leave it out.
There,s probably a much better opportunity waiting around the corner.
Russ.well I am considering it. I guess its just that I never take at face value what a real estate agent tells me. I want to check it out from the other end where the agent has no input, but I really don’t know what the other end(s) are if you know what i mean.
For example the other end could include finding someone who has purchased one of them and get some inside info on how it is going… I have no idea again how to find someone..
Hi Daaussie,
At 20 m2 you will find that few (if any) lenders will do the standard 80% lend on these as they consider the ‘risks’ too high for their money. You will need to realise that the amount of equity they use may negate any cashflow (or growth) benefits you seek or achieve.
These places generally are more suited to an investor who has equity to burn, wants a close to city investment and is chasing perceived cashflow.
You haven’t provided any figures so definitive answers are going to be difficult to give you.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
We have looked into these a little and the most important things to look at are the sustainability of the company who will be managing the property.
Is there a guaranteed return and are all body corporate and strata fees are paid by the management company, or is it payed on an occupancy basis. This one seems to be alright.
The other problem you will face is a lender financing one of these. Most lenders wont go to 80% unless they are 50 sqm. I have found one guy in Newcastle that has a lender that will go to 80% depending upon sevicability.
As long as they have a leasehold agreement in place with a guaranteed return, there are some very good little earners in these sort of deals. Especially if there is a ratchet clause in place. This means that the return can never be less than the previous years return.
Try contacting SLA through a Univesity. If you have any other question click below and i’ll do what I can to help.
Hunter House Hunters.
Specialising in finding your dream home in Newcastle and the Hunter Valley or your perfect investment property throughout Australia.To join our database [email protected]
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