Hi everybody,
I am thinking about investing in a storage unit in Sydney, but thought it may be worth getting the more experienced opinions from this forum before looking into it further.
The storage units are strata titled, and cost around $40,000 with an 8% p.a.return.
However, since I know absolutely nothing about this type of investment I was wondering if anybody out there has already done this, and if so, how well is it working for them? Are there any traps for the unwary?
Does anybody out there know if the Storgae unit industry is expanding, or are there an oversupply of these units?
Would this be a good type of investment for a newbie to get started in real estate?
Any help would be absolutely appreciated.
Regards
Bernie
P.S. Merry Xmas
Hi Bernie
I looked into these units on behalf of investors a while ago. There is no real data on the true value of each unit, so unless you want to commission a valuation (quotes ranged around the $1600 mark) you don’t know if you are paying an inflated price for them. I suspect you may be because I also researched what the true rent return on these would be (after the three year guarantee is over)and if we assume rent returns will be similar to today, then they nornally return around 5% in this particular facility and in others that have been strata’d in Melbourne. Also, because of the lower non-guaranteed return, they may be quite hard to sell as the guarantee period starts to run out. Banks I spoke to did not want to lend against them either, except with very poor LVR’s (around 40% lend).My suggestion is that you look elsewhere for deals that will bring a better rental return and give you greater leverage.
I had the chance to offer them to investors (I’m a buyers agent) but declined because I thought there were much better deals out there for the same money with a lot less unknowns.
As for the growth of the industry, there is a bit of speculation going on which sounds very positive, but who knows? I’d rather seek a deal where I know what my profit is rather than leave it to chance. My humble opinion is for you to do the same, especially if you are still new to investing. Stick to something you know will return well without a rent guarantee and can be resold without too many hassles.
Don’t mean to sound overly negative, just take care…
Kind regards,
Scotty3Hi Scotty3,
Wow! What a fantastic response!! Thank you so much for taking the time to respond in such detail. I really appreciate it. [biggrin]
Yes, my main concern was what was going to happen after the 3 year guarantee and how I would go at selling it if I needed to.
I’ll keep looking for my first property.
Thanks again and Merry Xmas to all.[xmas]
Bernie
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