hey guys, im looking at buying a studio apartment and its +CF but i dont know the pitfalls if any with this type of property.
Hi Zippys,
Aside for their limited growth prospects you need to carefully check the size of the apartment.
Anything under 50 sqm creates real headaches for you as an investor. Lenders do not like doing standard lends on them and as such these types of properties can eat into your savings or equity a little quicker than they should.
You will also need to check to see how the projected returns are calculated. Does the property (or similar ones in the area) have a history of achieving the stated returns? The last thing you need is to be left with a vacant lemon that cannot be sold.
These properties are really niche properties that suit a particular type of investor – someone with high equity levels and in need of an income stream.
I also suggest you do a search (top left) using studio apartments, serviced apartments or apartments as you’ll get a fairly extensive list of previous discussions.
Derek
[email protected]Property Investment Support Available.
Hi
Derek has provided some great information re: problem with getting finance depending on size.
I’d just add to watch out for the body corporate fees attached to the building. On that, it would pay to understand the body corporate structure and what your rights and responsibilities are.
For example, looking after the common property (landscaping etc) can add up over time and, in some cases, the costs can be very hefty.
Just make sure you complete a thorough due diligence so you know what you are getting yourself in for.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
zippys,
5 years ago I very nearly bought a studio in a great Sydney location, but I bailed out when CBA told me they didn’t lend on studios at all at the time (regardless of size; that may have changed though, or maybe I was wrongly informed).
However, in hindsight it certainly would have had significant CG, but the finance thing certainly bothered me.
Mick
if its hard to get finance, then it will be hard to sell. this would limit price increases.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Are you factoring in the body corp and rates to make this cash flow +ve? In some areas I have seen the rates are not much lower than a house. You could also increase rent if you put in some furniture to make it attractive to students.
My online investing diary: http://retireyoungandwealthy.blogspot.com/
Studios are a nightmare to find finance for.
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
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