Hi,
I’ve just look at the ads about the apartement in melbourne city (3000), and it is reasonably cheap with a very good rental income. May I know the reason why ?? Is that because there is no growth if we invest in apartement ??
One of the description is: the apt is securedly leased until 2006 with 3 further 3 year options. What does it mean ?
Your help is much appreciated.
Cheers.Inner city units in Melbourne are not in high demand. Many of their prices have dropped dramatically and there are a lot available. No-one can tell you what growth will actually occur but I would expect there to be no growth or further negative growth on those units.
It is rare to find a residential unit with such long leases and so many options for the tenant. It could be a problem if the tenant is not the best. It might be great if they are a good tenant. It sounds like some sort of management agreement exists which I would be asking the real estate agent about.
Good luck.
Robert Bou-Hamdan
Mortgage Advisercutegirl
also, you may be looking at ‘managed apartments’ – where you have a long term agreement with the managing agent (in house).
the apartments are generally run like a motel, short stay etc. in the cbd.
i have clients who net considerably more month in month out with their managed apartments than their standard suburban long term rental properties.
some buildings and some managers are better than others – sometimes significantly better – this variation is what causes lenders to be more cautius when it comes to financing.
re 3000 apartment market – it appears that despite the ‘cbd’ doomsayers, the market has absorbed significant levels of new stock, both rental and sales – as mentioned above, i look at it on a building by building basis as opposed to a blanket approach.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneDoes it mean good to invest in Melbourne CBD apartement ?
I realise the growth would be slow or even may be negative, but the rental return is very tempting.. [cigar]
Very hard to borrow against these properties. You will need a large deposit. I would look for something else if I did not have much cash.
Robert Bou-Hamdan
Mortgage AdviserHi Cutegirl,
If you thinking to have an investment property in Melb CBD, you should avoid the serviced apartment or student accomodation types of apartment unless you have reasonable amount of money to cover the deposit.
There are a lot of CBD apartments in melbourne that have very tempting rental return and are not under service or student apartment agreements. eq. Franklin Lofts in Franklin St (near Victoria Market, RMIT, & Melb Uni) where 1 BR apartment can give about $300 – $345 a week. According to many agancies, this area has 0 rate of vacancy for that rental price, this fact is backed up by some overseas students and professionals who are looking for apartment to rent (hard to rent an apartment in that area).
It is very tempting, isn’t it ? But you also have to consider about the cost of body corporate and strata insurance which can cost you about $4000 a year.
If you are interested to buy, don’t forget to write down property manager name & phone number when you inspect the apartment because he knows who is the owner so you can deal with the owner directly and get better deal.
cheer
ayr007
Why do we need a large deposit ?
Is that the same amount of money (deposit), that we’re going to spend, either in CBD or suburb ?Anyway, thank;s for the comment.
[biggrin]You need a larger deposit on most inner city units and especially inner city serviced apartments because the lenders do not consider these as good security to borrow at high levels against. I would take this as a warning and listen to it. A suburban unit can usually provide you with much higher borrowing levels.
The Mortgage Adviserhttp://www.themortgageadviser.com.au
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