All Topics / Help Needed! / Investing in Studio type properties

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  • Profile photo of tlai888tlai888
    Member
    @tlai888
    Join Date: 2005
    Post Count: 2
    June 1, 2005 - 12:29 am

    Hi all,

    I am a newbie in IP but just wonder what are the advantages of investing in Studio type properties or is studio investing is totally unrealistic.

    Can anyone comment ?

    Say If I buy a luxury studio in Neutral Bay NSW at 369,000 (asking price) and the rent is A$380pw. Although the return is a bit higher than average houses but the capital gain will be really limited and the cash flow of course negative (say 90% loan) for a long time. Also, my real estate agent friends told me they are really illiquid, i.e no one even interested in asking to buy one now, then how can you sell ?

    Thanks in advance.

    – Tak

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493
    June 1, 2005 - 12:38 am

    Many studio apartments are a little difficult to finance at the higher levels mainly due to their size. Some locations are also flooded with them which makes them even more difficult to finance. This should not be a problem in Neutral Bay though.

    The downside of the them is the minimal capital growth that seems to go with them. It just slows you down from further investment opportunities.

    Instead of buying one exensive negatively geared studio in Neutral Bay, what about a decent house that will serve you a lot better a little further west or some other State. Maybe 4 smaller positively geared properties that will improve cash flow. There are a lot of options.

    By the way, you could buy two decent studios for about that price in Potts Point which return much better.

    The Mortgage Adviser

    http://www.themortgageadviser.com.au
    [email protected]
    Essential Links

    Profile photo of tlai888tlai888
    Member
    @tlai888
    Join Date: 2005
    Post Count: 2
    June 1, 2005 - 1:01 am

    Thanks for your advice. I should think more and be lateral. I am thinking of studio because I do not have much budget but your advice is great.

    Thanks

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781
    June 1, 2005 - 1:51 am

    If you plan to buy and hold for a long time then illiquid might give you an opportunity to get something really well priced.

    Double edged sword which will bite you on the bum if you choose to sell.

    I personally prefer houses for the CG potential. I believe that middle class 3-4 bedroom homes are the most sought after type of residential property in any stage of the market cycle.

    If you are looking at $369 000 then you will be able to buy good houses in almost any area except for many Sydney suburbs!

    This is just my opinion though – not any sort of financial advice!

    Cheers,

    Simon Macks
    Finance Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

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