Hi everyone,
Would value your opinions on this option –
Buy apartment (1bedroom) which is part of hotel for $99,000. 5 year lease with manager paying $688/mth. Body corp and rates are $565 quarter.Location very central.
Look forward to you responses.
Cheers
SHi Susan,
The problem with these kinds of properties is that it is difficult to get a decent LVR from a lender, and those that will give you a decent LVR will charge a higher interest rate, killing the yield. You are also unlikely to get much capital growth.
Basically, if you have heaps of equity and need cashflow it may be a reasonable investment for you, but for most people it would be an anchor around their neck.
Regards
AlistairSusan,
These properties appeal to the inexperienced because the numbers are good.
In general I would advise caution. APerry has some great points however the key is resale. You will have to sell to another investor and generally growth on these isn’t good.
Whereas a unit or house can be sold to the homeowner as well and demand is always solid.
I suggest you stick to the tried and proven residential market before branching into something new.
Sorry to be a wet blanket.
All the best
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I’m with Simon on this one. These type of properties tend to lack capital growth and end up difficult to sell, due to the limited buying audience.
Stick to something with at least 30% land value to give yourself something to grow
Cheers,
Pro-Activehttp://www.invested.com.au Australia’s premier Investor Education site
Susan
We can discuss it further in the morning when i come to see you but i am with the others in that financing at a decent LVR and competitive rate is hard.
With a gross yield of 8.3% you are really relying on Depreciation and Building Write off as with the Body Corp & Rates coming in at $2260 a year there is minimum + cash flow.
You will still find a property in regional Qld giving you 8% Gross and with little concern over the financing.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]
http://www.yourstatefinance.comRichard Taylor | Australia's leading private lender
Hello All,
I totally agree with all the above.
Futhermore concerns can also be raised about the management rights too. I.E are they good at their jobs, is the rent guaranteed, and if they go broke or sell management rights? what else can be done with that property, zoning?
Stay with houses or units ( outside of motel style)
This is my 2 cents worth.
Cheers
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