Hi, I am a newbie to inversting and am currently looking for my first IP . I have noticed that a lot of appartments in Melbourne are "relatively " cheap although not quite positive cashflow. Are they worth looking at? Also (excuse ignorance) what does it mean when an appartment has a 5x5x5 lease arrangement? Would appreciate thoughts from the more experienced than myself (which could be pretty much anyone!)
If it a 5 x 5 x 5 lease arrangement, it sounds like it could be a serviced apartment that is managed by a company who manages the whole complex ?
If so; be very careful.
A few things to consider:
1. if it is under 50 sq/m in size, lenders are reluctant to provide finance, or they will lend you much less, meaning you will need a bigger deposit; maybe 40%.
2. if the returns are bad due to poor management or whatever, it may be hard to sell.
3. often there is limited cap growth.
4. little control over any aspect of the investment.Thanks for the help guys.
Apologies for the spelling on the first post, half asleep
typing doesn`t work!
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