Studio Apartments in this Kangaroo Point building are proving to be superb investments and are great for positive gearing if that's your thing.
Apartments are two and three bed and are extremely popular with Shafston students. Owner occupiers who love the Kangaroo Point happening lifestyle find them attractive as well. They offer great views and they are typically netting owners more than $1000 per month (with some months returning more than $1500 net).
Prices of Kangaroo Point studios are continuing to move steadily upwards, with good river views being particularly sought after. Rival studio apartments in Kangaroo Point are now generally selling in the range of $220,000 to $330,000 and this makes Shafston apartments really good buying now because they are still cheaper to purchase and the Mansions is a modern well appointed building. Financing is readily available at very competitive rates (even for people with low deposits). The north east river views are just about the best river views in Brisbane.
The body corporate committee in this building is really proactive and keeps overhead costs as low as possible. They don't have many body corporate restrictions and council rates and body corp fees are fair, and the building is well managed. This makes it very easy for investors.
My friends and I bought a unit in the building a few years ago and we have never looked back as this has been one of the gems in our property portfolios. My guess is that they will continue to be a mover in the Brisbane studio market sector. I'm looking at buying more studios like this in the next year.
Thomas, I just couldn't help replying to this post. Are you an agent? Where is your information coming from?
From my quick searches, I see that most units were purchased in 2001 for around $160K (lower floors) to $190K (upper floors). The last three sales that I looked at were:-
Purchased 5/01 for $161,000 sold 6/06 for $91,000 – Loss $70,000 plus in's and out's
Purchased 11/01 for $171,000 sold 10/05 for $102,000 – Loss $69,000 plus in's and out's
Purchased 5/01 for $158,000 sold 4/07 for $86,500. – Loss $71,500 plus in's and out'sI guess that they can't go much further south and profit may be able to be taken soon.
Rents of $1000 to $1500 per month, but what are the management fees?
Sorry to appear negative – perhaps you can enlighten me.
Jon
Hi Jon Thanks for your reply.
I am happy to share some more info with you.
I’m not an agent. I am a very keen investor and property researcher with more than 20 years experience. I mainly specialize in property investments in South East Queensland.
The Shafston Mansions units were sold originally at premium prices in 2000 and 2001 and the prices fell as the market settled and the original rental guarantee arrangement ceased. Of course this trend is quite normal for many new apartment buildings. One has only to look at the Gold Coast to see lots of similar examples there.
You are right in that the prices bottomed out in the sub $100,000 range a few years ago. A price bounce back was delayed due to very poor marketing and a few very gullible overseas owners accepting low prices for their units. The lowest price ever recorded was $84,000 for a non balcony non-air-conditioned non-view unit.
Of course the units with river views or good city views have always fetched significantly higher prices than this. At their lowest point (in mid 2006) a three bed unit with good river views and balcony fell to a very low $135k. Most owners today are switched on and won’t sell their units below a reasonable market price, which is fair enough hey.
Some recent sales in 2007 and 2008 are:
· A 9th floor Shafston Ave facing apartment sold for $132k
· A 6th floor corner apartment sold for $132k
· An 8th floor (non balcony) apartment sold for $136k
· A 6th floor (non balcony) corner unit of slightly larger than average size sold for $140k.
Very recent sales include:
· Two balcony apartments sold for $135k and $138K respectively.
· A 6th floor unit with quite good (but obstructed) river views sold for $155k
· Two non-view non-balcony smaller style units sold for $115k & $120k resopectively.
I guess one would now expect to pay between $155k and $185k for a unit with very good river views, but they rarely come up for sale at these prices in that building. I couldn't imagine an airconditioned unit with balcony selling for less than $135k now days and prices appear to be moving upwards.
One has only to compare the above sales results to the sales prices and annual rental returns of studio apartments at other Kangaroo Point buildings to see how attractive Shafston Mansions still is. (To name a few: check out the old “Olims” buildings on Main Street where prices are now approaching $330k for the river facing units; the older style “Bachelors” apartments also on Main Street and the “River Gardens” apartments on Wharf Street where prices are also much higher than at Shafston but returns are often lower.)
Yes the rental returns I quoted are net to the owner in that the management fees (roughly 9%) and cleanings costs etc have already been deducted. Not all months achieve $1000 but on average they are achieving that or a bit higher for me. The building is at about 95%+ bed occupancy on any given day, and thanks to the proximity of the university, tenant demand exceeds supply.
I hope the above info is helpful.
Kind regards……no offence, but it's your first post, and it seems like a sales pitch.
Hi Thomas, Thank you for the reply. I am always trying to learn more about the way people (investors) think.
I am truly not trying to be difficult and perhaps I am missing something here, so on behalf of other members who may be following this thread, let me play devils advocate for a minute.
I have just entered these properties into a Property Analysis program that I use. The following are the assumptions that I used.
Unit 1
Purchase price $90,000
No Deposit IO Loan 8.25%
Annual Net rent $12,000 and $18,000 (although I can't see this return on a $90K unit)
Taxable Income $60,000
Body Corporate Fees $3,500 per annumUnit 2
Purchase price $135,000
All the rest stays the same.The results:
Unit 1
$12,000 annual rent shows a$4 per week posative cash flow
$18,000 annual rent shows a $83 per week posative cash flowUnit 2
$12,000 annual rent shows a negative cash flow of $41 per week
$18,000 annual rent shows a $38 per week posative cash flow.Now that part seems to back up your views. The problems that I have are, what happens in 10 years as the units get old and tired and require a refit and new furniture? How much are they going to push rents during this time? What happens if the over seas student market falls of as it is at present?
From my experiences in this style of property (over 25 years) the sales value is very dependant upon the rental return and any new purchaser is going to want the same level of return that you are achieving – so limited capital growth. As yet recent sales have not reached original sales price of 2001, thats 7 years ago. Where to from here? Where would you have been had you purchased a standard one or two bedroom unit at the same time? In 2001, I was selling new 2 bedroom units in West End (Suburb next door) for $200K (thats only $40K over the Shafston Mansions buy price),these same units are now selling for over $450K. and renting for over $18,000 a year.
I have to say that if I were cashed up, I might buy one for $90,000 and be happy with the return of almost 10%. Perhaps good for a retiree looking for somewhere to park some money as long as they don't want it back in a hurry. There are several on the market at present and sales seem slow.
My thoughts – welcome other opinions.
Jon
Thanks Jon for your further thoughts.
There is two perspectives here. It's horses for courses.
Obviously the $450k would give an agent a much better commision than would a $150k unit. That point's not in doubt.
And yes the Brisbane market movements over the past 6 years has seen strong growth in apartments generally, including studios, so there is good news for investors in these types of properties.
As an investor what I am seeking are properties that don't cost me alot to hold on to but will achieve a fair or good capital gain over the long term. I also happen to love properties with great views. So for me it's all about having a great locality and also cost containment.
I find the rental returns on stuidio units generally to be proportionately far better than other types.In the case of Shafston Mansions even if international student numbers fell there are lots of options. They are easy to rent and one is not bound in any way to keep them in the letting pool. So you can rent them out privately if you wish.
I think the investment example you give tends support my investment position. I guess for some an $18k pa return on a $450k investment might be appealing. Personally I would rather have more than double that return (being a $13k pa rerturn on a $150k investment). In that case I would not have to to find the extra cash to hold on to the property.
The fact that the Shafston developer charged high premium prices when originally sold in 2000 and 2001 tends to cloud things a bit, when one looks back. The original investors therefore did not do well as they paid too much however subsequent investors have done quite well. The same trend is true of the Olims and many other apartment buildings I can think of. From what I have seen the market has to settle before they move up.
The thing that makes buying studios in Kangaroo Point so appealing to me and quite a few of my friends (not just at Shafston but also other locatons such as the Olims) is that these are the most affordable type of apartments to get hold of. As the minimum buy in threshhold moves in the area up so too do the studios move up.
Also the culture is changing very rapidly. Small apartments in inner city locations are becoming much more the norm and are really very sort after to rent. Personally I think they are the way of the future, not just in Brisbane but in the major cities around the world. Check out Sydney, London New York etc.
The cost of holding these studios are lower and the cost of a refrub if needed can be very low also. Sorry if this seems like a sales pitch. It's not intended to be!!.
Thanks again Jon for your comment.
cheers……….
I looked into several Student Accom units in Sippy Downs and a couple in Logan in Qld and could not get the figures to work.
After things like Sinking Funds, council rates, and body corporate, I was looking at about a %5 return on a 200k unit.
These were 4 bedroom units rented at ~135 a week each, so even with at gross rent of about 2K, it didn't really work once you take into account the actual occupancy rate ~%90, the cleaning fees and the %9 letting commission.
If anyone is considering these units make sure you get some actual figures.
Hi Thomas,
Obviously the $450k would give an agent a much better commision than would a $150k unit. That point's not in doubt.
Where did that come from? Commission is not an issue here. I think that you missed my point which was, at the same time as Investors were being convinced about the good deals in Shafston Mansions (2001) for $160K to $190K, I was selling two bedroom units in the same general area for $200K – these units are now worth $450K and returning the same rent ($18,000 a year) as your units now selling for $135,000. For those investore who purchased for $200K and now receive an $18K annual return is not bad, in fact they are now posatively geared so absolutely no cost to the Owners. The next 7 years looks good for them.
As an investor what I am seeking are properties that don't cost me alot to hold on to but will achieve a fair or good capital gain over the long term. I also happen to love properties with great views. So for me it's all about having a great locality and also cost containment.
I respect your right to purchase what ever floats your boat, but I also believe people on this site should be made aware of the pitfalls and other options.
Also the culture is changing very rapidly. Small apartments in inner city locations are becoming much more the norm and are really very sort after to rent. Personally I think they are the way of the future, not just in Brisbane but in the major cities around the world. Check out Sydney, London New York etc.
With this I agree. I have seen the demographic changes my self for one bedroom stock, I am yet to see a major shift towards Studios. People should also be aware that Banks don't like lending on Units under 50 m2. (unless you have massive equity elseware)
Thomas, it has been interesting hearing your thoughts on this subject and I wish you all the best with your investments. You are quite correct in saying – it's horses for corses, you just have to read the differing approaches to investment on this forum alone to realise that there are many ways to skin a cat. Thank goodness there are so many options or else the good ones would not remain good, as everyone would want them and prices would rise and they wouldn't be so good anymore
Jon
I have just been looking at these studio apartments. I have somewhat mixed thoughts……
Seems to be a lot of hidden costs involved with renting these studios to the students under the current management. They advertise high returns but when you dig deeper, the amount that is returned is very rarely "HIGH".
I went last week to have a look at the units at Shafston Mansion.
History of them:
The 170 units were sold in 2001 for around $170,000 to $200,000. Everyone says they were sold way overprice to gullible overseas investors. Between 2003 – 2006, some were selling for $90,000!!! They dropped a lot but have come back up a little. They were originally sold as student accommodation. Some stage in the first few years a serious sexual allegation was made against someone involved with the school involving a student. It was all over the news worldwide and a current affair. I'm not sure if this contributed to the lower price drop as student numbers were said to have dropped a lot. 2009 the units are selling for approx $138,000 to $193,000 with river views. up from previous years but still down from the original selling price. Over the last 8 years, capital growth is not a positive factor in respect to the original selling price. They advertise a 80% occupancy rate and approx 3500 students per year. They have also stated that they will be building a new student accommodation building next door in the next 18 months. It will be more expensive to stay there which will in turn make the cheaper ones more appealing for the students on a budget but from what I have seen, most students attending this school are from quite wealthy families. Car parking is Available from 5pm to 6am for owner/ occupiers but no guarantee is given. Street parking also available but seems to be a large volume of cars in that area during the day.
The Fees:
They advertise the units rent for a maximum of $340/week (With rates as low as $290 for long term) with the more expensive units getting $20 extra per week. The cheapest units are said to be selling for around the $125,000 to $130,000 mark. Still with a little bit of a river view, but this will be gone soon due to the building of a new facility on the eastern side. If u wish to rent the Shafston University unit out, the costs that are known to me are: ( Every time I make an enquiry there seems to be another fee!)
Rent OUT:
RENT: $340 Inclusive GST/weekTake out of this amount:
$34.00 GST
$25.50 for rental commission/week (Between 7.5% and 9%)
$242.50 loan repayment/week (based at $150,000 over 20 years principal and interest)
$65 Cleaning fee/week
$55.38/week body corporate and sinking fund (Includes power bill)
$30.30/week Rates
$36.40 Linen Hire/week (2 beds)
Minus $10.00/week Internet service (maybe payable by students)
Minus a few dollars a week for some sort of cutlery rental??
Would still have to PAY at least $159.08 on top of rental income every week.
(I've worked out the management earn $21573.00/week just on cleaning/commission and linen hire IF they have all 170 units out for rent )Only way to avoid all these fees is to rent them out to someone yourself.
If I live in it, my expenses will be:
$242.50 Loan repayment/week (based at $150,000 over 20 years)
$55.38/week body corporate and sinking fund
$30.30/week Rates
$10.00/week Internet
Would cost $338.18/week to live there.
Anyone else got any info on these? Good or Bad reports…… seems to be a mixed bag!the outgoings that are disclosed look too high. limited market. would not touch with a barge pole. in my opinion.
regards.Hi Auss007
Fortunately I happened to be on-line when your request for info came through.
I am an investor in Shafston Mansions and can answer your questions with a fair degree of accuracy. I’ve just visited that building myself recently and I have attended the building quite a lot over the years so I know it pretty well.
The units are very good buying for a few reasons.
In my opinion they happen to be best small studios units in Brisbane if you want a Kangaroo Point location and views. I have bought others in South Brisbane, Kangaroo Point and Hawthorn and Morningside, but these Kangaroo Point studios have given me the best rental returns of all of them.
I have owned my units in the Mansions for three and four years now and I don’t think I will ever want to sell them….. probably will pass them to my grand kids! I intend to buy another one this financial year and put it in our super fund.
There are no hidden costs for the unit owners, so don’t worry at all about that one, and some of the fees/costs you mentioned don’t exist. For example there is no GST on the rental tariffs, and there is no “$65 cleaning weekly cleaning fee” either. There is no internet access charge to unit owners. The only monthly charge to the unit owner is the $3.00 monthly statement fee.
There may be a few optional extras that tenants can pay for if they wish but they don’t affect owner’s returns in any way.
Occupancy: The occupancy hasn’t been down to 82% for probably 4 years. Occupancy sits at 91% / 92% normally…. and that’s by bed – so the unit occupancy in the building is normally at or near 100%.
If a new building is eventually built next door there will be a reduction of the suburban views on one side of the building only, however the units that currently have the great river and city views should always have them. Fortunately the heritage listing of that whole section of riverfront land means that the water views from most of these units can’t ever be built out. That’s important to know as an investor and if you choose to live there.
Tariffs: The current tariff rate if the unit is let through the on-site manager ranges from $295 per week to $420 per week, with higher rates applying in some circumstances. The tariffs will probaby increase substantially next year as they are genrally "booked out" at those rate. The demand for accommodation so very high.
The rental returns are good. The net return I receive is on average between $1000 and $1300 per month. The $36.40 per week linen/cleaning charge and the agent’s full commission entitlement (7.5%plus GST) has already been deduced before I receive those monthly amounts. They are the only weekly expenses charged to owners.
Of course if something has to be replaced in the unit such as a microwave, the owner will be charged then – but that is quite rare, and the cost of any replacement is very competitive. The tenant is charged for any item they break or lose (not the unit owner).
You may be interested to know that the average sales prices for units sold in that particular building this year are: $144,000 for the smallest non-balcony units in the building; $159,000 for usual balcony units; and $181,000 for river facing units (which very occasionally come up for sale and tend to sell quickly).
There is still depreciation benefit for investors – so that makes them slightly more attractive.
Capital growth has been outstanding for the last 3 years and I expect this should continue over the medium and longer term, particularly as the alternative studios in Kangaroo Point are much more expensive to buy and own; and generally return much less as a proportion of outlay.
Good luck to you Auss007 in your search. I hope the information I have given is helpful to you, or anyone else who happen to be interested in these particular apartments.
…..Thomas.Hi Auss007
Fortunately I happened to be on-line when your request for info came through.
I am an investor in Shafston Mansions and can answer your questions with a fair degree of accuracy. I’ve just visited that building myself recently and I have attended the building quite a lot over the years so I know it pretty well.
The units are very good buying for a few reasons.
In my opinion they happen to be best small studios units in Brisbane if you want a Kangaroo Point location and views. I have bought others in South Brisbane, Kangaroo Point and Hawthorn and Morningside, but these Kangaroo Point studios have given me the best rental returns of all of them.
I have owned my units in the Mansions for three and four years now and I don’t think I will ever want to sell them….. probably will pass them to my grand kids! I intend to buy another one this financial year and put it in our super fund.
There are no hidden costs for the unit owners, so don’t worry at all about that one, and some of the fees/costs you mentioned don’t exist. For example there is no GST on the rental tariffs, and there is no “$65 cleaning weekly cleaning fee” either. There is no internet access charge to unit owners. The only monthly charge to the unit owner is the $3.00 monthly statement fee.
There may be a few optional extras that tenants can pay for if they wish but they don’t affect owner’s returns in any way.
Occupancy: The occupancy hasn’t been down to 82% for probably 4 years. Occupancy sits at 91% / 92% normally…. and that’s by bed – so the unit occupancy in the building is normally at or near 100%.
If a new building is eventually built next door there will be a reduction of the suburban views on one side of the building only, however the units that currently have the great river and city views should always have them. Fortunately the heritage listing of that whole section of riverfront land means that the water views from most of these units can’t ever be built out. That’s important to know as an investor and if you choose to live there.
Tariffs: The current tariff rate if the unit is let through the on-site manager ranges from $295 per week to $420 per week, with higher rates applying in some circumstances. The tariffs will probably increase substantially next year as they are generally "booked out" at those rates. The demand for accommodation so very high.
The rental returns are good. The net return I receive is on average between $1000 and $1300 per month. The $36.40 per week linen/cleaning charge and the agent’s full commission entitlement (7.5%plus GST) has already been deduced before I receive those monthly amounts. They are the only weekly expenses charged to owners.
Of course if something has to be replaced in the unit such as a microwave, the owner will be charged then – but that is quite rare, and the cost of any replacement is very competitive. The tenant is charged for any item they break or lose (not the unit owner).
You may be interested to know that the average sales prices for units sold in that particular building this year are: $144,000 for the smallest non-balcony units in the building; $159,000 for usual balcony units; and $181,000 for river facing units (which very occasionally come up for sale and tend to sell quickly).
There is still depreciation benefits for investors on the building – so that makes them even slightly more attractive.
Capital growth has been outstanding for the last 3 years and I expect this should continue over the medium and longer term, particularly as the alternative studios in Kangaroo Point are much more expensive to buy and own; and generally return much less as a proportion of outlay.
Good luck to you Auss007 in your search. I hope the information I have given is helpful to you, or anyone else who happen to be interested in these particular apartments.
…..Thomas.
Hi Auss007
Fortunately I happened to be on-line when your request for info came through.
I am an investor in Shafston Mansions and can answer your questions with a fair degree of accuracy. I’ve just visited that building myself recently and I have attended the building quite a lot over the years so I know it pretty well.
The units are very good buying for a few reasons.
In my opinion they happen to be best small studios units in Brisbane if you want a Kangaroo Point location and views. I have bought others in South Brisbane, Kangaroo Point and Hawthorn and Morningside, but these Kangaroo Point studios have given me the best rental returns of all of them.
I have owned my units in the Mansions for three and four years now and I don’t think I will ever want to sell them….. probably will pass them to my grand kids! I intend to buy another one this financial year and put it in our super fund.
There are no hidden costs for the unit owners, so don’t worry at all about that one, and some of the fees/costs you mentioned don’t exist. For example there is no GST on the rental tariffs, and there is no “$65 cleaning weekly cleaning fee” either. There is no internet access charge to unit owners. The only monthly charge to the unit owner is the $3.00 monthly statement fee.
There may be a few optional extras that tenants can pay for if they wish but they don’t affect owner’s returns in any way.
Occupancy: The occupancy hasn’t been down to 82% for probably 4 years. Occupancy sits at 91% / 92% normally…. and that’s by bed – so the unit occupancy in the building is normally at or near 100%.
If a new building is eventually built next door there will be a reduction of the suburban views on one side of the building only, however the units that currently have the great river and city views should always have them. Fortunately the heritage listing of that whole section of riverfront land means that the water views from most of these units can’t ever be built out. That’s important to know as an investor and if you choose to live there.
Tariffs: The current tariff rate if the unit is let through the on-site manager ranges from $295 per week to $420 per week, with higher rates applying in some circumstances. The tariffs will probably increase substantially next year as they are generally "booked out" at those rates. The demand for accommodation so very high.
The rental returns are good. The net return I receive is on average between $1000 and $1300 per month. The $36.40 per week linen/cleaning charge and the agent’s full commission entitlement (7.5%plus GST) has already been deduced before I receive those monthly amounts. They are the only weekly expenses charged to owners.
Of course if something has to be replaced in the unit such as a microwave, the owner will be charged then – but that is quite rare, and the cost of any replacement is very competitive. The tenant is charged for any item they break or lose (not the unit owner).
You may be interested to know that the average sales prices for units sold in that particular building this year are: $144,000 for the smallest non-balcony units in the building; $159,000 for usual balcony units; and $181,000 for river facing units (which very occasionally come up for sale and tend to sell quickly).
There is still depreciation benefit for investors – so that makes them slightly more attractive.
Capital growth has been outstanding for the last 3 years and I expect this should continue over the medium and longer term, particularly as the alternative studios in Kangaroo Point are much more expensive to buy and own; and generally return much less as a proportion of outlay.
Good luck to you Auss007 in your search. I hope the information I have given is helpful to you, or anyone else who happen to be interested in these particular apartments.
…..Thomas.
Hi Auss007
Fortunately I happened to be on-line when your request for info came through.
I am an investor in Shafston Mansions and can answer your questions with a fair degree of accuracy. I’ve just visited that building myself recently and I have attended the building quite a lot over the years so I know it pretty well.
The units are very good buying for a few reasons.
In my opinion they happen to be best small studios units in Brisbane if you want a Kangaroo Point location and views. I have bought others in South Brisbane, Kangaroo Point and Hawthorn and Morningside, but these Kangaroo Point studios have given me the best rental returns of all of them.
I have owned my units in the Mansions for three and four years now and I don’t think I will ever want to sell them….. probably will pass them to my grand kids! I intend to buy another one this financial year and put it in our super fund.
There are no hidden costs for the unit owners, so don’t worry at all about that one, and some of the fees/costs you mentioned don’t exist. For example there is no GST on the rental tariffs, and there is no “$65 cleaning weekly cleaning fee” either. There is no internet access charge to unit owners. The only monthly charge to the unit owner is the $3.00 monthly statement fee.
There may be a few optional extras that tenants can pay for if they wish but they don’t affect owner’s returns in any way.
Occupancy: The occupancy hasn’t been down to 82% for probably 4 years. Occupancy sits at 91% / 92% normally…. and that’s by bed – so the unit occupancy in the building is normally at or near 100%.
If a new building is eventually built next door there will be a reduction of the suburban views on one side of the building only, however the units that currently have the great river and city views should always have them. Fortunately the heritage listing of that whole section of riverfront land means that the water views from most of these units can’t ever be built out. That’s important to know as an investor and if you choose to live there.
Tariffs: The current tariff rate if the unit is let through the on-site manager ranges from $295 per week to $420 per week, with higher rates applying in some circumstances. The tariffs will probably increase substantially next year as they are generally "booked out" at those rates. The demand for accommodation so very high.
The rental returns are good. The net return I receive is on average between $1000 and $1300 per month. The $36.40 per week linen/cleaning charge and the agent’s full commission entitlement (7.5%plus GST) has already been deduced before I receive those monthly amounts. They are the only weekly expenses charged to owners.
Of course if something has to be replaced in the unit such as a microwave, the owner will be charged then – but that is quite rare, and the cost of any replacement is very competitive. The tenant is charged for any item they break or lose (not the unit owner).
You may be interested to know that the average sales prices for units sold in that particular building this year are: $144,000 for the smallest non-balcony units in the building; $159,000 for usual balcony units; and $181,000 for river facing units (which very occasionally come up for sale and tend to sell quickly).
There is still depreciation benefit for investors – so that makes them slightly more attractive.
Capital growth has been outstanding for the last 3 years and I expect this should continue over the medium and longer term, particularly as the alternative studios in Kangaroo Point are much more expensive to buy and own; and generally return much less as a proportion of outlay.
Good luck to you Auss007 in your search. I hope the information I have given is helpful to you, or anyone else who happen to be interested in these particular apartments.
…..Thomas.
Well, 4 identical posts – is that a record?
Thanks Thomas,
What also concerns me is the fact that 15 to 20 of these units are for sale at any one time with quite a few staying on the market for some time and then disappear. Sometimes I suspect they maybe taken off the market? I agree with the river view apartments are much better but the extra money does not seem to be compensated by $20 extra in rent a week. Shafston Mansions 2 being built next door I think will be a lot more appealing to students as the developer would have learnt a lot from the first building. I also noticed while I was in the apartments a strong sewage smell on level 4 with signs on each of the room doors stating that they had a problem with plumbing and that carpets would be cleaned that night. Does this happen often?
About the charges below……..
Rent OUT:
RENT: $340 Inclusive GST/weekTake out of this amount:
$34.00 GST
$25.50 for rental commission/week (Between 7.5% and 9%)
$242.50 loan repayment/week (based at $150,000 over 20 years principal and interest)
$65 Cleaning fee/week
$55.38/week body corporate and sinking fund (Includes power bill)
$30.30/week Rates
$36.40 Linen Hire/week (2 beds)
Minus $10.00/week Internet service (maybe payable by students)
Minus a few dollars a week for some sort of cutlery rental??
Would still have to PAY at least $159.08 on top of rental income every week.These fees and charges were obtained from the lady on the front desk reception of the unit. Maybe these are just fees for new buyers?? 2 of the management team were also present when I got these figures. She stated that GST WAS included in the $340/week rent. She also made it quite clear about the cleaning fee of $65/week + a $2.60 per night per bed rental fee on the sheets. Amazingly, NOTHING from the management team could be given to me in writing about the fees and many of the answers to my questions were very sketchy! The only thing given to me in writing was the tariff rates which you state range from $295 to $420 per week. The $420 rate is for a 6 night stay based on the nightly rate. If you use the per night rate of $100 for the first night and $65/night after that, would a student pay $360 for the 5 nights or pay the weekly rate of $360 for 7 nights. I dont understand how you would get $420 from a student for a six night stay when a student can pay $360 for 5 nights or 7 . Seems a bit strange to me. Maybe you get students staying for just 3 days? Also, twin share rooms go down to $180/week. If only one student stays in that room your return would be much less. So really, the tariff rates are more like $180 – $360. When I walked into that building I had calculated a total of $100 left over per week after expenses, when I walked out with all the figures given to me I calculated I was having to pay over $150 a week on top of rental income and that's IF it was rented 100% of the time. I was also AMAZED with my final question to the property manager on the day of "What are the units like to live in?" He says "Bloody terrible, the noise, the smell of Chinese food" (and a few other things I will not mention) Why would he say this to a potential buyer?? Fees!!! If I live in the unit myself, your correct, I don't have to pay all the linen, cleaning and commission fees. But then the property manager misses out. I could not imagine the property manager being overly helpful or friendly to anyone living in the studios as an owner/occupier as you would actually be cutting his profit.
With all my figures I visited 3 people involved in finance and accountancy and they all advised me to stay well clear of these. I advise anyone considering these units to read the fine print as many hidden fees and clauses are involved with these studios.
No bank wanted to give me finance for these units without a 35% deposit and still then they wanted it to be at least 30m2 before they would finance the other 65%Thanks for your info Thomas, wish you all the best with them and seems like you got in just at the right time to benefit from the small capital growth that these units have experienced. Anyone else apart from Thomas had anything to do with these studios??
This sort of things reminds me of UniLodge on 185 Broadway Sydney. Student accommodation too.
My sentiment/observation with this sort of investment is
1. You have too little control over what fees they charge and what CB rules they put down
2. A lot of people trying to sell at any one time
3. Aimed at at best "lazy investors" market (fair enough we're mostly lazy people), at worst "ignorant+loaded overseas buyers" market
4. Bank won't lend with high LVR (have you tried to borrow against one of these?)
5. Vertical tenants market
6. Potentially volotile environment (what if subjects with popular overseas students are relocated to another campus)Point 3 is enough to put me off – anything market as a worry-free/work-free investment always put me off. But that's just my personal taste.
The only time I'd buy one of this is when I buy the entire building and run the body corporate myself.
Hi again Auss007.
Thanks for the extra points you mentioned as well J900.I did quite a lot of homework before investing in this particular building, so I can answer most questions. I will address them point by point and provide some hopefully worthwhile tips as well!
Three of my business associates bought studio apartments in there around two or so years ago and all have seen gains. They want to hang on to them. Another investor friend of mine is looking to buy a river facing apartment in there at the moment. He doesn’t want to spend moré than $200k but wants a regular type studio close to Brisbane CBD. Very hard to achieve in Brisbane in today’s market!
I know there are some new and temporary staff filling in at the place right now and that would account for the incorrect information you were given. I’m sorry you had that experience. I was in there recently myself and I know that whoever was behind the counter was really struggling to answer questions. Until they sort out the temp staffing situation I would hope they would have the good sense to redirect enquirers to the licensed real estate agent who should have all the factual info.
I contacted one of the staff to discuss the plumbing problem you mentioned. Apparently it should have been fixed that day. Unfortunately, these types of things happen occasionally in residential apartment buildings. The important thing is that the problem is sorted quickly with minimal disruption to all. I’ve never heard of anything like that happening there before, but there’s always a first time. In a much older building in which I own an apartment not too far away there is a plumbing issue about every 2 months which is a real problem but the residents are pretty used to it.
The details I have given previously in this thread about fees and costs for investors are accurate. There is no fine print as such in relation to any fees and charges. The only weekly cost to unit owners is the cleaning/linen hire fee being $36.40 per week and the standard letting commissions. Between tenancies there is a substitute cleaning fee for that particular week called a departure service fee, so that is where the new staff probably got confused. Costs to owners are very low overall.
The $420 per week is the regular (non-student) tariff applicable to the “Premier Deluxe 2 bed apartments” for stays of up to 11 weeks. It reduces to $375 if the tenant has a student card. Longer stays, for up to a year, are at lower weekly rates. If rented by the bed for under 12 week stays the same apartment can return $500 per week. Dormitory apartments contain an extra bed and return slightly higher amounts again. This is explained in the current tariff table.
Since I have been involved in this building, there is usually somewhere between 5 and 12 units for sale at any given time. This may sound like a lot but actually it only represents 3 to 7% of the total number of apartments in the building. Some units sell very quickly. Others can take quite a long time, particularly if they are a bit tired and need walls repainted, new floor coverings or something like that.
By the way, you are right about on-site managers in such buildings – If they think you might be inclined to want to remove your apartment from their letting pool, they can be very unhelpful and completely discouraging – and it gets worse if that are not actually allowed to sell the units themselves.
An interesting story: In two other buildings I looked at in Brisbane about three to four years ago, the on-site managers were in the business of running the building and apartments down to every prospective buyer who came in the inspect them. I started to get suspicious and when I began to delve a bit I found the managers were quietly buying the units up for themselves – one had 17 units already and wanted to acquire the remaining 7 and the other manager was in the process of acquiring his 19th unit in that complex of 65 units. So I guess, the moral of the story is that while it can be useful to talk to on-site staff – mainly to gauge it they are competent or not, all on-site managers will have a vested interest in keeping their letting pools large and dissuading owner occupiers, and much of what they say is coloured accordingly. It seems to be just a fact life in that business, but a good point for buyers to know.
Cooking smells are par-for-the-course in large apartment buildings everywhere. There is a mixture of overseas visitors and local people in this particular building and it’s no worse than anywhere else. Young people generally tend to live in these blocks – but I know a few older people who find the smaller units just right for their needs. They site the security aspects as important to them.
The current FHOG makes studios in general attractive to people trying to get into the property market – particularly singles. Sometimes however they can still have problems getting finance.Borrowing: LVR is an issue but has not been too bad overall. There are one or two of the major lenders doing 80% or 85% if the borrower has no other property security to offer. One does 95% with an extra fee. Another bank does 70%. If the borrower offers other property security then of course borrowing would be expected to be up to full value/sale price or higher. I have been quoted 110% in such circumstances.
Although the obvious negative with small studios is that there are still only a few of the major lenders currently lending on them, I have read that this situation could change dramatically over the next 20 years. Some financial analysts in the industry have predicted that change to happen much quicker, but we’ll have to wait and see.
The simple economic reality is that people will need to be accommodated in smaller residential spaces in the future in all of our major urban and regional centres – so it is quite likely that with continued population growth in our cities, studio living will become more and more the norm rather then the exception. It’s hard to imagine things going the other way!
To J900, thanks for mentioning Unilodge. I am familiar with one of their buildings in Brisbane but I do not own any studios that are purely student accommodation, but I know a couple of people who do, and they seem happy enough with the annual returns.
Shafston Mansions was designed to be a mixed use residential studio apartment building, and it is unlike purely student accommodation buildings in some important ways.Some critical differences worth knowing are:
· Shafston Mansions units are fully self contained studios with kitchens (not all student accommodation is).
· The unit owners at Shafston Mansions have full control of the building through a regular body corporate. As the owners are investors looking for good returns they will strive the keep costs to owners as low as possible.
· These apartments can be let to anyone – they are not just for the College students (unlike Unilodge for example – which I believe is quite restrictive in this regard).
· Any unit owner can remove their apartment from the on-site manager’s letting pool at fairly short notice, and then list it with any outside real estate agent. This happens occasionally, but most investors don’t bother to change as the returns are slightly better through on-site manager.
· There can be no hidden fees and charges. That would be illegal. All owners are offered a standard Queensland PAMD letting contact through the on-site agent. They can negotiate whatever letting terms they wish.· The rental tariffs through the on-site manager’s letting pool, are set in consultation with the Owners…so that gives owner investors a greater say overall.
· Obviously the unrestricted use of these particular apartments means that they will be tenanted regardless of educational demand for courses. So there is much lower risk on that front.
Strata titled studio apartments have been good to me. As I say, my aim is to own them long term. My game plan is to acquire one more in the Mansions and possibly a couple more in other Kangaroo Point buildings as well over the next few years.
Just a few final comments about my preferred approach to property investing – which I’m happy to share with you:-I been active in the property investment business for more than 20 years now and I’ve done a lot of property renovations over this time as well. I’ve bought more than I’ve sold. Most of my investments happen to be in the locations I know well. I always do my homework before I buy anything. I don’t mind buying properties that have untapped potential – I find them to be the most interesting of all.
Like everyone else I like low risk properties which don’t cost a lot to hold on to. I tend to search out properties that I think will have quicker capital growth potential than the overall residential market – which usually means buying in prime locations. Sometimes also, this means doing something a bit different……as…. if we all invested in the same things most of us would probably be not be as successful today.
An important thing from my perspective is to make informed decisions and preferably to have a balanced property portfolio. For me, yes, this is about sometimes owning the entire property (for example, blocks of flats and individual houses) where you have full control, some rural proprty, as well as having strata titled high-returning apartments, and not forgetting some mixed commercial property shares.I’m always open to new ideas and strategies. I find that no matter what your experiences happen to be in this business there is always more to learn.
Well that’s enough from me. Thank you for providing a good forum to share property ideas. I hope my experiences have benefited at least a few readers with similar aspirations.
……Thomas.Hey guys,
You all seem to be in the know when it comes to Shafston. We are looking around for a cheap studio to live in part time. Shafston Uni Mansions seems to tick some of the boxes. What is the cheapest you can pick one of these up for at the moment? They seem to have a heap for sale, does that mean the buyer can drive the price down?
Any advice would be grealty appreciated.
Cheers
Hi brisbane 2010.
There is always a selection of these apartments for sale as there are 170 units in the building. The minimum buy in price is currently around $150k for the smallest non-balcony units in the building. You might find someone prepared to sell a studio unit with a balcony or courtyard in the $165k to $175k range. The river-facing units will sell for $185k to $195k and that's still a very low price for any studio unit, let alone a high returning unit with a full river outlook.
I have made some enquiries and have found that quite a few of the owners are unprepared to negotiate anything below the listed price. The unit owners in the building seem to be pretty astute as they know their apartments are cash positive or close to it at full borrowing. With the annual depreciation benefit the margin increases.A friend recently paid about $185k for a river view apartment in there, which was an outstanding buy for 2009 in Kangaroo Point.
Good luck with your search.
…….Thomas .
You must be logged in to reply to this topic. If you don't have an account, you can register here.
