- Hi there ppls.
I am new here and i am wondering about Student Accommodation. These are small studios, on their own strata title. they are cheap ,but return very nicely. (rents are high)
I was wondering if anyone if anyone has them or invested in them or have any experience in them. I am finding it hard to get finance, banks only allow up to 65% LVR because its under 50M sq, im talking to some banks now.
Anyhelp is appreciatedTCL Investments
Hello
It looks like no body is interested in Student Accommodation.
Maybe some numbers might excite you guys.
Purchase price, $268,000
Rental $495pweek
Strata $906 p quarter
Council $160 p q
Water $130 p qManagement 8%
What do you think?? even if it doesnt appreciate in value over the next 5 years. at 5.5% interest, i still make a 8500 profit ( not accounting for property maintenance and depreciation).
Better than money sitting in the bank right??
Over the next 5 years don’t count on 5.5% interest.
Based on your $90k deposit requirement, you would only be making a cash on cash return of 9-10% if clearing $8,500 p.a.
Here is a deal in NZ for $205k in a very good central location, returning $489 per week. It is a 3 bed so you wouldn’t have the same problems financing as over 50 sqm (also no LMI, capital gains tax or stamp duty). Just guessing but would probably require a 10% deposit.
Also guaranteed tenancy for the next 12 years with no vacancy.
Its located a few doors down from the Reserve Bank of NZ (No. 2 The Terrace) so really is a premium central location.
Ok, theres something to consider. I have never done a property investment overseas before and not familiar with the pros and cons, Would you educate me?
Some points come immediately to mind are:
1, how to get finance for an overseas property, easy/ hard/ more hoops to jump thru
2, No captial gains tax is a plus. but i heard it is payable when one wants to bring the money back to australia, ??
3, the long tenancy is a great thing, 12 years, but does that mean that the rent dont change?? it stays at $489 per week??
4, taxation laws, regarding income comming from overseas investments, how are they treated and taxed??but thank you for your response. I might have to investigate further
I am a kiwi living in Sydney. I currently dont own property in NZ though. My understanding is that it is easy for an Australian Resident to get finance in NZ. All of the major banks there are owned by the Australian Majors. The best mortgage deals come from NZ government owned Kiwibank though. Interest rates are comparable to Australia.
I would suggest talking with Matt Gilligan at Gilligan Rowe and Associates in NZ. He is an expert on Australia / NZ property investments and seems a good guy by all accounts. There are actually some further advantages that he can talk you through, as you are able to claim depreciation both in Australia and in NZ.
For further details on the property contact the number provided, I have no links to them in any way.
Cheers,
MattG'day TLC,
I personally love student accommodation as an investment although it does add an extra thing to research ie the uni/college that the students are attending. I have one student acc townhouse that I bought for $188k and rent for $620pwk although I pay all outgoings.
Your example above sounds good to me as long as you're not paying their outgoings (power, phone, internet, etc) but personally I would avoid any investment property that couldn't also be let on a normal lease basis and I personally can't stand some of the studios currently available and felt claustrophobic just inspecting them (unilodge goes down to 18sqm!).
One word of warning though, don't count on any capital gains; it's even possible for them to depreciate over their lifetime so make sure the cashflow is worth it.
Good luck and hope that helped a little,
Andy
Unilodge Sydney certainly depreciated! Plus at any one time there are 20+ of them on sale.
BrisbaneAndy wrote:G'day TLC,I personally love student accommodation as an investment although it does add an extra thing to research ie the uni/college that the students are attending. I have one student acc townhouse that I bought for $188k and rent for $620pwk although I pay all outgoings.
Your example above sounds good to me as long as you're not paying their outgoings (power, phone, internet, etc) but personally I would avoid any investment property that couldn't also be let on a normal lease basis and I personally can't stand some of the studios currently available and felt claustrophobic just inspecting them (unilodge goes down to 18sqm!).
One word of warning though, don't count on any capital gains; it's even possible for them to depreciate over their lifetime so make sure the cashflow is worth it.
Good luck and hope that helped a little,
Andy
Thank you for your input. First thing is the positive cash flow. if there is an appreciation of price its a bonus.
Unilodge is managed by a corporation, that doesnt allow any persons other than students to stay there. Even owners!! And yes some places ar very small.
I am not paying for any outgoings, only water, rates and strata. even if one had to pay, one would include them in the rent and make a profit on that too right??Anyway, Where will i find more investments of this sort?? are there special agents that specialise in stu accom in sydney or other capital cities??
Thanks again for your imput. i really appreciate it.
Not sure about specialised agents as I did my property searching a bit differently. I went looking for uni's that had big growth plans then just did a search for properties available nearby.
I've heard mixed reports about unilodge from other investors and students so do your research and this sort of property you need to bargain HARD to make the most money.
Good luck
I have just made an offer to buy a unit in Unilodge, the numbers stack up.
With this type of investment studio, Do you think its necessary to do a building and pest report?? It looks too small to do, i dont imagine that the inspectors will give me a discount for such a small place, there isnt that much work to look at.
Any thoughts on this?? its not like its a house or a townhouse that has many rooms to inspect. almost all 4 walls are common!!Any thoughts on this???
Hi TLC, while the numbers stack up, do take into consideration the body corporate and management fees that might be payable. Many times these look like a great investment but really not due to all the controls and outgoings. Having said that there is a REAL shortage of accomodation for students. Cheers
There may be a shortage of student accommodation, but they aren’t in a position to pay any more for it. There will always be a ceiling.
mattnz wrote:There may be a shortage of student accommodation, but they aren't in a position to pay any more for it. There will always be a ceiling.I dont think this is a case for the overseas students, Local yes. but overseas no. Most of them have rich daddies with very deep pockets.
I think that it is with everything else, realative to demand.
May I suggest Seller financing. It is an important and popular tool that can help buyers purchase a property they could otherwise not be able to buy. Sellers are sometimes willing to become "banks" for the buyer, taking payments just like a bank would until the loan is paid off. In all other respects the transaction is the same as through traditional financing — the deed is transferred to your name, and you simply make your payments to the seller instead of to a bank. More and more sellers are offering financing because the rate of return they can get is better than through income-producing investments like certificates of deposit, money market accounts, or other "safe" investment vehicles. To better understand, you can visit http://thewealthcollege.com. I usually make it as my reference when it comes to Property Investment Management and other concerns related to investments.
TCLinvestments wrote:Most of them have rich daddies with very deep pockets.That is a really bad generalisation. Some overseas students maybe rather well-off, but the many (I would think it's the majority) comes from middle income families who have sold/mortgaged their assets back in their home country.
If economic situation in Asia takes a turn for the worse and/or Aussie dollars continue to strengthen, that might put a cap to number of international students. During the 97 Asian crisis, many Asian students returned to their home country and many more prospective students choose to study in less expensive countries (you'll be surprised by the number of twinning programs Australian universities have in other countries).
Sorry if i offended. that comment was made with abit of tongue and cheek
as we all know, there are students of all status and wealth levels.OK, an update
I did finally purchase this appartment, there was lots of drama, and backwards and forths with the agent and the vendor. but, we finally ironed out all the wrinkels of this deal.
My final purchase price was 238k
rent this year is $497.50/weeki got the tenant til 2 jul 2010- so im happy for the time being,
The place has had any minor maintence issues fixed when these tenants moved in in Nov 09, so i wont be needing to touch the place for a while (touchwood)
Overall Im happy with the out come. It just took a long time and alot of frustrations.
Congrats…
which lender did u end up with?
at what LVR?CBA, 60%
I had to come up with alot of cash myself. Which i expected. Buying for the rental income. and the utimate goal of replacing my wifes working income.
as we all know, there are students of all status and wealth levels.
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