Hi,
We purchased a retirement village unit off the plan a few years back, we settled on it October last year. We had a tenant for 10 months and now it has been empty for 5 months. The repayments and costs are starting to bite, hard.
Our other IP which has been a great performer has been supporting our other property, now we have received notice that our tenant intends to leave at the end of april. We cannot afford to pay both loans and would have to draw down some of the equity in the 2nd IP to cover the loan.
How do you sell a property like this? Or are we better off selling the better performing property to ease our financial burden? (it will be a lot easier to sell)
Any advice/tips would be very appreciated.Thanks
I would sell the retirement unit 1st as it is a dud investment. Though, it can be very difficult to sell.
It is a highly specialized area.What was the reason why you consider to invest it at the beginning?
Have you tried to sell the retirement property?
It has a limited market to sell to but my father in law managed to sell his retirement unit so it can be done.
The problem with the retirement property is the transient nature of the tenants or property owners as they usually move into a nursing home after a few years or they pass on.
A real estate agent could sell it for you.
How hard would it be to get another tenant you could start advertising now for the end of april.
You might find the better performing property easier to re rent out.we considered the retirement unit as it is positive cashflow (with a tenant) We have advertised the unit for 3 weeks as a rental with only 2 responses and 1 inspection.
Just a Crappy decision at the end of the day, have to learn the lesson and move on….
Remember the lesson you have experienced
being looking at who you can market to both in Tenants and in Selling a property.
The retirement property may be cash flow positive but only if you can get a tenant.
Don't let a mistake put you off
Keep at it and go into damage control and think long term.Even if you get a tenant you have to take note of how long it has taken to get one for the retirement property.
A warning here to others. There are reasons that banks lend lower ratios on student accommodation, retirement units, studio apartments and serviced apartments. This is due to the risk – both in return of capital and revenue.
Often operators of these businesses are also the developers. The revenue from the management company is not generally enough to service the development costs – therefore most sell down units / apartments to transfer debt from banks to investors (often a condition of funding)
A lot of mortgage brokers and sales staff take up to 4% commission on these properties. Don’t buy one unless you get a bargin. Don’t buy at the developers price. Don’t pay above bank valuation.
High risk investments
rental guarantee are not worth anything
capital growth is limited
they cost more than there worth
crap crap crapSorry I don't understand you say it has been vacant for 5 months and advertised for the last 3 weeks?
yes, we are only just getting proactive, very late obviously. The developer has been paying for a lot of advertising already and we just let things slide over christmas, stupid thing to do i know, anyway thanks for everyone’s replies, a lesson perhaps for people in what NOT to do
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