Self Serviced Apartments/Hotel/Student leases

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Devious05
Member
@devious05
Join Date: 2011
Post Count: 1
November 28, 2011 - 11:11 pm
I wonder if someone can assist me with following.
I've been researching small units to buy as a PPOR and have come across a number of investment apartments that seem to almost pay for themselves completely with the rental earned.
Example: http://www.domain.com.au/Property/For-Sale/Apartment-Unit-Flat/VIC/Melbourne/?adid=2009264953
Some say tenant pays all outgoings as well. Others mention 15-20 year leases to Quest/other hotels etc so seems to be very secure ie no worrying about getting new tenats in. Others are in student buildings right next to Monash etc so I presume they would be very secure tenant wise as well.
Can anyone tell me the downside to each of these investments? I realise there has to be something otherwise why would anyone be selling it?!. But they seem too good to be true thus the skepticism.
Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
November 29, 2011 - 3:55 am
Finance and re-sell cost ( capital growth); in Summary
– you need a deposit of 20%+ ( so no 90-95% LVR loans etc…); this drops down quite a bit based on size
– Good income and strong employment
– Rental will be discounted at 70% as a min
– Not all banks will do this sort of security
– Size- should be larger then 15 sq meters
– Configuration of the unit will play a part
– Valuation; need to have simliar unit sold in the last 3-6 month
Regards
Michael
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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Catalyst
Participant
@catalyst
Join Date: 2008
Post Count: 1,404
December 1, 2011 - 6:24 am
Agree with above. Watch for management charges also.
In 2008 I was looking for a an apartment in inner Sydney. I looked at this type of property and yes they "seem" impressive.
In the end we bought a very small 1 bedroom unit in Potts Point. 2008 was a good time to buy and we got it under market value.
In 3 years it has gone up 50% in price. The self serviced apartments have hardly gone up in price in the last 3 years.
mattsta
Participant
@mattsta
Join Date: 2011
Post Count: 604
December 9, 2011 - 8:29 am
Yeah I reckon that the management charges for self serviced apartments and hotels will be what can eat away at your earnings. Make sure to consider their impact on your calculations