Hi all,
I am looking at purchasing a flat in South East Queensland for $400k. We have been offered the options of using the apartment as a serviced apartment and we will be paid $550/week which is way more than what we would get if we rented it out privately. They will also paint and re carpet the apartment and it would be a 4 year contract so we wont have to worry about tenants moving out during this period.
Basically this sound too good to be true. Is there something I am missing in this deal?
Thanks in advance.
Kurt
Hi kurt
Is the property a serviced apartment? If so – the max LVR is usually around 70% which can deter future purchasers and impact on longer term growth.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Jamie,
Thanks for your comment.
I believe not all the apartments in the block are serviced. There are owner occupiers and other rentals that are not “serviced apartments”. We have already received preaproval on our finance but not 70% at all. I will call the bank on Monday to ask them about this.
Apart from the possible 70% LVR, there are not any other catches are there?
It just seems a bit too good to be true, so want to make sure I am not going to get stung somewhere else.
Cheers
Kurt
Hi Kurtuk,
$400k could be a high price or an OK price, depending just where in SEQ the flat is. Have you seen similar flats in the block you are purchasing that confirm this price?What about costs? Body Corp, Rates, etc. A 6.9% gross return sounds good, unless there are other costs that will chew major $$ to leave a low Nett return.
Benny
Hi Benny,
From a price perspective it is pretty good. Its in innner Brisbane about 2km from the CBD (Bowen Hills, Fortitude Valley area).
Body corp is on par with the area at roughly $1,200 per qtr. Rates are also normal at roughly $300 per qtr.
Its close to the extensive development at the RNA showgrounds so hoping the property will increase in value along with the development.
Cheers
Kurt
Hi Kurtuk,
Well, it seems that area can ask that sort of price, as I see (on the internet) many 2bdrs selling at that price and above. Even some 1 bdrs are asking near to $400k. Which is yours? If yours is a 1bdr, you might like to check this out :-http://www.realestate.com.au/property-apartment-qld-bowen+hills-117474263
I don’t know any more than what I see there, but I wonder if having 2 side-by-side might offer opportunities that could trump other possibilities. e.g. what would be the income from TWO apartments, with a purchase price of $260k each? Can you service an extra $120k? What risks? What yield? Serviced or not? Location? Why the “low” price (an investor wanting to liquidate)? etc…..
Anyway, just thought I’d share FWIW,
Benny
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