Unilodge Investment apartment Broadway

Discussion in 'Go ahead!...ask us anything!' started by Generalzod, Jan 11, 2018.

  1. Generalzod

    Generalzod Coach

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  2. mave

    mave Bench

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    Seems pretty reasonable, price wise.

    That said, I wouldn't be purchasing apartments in Sydney as an investment.
     
  3. AJB1102

    AJB1102 Juniors

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    I wouldn't touch an apartment for an investment
     
  4. SpaceMonkey

    SpaceMonkey Coach

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    It’s a shoebox sized studio and I’m guessing there would be heavy limitations on what you’d be allowed to do with it, looks like it might be a students only rental. That said it’s a great location so I doubt you’d have any trouble getting tenants and if (at a rough guess) you can get $400pw for it you’re almost covering repayments on a 20 year mortgage.
    But I’d definitely not be counting on massive capital gains, so do some research on what similar places are renting for and what the vacancy rates are. Also check out the strata/management fees, the fact that it comes furnished tells me they might be pretty steep.
     
  5. Twizzle

    Twizzle Administrator Staff Member

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    I've been involved in engineering student accommodations, they are designed specifically for this reason and the tenants are all uni students, some from overseas

    For mine this is not the tenant that you really want, unemployed or part time employed young students.

    And yes, capital gains would be minimal imo.
     
  6. SpaceMonkey

    SpaceMonkey Coach

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    I’d guess in that location most of the students you’d get renting would be full fee paying overseas students, so I don’t think their employment status is too important as their rent will be bankrolled by parents. Very few part time employed students could afford rent on an apartment in Broadway. Certainly not if thru were unemployed.
     
  7. muzby

    muzby Village Idiot Staff Member

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    I looked into these a few years ago and wouldn’t touch them with a barge pole..

    Dividends are generally good (usually somewhere between 5 & 10%) HOWEVER.. If you are borrowing to buy one of these you must remember that rates are low now. But the will go up at some point which means it can go from positively to negatively geared.

    In addition many lenders won’t give you a loan for these properties.

    Where the pitfall comes is capital gains and trying to sell.

    Generally these apartments do not increase in capital very quickly as there is a very limited market for people looking to buy these units as you can’t live in them yourself nor can you rent it out to anyone who isn’t a student..

    Some people purchase these as part of a SMSF but even then to regain your initial investment you are still a) relying on a buyer and b) hoping the building still exists in however many years retirement is for you..

    Depending on how much you’re looking to invest / borrow there are plenty of better options out there.

    For me, I invested in a regional town which is growing in size.
     
    Lambretta, Generalzod and SpaceMonkey like this.
  8. NathanielOrtiz33

    NathanielOrtiz33 Juniors

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    Look at the location first, do your research looking at what rental rates the neighborhood can support. If you want to make a good profit on a rental property you need to buy one that needs a bit of work then fix up units as renters move out so you can raise the rents for the newer units.
     
  9. muzby

    muzby Village Idiot Staff Member

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    unfortunately in the instance of a student accommodation setup, the units are mostly set up as a leaseback arrangement with the managing agency, so increasing rents is not an option.
     
  10. veggiepatch1959

    veggiepatch1959 First Grade

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    Sounds dodgy to me.
     
  11. Lambretta

    Lambretta First Grade

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    The major issue when buying an apartment such as this is that most lenders have a minimum square meterage requirement of 50 square metres

    This apartment is 30 square metres

    Other restrictions lenders may have would be
    serviced apartments,
    apartments under lease back arrangements with periods greater than 12 months,
    apartments where other parties have a sale on who you can sell to / when you can sell,
    properties with restrictive covenants such as SP55's,
    converted hotel / motels
    properties with management agreements on title

    There might be a lender who would be willing to lend on these, I believe CBA would be the only bank I know of who might consider such a property, but only if you have another property on a facility etc


    The most likely buyer for properties such as these are cash buyers, or buyers who are using equity in other properties as security. IE a home owner who is drawing against the equity in their home and no bank will take security of the property being purchased

    In times of a downturn, such a property would be harder to on sell, so you have to be prepared to take it on as a long term income producer. In that respect, the rent would be good and it would be a good investment.
     
  12. Lambretta

    Lambretta First Grade

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    The simple maths on this purchase is actually good

    Assuming a purchase price of $275,000 - someone could borrow $285,000 against the equity in their own property

    At 4.3% the P&I repayments would be $1,360 per month
    Rental at $400 per week would be $1,750 per month

    Assume strata costs / vacancies equate to a 20% reduction and you're making P&I repayments with no additional input. That's bloody good if you do want a set and forget investment

    The only caveat being you need to own your own property and have sufficient income to borrow the money
     

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