My partner and I are looking to invest in a serviced apartment, however when we approach the banks we are finding resistence to this style of property. We know that this will be a good investment because we have seen the returns and the proposal includes rental guarantees, so why won’t the banks accept this as security ?
Make sure the head lease is an extremely secure well known company, banks tend to stay away from small accomodation below 50m2 as the believe it to be unlivable. Due to the size, the actually real estate is worth very little, thus If the head lease was to go under you would be left with an unsaleable apartment.
Suggest you have a look at Blueboy’s post on page 9. You might find your asnswer there.
Hi Cazdean
One of the lenders concerns about serviced apartments is that they feel that the value of the rental guarantee is reflected in the purchase price. That’s why most lenders will restrict the LVR on such properties.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHello Cazdean,
I think stuart summed it up best. Its simply too high a risk, and they generally have a bad reputation with banks.
Take a close look at the management contract also. They may require the apartment to be refurbished at your own expense, after a certain period of time.
David Femia
Femia Property Group
Property Investment Consultants
http://www.femiapropertygroup.com.auHi cazdean,
Can you tell me which serviced apartment you are thinking about purchasing?
I have some experience with them, so I may be able to give you some more insightful information. I may know the development very well.Regards,
Mannie.“It’s too late to go back and make a brand new start, but from today you make a brand new end”.
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