Re Retirement village in Towoomba, Qld.
Guaranteed Rent.
Managed
Occupancy 95% of time.
6% return pa.
Positive cash flow after paper write offs.Why is it that banks will not fund us to purchase these Units.
Someone from Edestiny (re margaret lomas) said the banks think there a bad deal.
Ladies and Gentleman, your thoughts please!
Captain
Because they are very hard to sell!
Also anything that has a guarranteed rental income means (in the banks eyes) that this is built into the price.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Why are they hard to sell.
Shouldn’t there be a lot of demand for such properties as population is aging?
BarbDunno. that’s just the way the market is. I suppose they are much less common than standard houses, so teh market for them is much smaller.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thankyou all for your comments.
Much appreciated
Captain Positive
My thoughts on retirement villages;
Look at the demographics in the area, If there are a lot of aging citizens then you could well be on a winner.
Have a look at your competition, can you offer what they can.
In my area retirement villages are packed out very quickly after they are built. This alone makes the idea sound attractive to me.
Good Luck,Gasso
I think that one of the main reasons banks are reluctant to lend on retirement village units is because it’s not your “normal” property. Banks are by nature risk averse and conservative. They lend on normal properties because that’s been happening for umpteen years. Retirement village units are not that common, and also have fairly tight restrictions on how who can live in them. This, in the bank’s eyes, increases risk, because it’s non-conforming. Kind of in a similar way that a bank will treat a non-conforming borrower. I agree that retirement villages are going to be big business as each year goes by. But the bank doesn’t want to have to evaluate the business potential for property. It’s only interested in collateral and serviceability. (those experts out there – correct me if I’m wrong)
I know of a property developer who developed holiday resorts. Each unit in the resort was offered for sale to investors, who would receive a share of the profits from the operation of the resort. The properties were really well spec’d out, in nice country locations. But would-be investors found it hard to borrow money from banks. The developer had to work hard with all the major banks for quite some time, to convince them that the properties were bankable. Once the big 4 were happy to lend, the other banks slowly fell into line. Now they’ve got about 4 or 5 major resorts all around WA, with units selling like hotcakes.
the moral of the story is – you’ll find that as time goes by and more and more retirement villages spring up, banks will slowly loosen up and be more willing to lend. In my personal (and uneducated) view, this may lead to an increase in the demand for, affordability of and therefore prices of retirement properties. May be a short wait, may be a long wait. Only time will tell.
Cheers
M
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