Hi guys
Any thoughts on investing in CBD apartments? I’ve done a bit of digging around and the rates (strata, etc) seem to be rather high but with almost 6% yield can you really go wrong?
Would love to hear your opinions.Cheers
RadMy first comment would be to stay away from CBD apartments.
I would then ask which CBD you are looking at that has 6% yield??? I know it is definately not Sydney.
Robert Bou-Hamdan
Mortgage AdviserThanks for the reply Rob. I was looking at Brisbane. Could you give me a few pointers as in why I should stay away from them.
There is a huge oversupply and borrowing against them is difficult in most cases. Prices have dropped recently yet more are coming onto the market.
People may argue that rental yields are up but I believe it is a direct result of lack of affordability to purchase by those renting. This will eventually turn around.
You can’t go wrong buying a house somewhere.
Robert Bou-Hamdan
Mortgage AdviserUnless you have a sizeable deposit, most lenders have instructions at this point of time NOT to lend for CDB apartments.
Good luck anyway
You Dream, You Believe, You Create, You Succeed
Just on the topic of lenders’ opinions of CBD apartments, it is a very good guide to investors. Lenders began reducing the LVR on apartments back in 2003 and look what has happened since then. They spend millions of dollars a year on research to protect their loan books so it might follow that they know more than your average every day investor.
Why try and buy something that everything is telling you not to?
Robert Bou-Hamdan
Mortgage AdviserAll comments have been fair enough, however, I wonder if this change in policy by the banks has contributed just as much to the drop off in values to apartment prices
Lenders began reducing the LVR on apartments back in 2003 and look what has happened since thenChicken or the egg?
Woodsman
Great cash flow opportunities. PM me for more informationI don’t think it has anything to do with the lender’s decision. I think it is based around the over-supply of units from builders like Meriton, etc. This is the main reason lenders (and mortgage insurers) reacted the way they did. They made a common-sense decision as far as I am concerned.
Most people do not know that they will have trouble getting a loan on these properties when they sign a contract at a hard-sell seminar two years prior to completion. They only find out in the three months leading up to settlement.
Robert Bou-Hamdan
Mortgage Adviser“Any thoughts on investing in CBD apartments?”
Oh lordy lordy, is this a serious question? This must be some kind of troll, no-one could be so mis-informed as to be seriously considering investing in CBD apartments … could they?
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