Hi, I am new in PI, I have been looking for a good long term rental property. I stumbled on this piece of property, good starting features and benefits. Almost always tenanted.
It is a property url :
http://www.collegesquare.com.au/collegesquare/I would like to seek some of your views regarding this type of PI. Some banks do not like them as they do not see high capital gain and a higher risk.
Cheers
Originally posted by tomtkb:Hi, I am new in PI, I have been looking for a good long term rental property. I stumbled on this piece of property, good starting features and benefits. Almost always tenanted.
It is a property url :
http://www.collegesquare.com.au/collegesquare/I would like to seek some of your views regarding this type of PI. Some banks do not like them as they does not see any capital gain and a higher risk.
Cheers
The nbanks are probably correct so you should stear clear of them.
College Square is one of teh better student accomodation investments. BUt overall this type of unit is small and has a narrow demographic market. Currently the number of overseas students is falling.You could find a better investment.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auThanks for the comments. I thought that 6.25% return is high rental return number and it should be able to generate interest in the PI community.
Anyone care to share some good rental retun investment experience or plans?
New PI
6.25% is a good rental return, but mortgages run at 6.5%…
The main problem with these is the value of the unit is based on the value of the lease. That’s the wrong way around in my mind.
I say that because if you didn’t have the university lease, how much could you rent the place for? Generally at a lower value which to me says the lease is over inflating the price you are paying for what amounts to a tiny bed-sit. If/when the lease runs out, just try selling it… You’ll be hard pressed.
You can get relativley safe interest guarenteed investments that run close to 6.25% (actually closer to 6%) so why the risk of student accomodation?
Hi,
One thing you should stay clear of is area where they have alot of units and more are getting build.
the reasons:
1. You unit will not appreciate as there is oversupply in short period of time
2. You will have difficulties increasing rents and having high occupancy rate as a result of oversupply and tenants having the power to choose and negotiate.
3. Bank hate borrowing money when you say anything like i’m buying a unit where there are alot of others being available and being developed.
Stay out of areas like these. That is not to say that you should never purchase a unit but just to warn you of the traps people make when they see 6% yield or higher!
Good luck and let us know how you are going!
[biggrin]
Hmmm, Looks like student accomodation with many units strategy is not so favourable. What would be a good rental return property in Melbourne – commercial shop, apartment in South Yarra or StKilda?
Hmmm, Looks like student accomodation with many units strategy is not so favourable. What would be a good rental return property in Melbourne – commercial shop, apartment in South Yarra or StKilda?
At the moment I have had a great deal of trouble finding anything in Melbourne with a high rental return.
Have a look a bit outside of Melbourne. Around Geelong, Corio maybe or look to the East a bit.
Originally posted by surreyhughes19905:6.25% is a good rental return
No. It isn’t. 11% is a good rental return.
Cheers, F.[cowboy2]heya tom
The apartments are 229k- I think you could do a bit better for the price. I’d have to say though, that that area is an excellent location- I just stayed there yself for the last few days- it’s urban, stylish, and a very good precinct for an investment property, I would think.
The apartment is 1 bedroom (not studio) with a study space. It’s a strong cafe district, and is between RMIT and Melbourne university- I doubt you’d have tenancy concerns even after the RG had expired. You’d want to check out median rents though, for the area, and similar buildings going up to see if there will be much competition. But given that it is a UMELB/YWCA project, I am sure you’d be ok.
If it is 6.5% gross return… you’d need to check out the body corporate fees- they might be a killer.
kay henry
Kay, The Body Corp is $3900.
Foundation, I don’t think you could find an 11% return in Melbourne!
Tomster,
Yep – you can…I posted details of such deals about a month ago…that was nett as well, not gross.
I think your comment was refering to a certain type of property on a certain type of scale.
I’ve found “Property” to be such a wide ranging term, that often poeple generalise too much.
For example, the market for both Capital Gains and rental returns are very different for ;
Student Accommodation
Petrol Stations
4×1 B/T houses in the ‘burbs
Dockyards for sea container laydown
3×2 swanky inner city townhouses
CBD office blocks
5 acre farmlets on the city suburb fringes
Shopping centresAll of these are “Property”, but you’d be foolish to try and lump them into the same pot, or draw any correlation whatsoever.
They all behave very differently indeed.
Perhaps you were only refering to the first on the list…I don’t think it’s reasonable to lump the other sectors in with the very narrow band in which you are specifically looking at, and then conclude “I don’t think you could find an 11% return in Melbourne!”
I bet you could find 11% if you looked hard enough and had the resources to actually do something about it.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I have been talking to some local invester and they said that property gain rate is normally following the inflation rate.
If the inflation rate is 7%, the expected price increase of building a house increases by about 7%. Eventually rental tends to follow.Any other views from the fellow investers?
[blush2]If you are chasing higher yields for residential property you might have to go where they are to be found and it might not be in your local area.
eg you could go the US and get a property at 30%yield ….
Tom,
Take a stroll down Swanston Street carlton (the uni precinct) and have alook at all the empty blocks of land that have been boarded up….One gues what they are going to be….These shoe boxes can only be used as student accommodation and not as anything else so you are reducing your flexibility….Have said that Australia is seen by Asia as a great place to get an education and Uni’s will become increasingly aggressive in attracting Full Fee paying O/S students….
But this form of property investment is one of select few which is affected by health / disease risks…the last outbreak of Asian Chicken fever or flu or whatever it was called (about 3 years ago) really hurt the education sector because FF paying students numbers dropped by about 60%.
All things to think about.
The flu 3 years ago was called SARS (Severe Acute Respiratory Syndrome).
It is important to know what goes on in other parts of the world.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
