Greetings all,
I’m considering investing in a studio apartment in Sydney city. I’ve found a decent deal for about $216K which is currently renting for $300 a week. I’ve heard that studios don’t appreciate much in capital growth but I don’t know if this an old wives tale. Does anyone know if this is true and where I can get some concrete figures to look at?
Also I can only get a LVR of 80% for financing an inner-city studio apartment through the mortage brokers. I want to finance 95% does anyone know if this is possible?
And lastly if I live in the apartment say 9 months after I purchase it I understand I am entitled to the FOHG and the stamp duty exemption. However do I have still have to pay the stamp duty on contract settlement only to have it refunded later? Thanks in advance.
Regards
Tim
What is the size of the apartment?
The issue is getting it past the Mortgage Insurers who aren’t at all keen on <50sqm dwellings.
It is true that many people believe studio apartments to underperform however I cannot find any data to support this.
Perhaps you need to seek the anectdotal evidence from people in the real estate industry?
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
You only need to live in a property for 6 months to be eligible for the FHOG…
You can borrow 106% in some cases. This depends on your ability to service the debt. If you borrow more than 95%, the interest rate will be considerably higher. If you borrow between 80% and 95%, mortgage insurance will be payable if they accept the property. The mortgage insurers do no like studios and they do not like inner city (especially Sydney) so you are facing a double whammy.
Going to a lender who does not mortgage insure their loans above 80% will cost you in fees and interest rate.
Talk to a different mortgage adviser / broker for all the options.
As for data, try some of the Property Research links at…
http://www.themortgageadviser.com.au/index_files/essential_links.htm
I can assure you that there is not much capital growth in studios as I have an office in Darlinghurst and watch these prices all the time. There are some exceptions though.
The Mortgage Adviser
http://www.themortgageadviser.com.au
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Essential LinksIt may come down to size and the actual postcode of the studio.
Terryw
Discover Home Loans
North Sydney
[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
Hi,
Thanks for all your replies they greatly help a newbie investor like me.
In regard to the FOHG I checked I am entitled to it if I move into the property within 12 months of contract settlement. However I am unsure on whether I have to pay stamp duty initially (as it will contain a tenant for the first few months) and get it refunded when I move in? Or do I not have to pay any stamp duty period as long as I move in within 12 months. This is not clear on the NSW OSR website.
Secondly the unit I’m looking to purchase is in postcode 2000 or 2011 i.e. inner city and its 27sqm.
The best deal I can find is 80% LVR with a interest rate 0.5% off the standard variable with Colonial. I also have another one with 95% LVR but will have to pay mortgage insurance and its at the standard variable.
I currently do not have enough cash for a deposit and am thinking of taking the 80% LVR loan and suppliment the deposit with a drawdown on my margin loan. This works out cheaper as I do not have to pay mortgage insurance.
Would appreciate if someone knows a better financing option or comments would also be great. Thanks!
You do not have to pay the stamp duty.
Regarding the unit, it will be harder to finance due to the shoe-box size. It is still doable though. Mortgage insurers will not usually touch them but you say you have found a loan with mortgage insurance at the SVR. May I ask who that is with?
Surely, the standard variable rate is cheaper than a margin loan rate? Would it not work out cheaper to pay the ‘mortgage insurance’ than the ongoing higher interest rate?
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksI can assure you that there is not much capital growth in studios as I have an office in Darlinghurst and watch these prices all the time. There are some exceptions thoughCome of MA. I remember not so long ago you could get studios in Darlo for 60k (Vic street etc) and if you wanted to slum it up the road you could buy for high 40’s. This was about the same time as people were heralding the end of the world due to the Y2k (what was that again).
I don’t think you could get them for that now. By the way how is the coffe at the “trop” these days?
Cheers
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Do Aussie John and crew still have breakfast over there?
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
I don’t go to the trop. Can never get a seat outside and it is always too packed.
Don, I think you are dreaming if you think you could get studios in Potts Point for 60k or even in the 40’s back in the late 90’s. You would be lucky to get a serviced apartment or hotel refurb. for under 100k. I would like to hear from anyone who actually did this because I do not believe it was possible. The cheapest I saw at that time was just over 100k.
Also, properties I looked at in 2000 that were asking around the 150k (less than 25 sq.m.) mark are still at that price or slightly less now.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksHi MA,
They were around but most of the ones in the older buildings were and still are company title. That’s why they were so cheap. There was one a few months ago in Crick Ave under 100k. It was a dog box and technically Crick Ave is in the heart of Kings Cross. However, your mail would still read Potts Point. You would also have junkies shooting up in your doorstep. Although, that comes with the turf I suppose.
Biggest opp would have been to Buy in St Neots Ave in 98 when studios were in the high 80’s. Not like that now though.
Cheers
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
I think the majority of stuff you are talking about are the old prostitute hotel style accommodation. They definately do no go up in value. You only need to step on one dirty needle and it is all over!
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksI don’t want to blur the issue but I thought that if you bought a property & lived there then the interest & borrowing costs could no longer be tax deductable?
Regarding a Studio, we have one in Brizzie, within walking distance to CBD. It is over the despised 50 sm. Everyone poopoo’s it but it is always let; has definitely gone up in value & has a good return.
It doesn’t have a lift, spa. gym etc.Also we have just refinanced & for the first time the bank has accepted it as collateral
cheers
blossomozI own one in Elizabeth Bay — On the water — Sydney—in a building with a lift– but no gym or pool– There are never any vacancies in the building – any “to let” seem to be relet first day— occassionally when one comes up for sale it sells “under the Hammer”
Have got to agree guys. I watched the prices in Elizabeth bay and the 2011 for 10 years. Studios there went from zeros to heros. Big cap gains were made.
cheers
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
I don’t see anyone saying there was big capital gains in Sydney. There is no argument from me about them always being rented though. They are very popular.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Linkswe will agree to disagree on that one MA.
Cheers
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
I don’t do that Don!!!
I am happy to wait for someone who owns a Studio in postcode 2011 or 2010 to let us now about their good capital gains. I personally have not seen any since about 2000.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links
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