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  • Profile photo of happyjack72happyjack72
    Member
    @happyjack72
    Join Date: 2005
    Post Count: 53

    Hi,

    Does anyone have any experience with student apartments in Qld? I’m going through the due diligence process about one now, and I was wondering whether anyone had any experience with them or things they’ve found to watch out for.

    Thanks

    HappyJack72

    Profile photo of Fast LaneFast Lane
    Member
    @fast-lane
    Join Date: 2004
    Post Count: 527

    Make sure your due diligence is thorough, very thorough!
    Watch out for financing issues and dont be in a hurry to jump in. There are plenty of them for sale, so if you do in fact jump in I recommend getting some teeth during the negotiation stages. ie- playing hardball and picking up a good deal!

    Profile photo of happyjack72happyjack72
    Member
    @happyjack72
    Join Date: 2005
    Post Count: 53

    Thanks Fast Lane,

    What sort of financing issues or other issues are real concerns? I’ve definitely heard of a lot of dodgy deals happening in Qld over the years. I’m sorting out my own finance, and getting independent legal and valuation opinions before proceeding.

    Is one concern the fact that I can probably only on-sell them to other investors, thereby making disposal of the property a bit problematic? Or that not really an issue, because many of these do increase in value with the market and are readily picked up by other people?

    HappyJack72

    Profile photo of Fast LaneFast Lane
    Member
    @fast-lane
    Join Date: 2004
    Post Count: 527

    Financing for these types of properties ha been an issue in the past, like 60-70% max LVR’s but I know some of the brokers here on the forum have access to finance products that aren’t so prohibitive.

    Regarding onselling, typically the market for these industry specific properties are not as good as houses or normal apartments but that doesn’t mean they aren’t re-sellable. If it’s a good deal, it should be fairly good to sell in any market. Also they might be snapped up by owner-occupying students as a lot of these guys from overseas do in fact sometimes value owning there own place rather than renting. Even though it is usually only for the short-term.

    Typically these investments are a bit harder to finance and their resale market is not as vast as other property. However if the investment stacks up one or two of these can be a nice little addition to any portfolio.

    Profile photo of happyjack72happyjack72
    Member
    @happyjack72
    Join Date: 2005
    Post Count: 53

    Thanks again.

    My mortgage guy suggested that it may be a 75% LVR if I went ahead with it.

    The way I see it, a rental guarantee for full occupancy is vital, especially as you are pretty much limited in only leasing it to students, and for the university year (Feb – Nov). The contract shows a rental guarantee for this year, but the agent said a rental guarantee for subsequent years was not possible. What do you think about this? Is this usual? Is there normally a problem in getting full occupancy with these things?

    Also, outside the university months (Nov to Feb), apparently the rooms are rented out for holiday accommodation and I was quoted 50% occupancy during this period. As this isn’t guaranteed, I haven’t used this in my calculations, but I was wondering how often do rooms like this do get rented out for holiday accommodation in this manner?

    HappyJack72

    Profile photo of crushercrusher
    Participant
    @crusher
    Join Date: 2002
    Post Count: 186

    Hi HappyJack, [biggrin]

    Check out these posts on the same subject.

    https://www.propertyinvesting.com/forum/topic/23094.html?SearchTerms=student

    Regards

    Todd Burns
    http://www.freepropertyhelp.com.au

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