All Topics / Help Needed! / What are the Pros & Cons? Investing in Unilodge apartments

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  • Profile photo of hamoraccihamoracci
    Join Date: 2007
    Post Count: 2


    I'm a first time investor looking into some great apartment deals.  One that caught my eye was university accommodation with Unilodge.  Spoke to the real estate agent who was very informative and upfront with costs. 

    Has anyone invested in one of these properties or similar type of arrangement?  I have no clue as to what I should look out for.

    I would appreciate your comments….

    Profile photo of propertypowerpropertypower
    Join Date: 2006
    Post Count: 312

    hi hamoracci,
    Welcome to the forum.
    I had looked at the opportunity sometime last year

    The pros are:
    * Long leases (usually 3-10 year leases with annual CPI adjustments).
    * Hassle free investment (the management company does it all for you).
    * No vacancy factor and therefore continued income.

    However, I dropped the idea due to the following reasons:
    * Limited capital growth
    * Low LVR (around 60%-70%)
    * You cannot add value to the property because you cannot do anything with the investment. The only option is to lease it to the student accomodation management company
    * The gross yield appears good but usually there are a number of expenses (sinking fund, body corporate, management fees, etc) that eats into the yield. The net yields are usually not as good.
    * Because the leases are multi year, you only get CPI adjustments for rent. Sometimes when the market moves strongly (like right now) you can get better than CPI increases but with such arrangements your increase is capped at CPI.

    Hope this helps.

    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213

    These ones are very small and very hard to sell. I knew someone who had one and there she was trying to sell it for the same price she paid for it 10 years ago.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

    Profile photo of hamoraccihamoracci
    Join Date: 2007
    Post Count: 2

      Thanks a lot guys that's fantastic advice!

    Profile photo of Michael4Michael4
    Join Date: 2003
    Post Count: 70

    H hamoracci,

    Don't even go there. I had a friend that was in the same trouble as Terry mentoned! Stay clear!!!



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