I was just wondering what professional investors thought of over 55 units. Are they as less profitable than normal strata title or harder to sell in the future??? Any advice would be greatly appreciated.
Tony
Tony Fleming | Triumphant Property Group
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Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
i personally wouldn't even consider them. Low capital growth, hard to sell and hard to finance.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Terryw wrote:i personally wouldn't even consider them. Low capital growth, hard to sell and hard to finance.What Terry said. Finance can be *very* difficult.
Why would you consider an over 55's covenant when the block of units next door offers similar or better amenty without a restrictive covenant?
With our aging population as we are hearing daily would over 55's accommodation be improving as an investment these days? If I am seeing 2 self contained studio units on one title sold together for $130K and renting at $140-$170 a week each even with body corp and other fees, considering the area…these figures add up dont they?
Two trains of thought:
- one of my associates (he'd like that), built a small development under SEPP5. Single storey villas, open air parking, 2 bedroom. BIR, bare bones. All leased on a 10 yr lease to a housing co-op. He's laughing on 12 months of summer holidays.
- On the other hand, as I noted above, why would you consider it if it is not the highest and best use for the property?
On further due diligence every one of them in the complex seems to be for sale…that obviously not a good start! Steering away from over 50's villages!
The problem with aged accommodation is that like student accommodation it is a very limited market. Yes they return more than the average however if you are still losing money on the investment and theres no growth what the point.
In my view unless you are getting great returns which seems to mainly happen in the mining areas capital growth should be why you buy in Australia. So look for suburbs around Australia that have a history of 7-10% capital grown.
I generally look at suburbs within 10km of city centers however there are exceptions.
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Hahahah i remember looking into this years ago silly young Tony
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
I would never invest in over 55 units. They are extremely gard to sell and make a very low profit. I would recommend you to invest in the property that target middle age families.
Investing in an aged 55 plus unit is very much like investing in a mobile phone.
Its gotta look good .. be functional .. and have the facilities you require.
Its only AFTER you have purchased .. that you find the real expense comes from the billing system.
As an investment for longer term growth, no. As a means for finding out what its like to purchase a very average property .. sure .. call it a learning experience and find out what everyone else already knows.
However … having said that (quite a mouthful) .. realise what everyone else already knows .. that changing a property from one type of criteria to another is a chance to make a lot of money. Some of these aged care facilities are made incredibly well and have good facilities. As MANAGED (non aged care restricted) properties they will actually be quite profitable. If its possible to change its overall criteria from leper to prime position managed properties .. you'll make a lot of money turning it around.
xdrew, these things aren’t nursing homes or retirement villages that have management they are smaller unit style developments under SEPP 5 where there are no facilities or common rooms, just a unit in areas with transport, health services etc but are zoned 2a not medium density.
Seems like the overwhelming opinion here is to NOT invest in these over 55 units.
Yet a few days ago on Nathan Birch's Binvested Facebook website I came across the following article;
_ _ _ _ _ _ _
"Attention investors, 20%+ yield and $100,000 purchase price.
Could be the craziest deal all year! We have secured 10 X over 55 units which come with 2 units on 1 title for $100,000. There were originally selling for $200,000+ and we have secured these direct from administrators.
There is 5 left which need to be allocated to investors today.
They rent for $400 pw and have depreciation as a bonus.
You will probably require 50% deposit also, so please dont ask if you can buy with 5%."
_ _ _ _ _ _ _
Agree that these over 55 units might not have much capital growth, but buying at such a discounted price and with 20%+ yield they seem to be a good investment.
There is no doubt that they are not 'standard' securities however as Scott has stated – they should not be mistaken with nursing homes or retirement villages.
Regards
Shahin
TheFinanceShop | Elite Property Finance
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