Buying serviced apartment to be owner occupier – BORROWING ISSUES!

I agree.  Remember the rule – you want the value to double every 10 years.  The value you quoted is relevant to 2002 and it will be 2010 next year.  So that's say 8 years passed already.  So you should expect the property to be worth around $531k by now by the following calculation 295 + ($295 * 8 / 10) = 531.  You mentioned it has only appreciated to 350.  So it has already failed by a whopping $200k.  Stay away, I think!

Hi new_start,
You appear to be getting yourself in a bind here for no reason at all.
You have said you really like this place and really want to live there.
If you can afford it then this is a lifestyle choice, you shouldnt be buying this for its investment potential.
I am an L-plater when it comes to this but have just started reading the latest book from the guru and one of the first rules is not confuse investment decisions with lifestyle asset decisions.
I dont know much about managed versus owner occupied but from what you are saying the bottom line is that if all the units here were owner occupied it would be a lot more expensive and by the sound of it you then couldnt afford it which is why it is probably cheaper than anything else you have been looking at.
There can be other reasons why it has expensive strata fees and it is worth having this checked out by someone with experience to make sure there arent major structural repairs required.
At the end of the day you just need to decide if you are buying it to live in or buying it to rent out.
Hope this helps

The big concern I see is; let's say you buy this place, and it appreciates far slower than other properties.  Then you have a situation change in your life – perhaps you'll get married and want to have a family and as such will require larger accommodation.  You could in theory refinance the flat, to pull some money out of it to sink into a house.  However if by that point, the value of the flat is tiny compared to that of a house, it may not be an option for you.  You may struggle to keep up with the property market in that regard.

Right so let's assume this place pays you $20k a year in rent, and appreciates at 1.9% per year (which appears to be the case based on the figures in a previous post).  Let's say a regular apartment doubles in value every 10 years, but returns say only 4.5% in rent.  Let's see how that looks after one and two years respectively.

Scenario 1 : Buy this place at $350k.  At its current rate of apprecation (1.9% per year) it would probably be worth $356,875 in a year's time, during which you'd have earned $20k gross in rent.  Let's forget about tax for now.  So in one year, its worth is $376,875, so to speak.

Scenario 2: Buy a different place for $350k that doubles in value every 10 years.  After a year it'd be worth about $38500, though may have earned a lower rent of say 4.5%, which would earn you $15750.  So its worth after a year would be $400,750. 

So in one year alone, the second scenario has already outperformed the first scenario by $23,875.  This compounds each year.  After two years, the gap would be more in the order of $48,797. 

Ultimately, it depends what the purpose is for buying this place.  It will always be a roof over your head – that cannot be taken away.  If you wish to live in it personally forever, then it works perfectly.  The issues arise if it is in an investment, or if you need to use this place to trade up to something bigger later on.  On the face of things, the rental return with this place appears to be higher and would hopefully remain higher than regular places.  However if you ever needed to refinance it to trade up to something bigger, you would probably find yourself very restricted due to the fact the place might not appreciate a great deal by comparison to other properties.

All that said, the future is speculation.  We're just going on past history of such properties.

Like George 99 pointed out, you have to work out what the purpose of the place is first, and make decisions from there.

It is very hard to judge property in general at the moment. There may be many years of no growth or flat market, depending on the economy overall.

It is even harder with a serviced apartment. Many factors will influence price. A major one is the attitude of lenders as if you can't get finance then it will be hard to sell.

I think you are silly to buy a property that doesn't appreciate. There is no point. You might be better off by renting one and then investing the difference elsewhere.

and stamp duty, legals etc