Ultimo Units

S

Sureline

Hi, I would like someone to talk me out of this, please....

I am considering purchasing a studio apartment in Ultimo. I can purchase one outright with cash - I have about $220,000. The returns are so much higher than leaving money in the bank.

My goal is to live overseas long term from the rent. I can't achieve this with bank interest, but can with an Ultimo apartment's rent.

I'm not sure why this isn't a good idea. Please can anyone give me good reason for caution.

Thanks,
Sureline
 
Sureline said:
I am considering purchasing a studio apartment in Ultimo. I can purchase one outright with cash - I have about $220,000. The returns are so much higher than leaving money in the bank.
Click to expand...

Can you provide accurate figures of your rental returns, after ALL costs.
Please advise.

It may not be too far from bank interest after all.
 
After extra buying costs of stamp duty and legals, as well as extra ongoing costs such as insurance, rental vacancies and any minor repairs, not forgetting management fees either, you'd have a sub 5% gross return.

And the CG on these things is terrible.

Where are the benefits/upside to such an "investment" ?
 
The agent says "potential return 7% -8%" and you believe them, just like that?

This is student accommodation, cannot be used as normal residential. This is what you will be competing with for rental return:

http://www.realestate.com.au/property-unit-nsw-ultimo-414137439

So your rent is likely to be $340 per week, out of which you will need to also pay all utilities. Student accommodation means the property may be vacant December, January and February each year i.e., 25% vacancy.

The numbers for the unit posted above are (per annum) in round figures:

rent income: $13,260

strata: $4,000
water: $ 700
council: $ 800
insurance: $1,000
pm fees 8.8%: $1,100

total costs: $7,600

balance: $5,660 (but haven't paid for utilities yet)

Bank would offer 4% interest = $8,800

Remember that your selling costs for the unit will be at least 2.5% to the agent: $5,500.

Put the money in the bank.
 
Sureline said:
Hi, I would like someone to talk me out of this, please....

I am considering purchasing a studio apartment in Ultimo. I can purchase one outright with cash - I have about $220,000. The returns are so much higher than leaving money in the bank.

My goal is to live overseas long term from the rent. I can't achieve this with bank interest, but can with an Ultimo apartment's rent.

I'm not sure why this isn't a good idea. Please can anyone give me good reason for caution.

Thanks,
Sureline
Click to expand...

Hi Sureline

I can see the appeal of the low entry price however with these serviced uni student only there are downsides that you need to be aware of:

1. With these types of buildings your unit usually goes into a pool with others for rent (make that all of them) much like a hotel room. You may find this restrictive and also given that the management is basically out of your control (though I stand to be corrected if this isn't the case)

2. Harder to finance given small size

3. Lack cg of similar surrounding stock that don't have the same impositions and are in buildings that have owners not just landlords

4. PM fees usually higher

Do some more DD and good luck!
 
There may be something on the title or the bylaws that says the property may only be managed by unilodge, there could be headaches and comissions involved here. Be careful and read all the fineprint
 
In a nutshell, if these investments were soooo good and actually return a consistent 7-8% why wouldn't these already be snapped up by the savvy real estate brokers or their friends and family?
 
Sureline said:
Hi, I would like someone to talk me out of this, please....

I am considering purchasing a studio apartment in Ultimo. I can purchase one outright with cash - I have about $220,000. The returns are so much higher than leaving money in the bank.

My goal is to live overseas long term from the rent. I can't achieve this with bank interest, but can with an Ultimo apartment's rent.

I'm not sure why this isn't a good idea. Please can anyone give me good reason for caution.

Thanks,
Sureline
Click to expand...

With a 220k deposit, surely you would be positively geared in most suburbs. Just my 2cents
You could always
 
That property has been on there for ages or one identical to it. Given all the info above I'd steer well clear. You don't want to be confined to students only not to mention the other issues and low CG.
 
Listen to ACE in the Hole and RUN from this,

There is no worthwhile upside.

Do not buy it.

Do not buy it.

Do not but it.
 
Buy some shares in big bank have much more dividend than put in the bank deposit.

It's easier to sell share than this type of property.

if it's the income you are after, I think better look for somewhere else.

This is not the property investing, it's a donation to creating jobs for everyone involving in this !
 
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