Pensioner Units

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From: Donna Larcos


Anyone invested in pensioner units"?
One bedroom units managed by onsite
manager. Rent comes from pension and
rental assistance and you are paid
directly by the govt. Income is around
11-12% but costs are higher due to
onsite manager and 3 meals a day. Good
depreciation.

I was wondering whether they languished
from a capital growth point of view of
compared favourably to any other one
bedroom unit in a similar area?

Obviously these are cashflow rather than
capital growth properties but has anyone
had experience - good or bad?

Donna L.
 
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Reply: 1
From: Sergey Golovin


Hi Donna,

I am not a pensioner or neither have units, but.
But, always was interesting how the whole thing does work.

Cut it shot - they do increase in value, would you believe it.

I was firm believer that I can afford one for my self in about 30-40 years time if I’ll do bugger all. Just simply sit and wait for retirement package from government (you know that one with gold watch, meat pies and orange juice?).

Well, I changed my mind. Changed my mind in regards to gold watch…But still have hope to get post card and meat pies.

I could not believe that they do increase in value on very same way as any other real estate.

Obviously they are cheaper to buy, to start with…

Serge.
 
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Reply: 1.1
From: Anonymous


A can of beak beans and a few slices of bread split into 3 meals cannot cost that much.

And a X/mas chicken from Woolies at $6.95 aint that much of a investment.

Have a heart.
 
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Reply: 2
From: Yuch .



Hi Donna,

So your saying the gross return is roughly 11-12%, what about the net
return, ie total income less all expenses before tax?


Regards,

Yuchun Chen
Market Management Systems
NEMMCO Ltd
(02) 8838 5042

I am the Master of my FATE, the Captain of my SOUL, but a Slave of my
STOMACH






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Reply: 2.1
From: Donna Larcos


There are 2 units on each title. Gross
return is 12%, net return before tax and
without interest (depends what you are
borrowing and at what rate) is about
5.75% which probably makes it about
neutral. Then you add depreciation and
depending on your tax rate you would
have around 1000-3000 in your hand at
the end of the year. The expenses are
higher than standard residential because
they have all meals provided, onsite
manager, linen service etc. Oh yes, and
rent is raised every six months when
pensions are revised to CPI etc. Often
LVR allowed is 70-80% so you would
need to have the rest in cash or equity
loan. They are geared towards
pensioners who do not have enough to
purchase into a retirement village and
can no longer maintain their own large
homes due to loss of spouse. It is still
rental accommodation and they must be
able-bodied.
 
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Reply: 2.1.1
From: Paul Zagoridis


Hi Donna

This looks like many deals that have come out of the woodwork over the last couple of years.

Agents are tired of being asked for positive cash flow, so they find something you couldn't give away a few yeears ago, bump the price up to show a 11-12% gross and sell it to a cashflow investor who's just read Rich Dad Poor Dad.

The deal is still negative. You are tying up your deposit money and borrowing capacity and your profit is non-cash deductions.

The vendor is making the killing. There are developers who specialise in this sort of project and they look for 20-30% returns. You wouldn't buy a motel that showed only 11-12% gross. Don't compare these with residential real estate. Think of it as a business.

Paul Zag
Dreamspinner
Oz Film Biz is at
http://www.healey.com.au/~paulz
 
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Sim

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Reply: 2.1.1.1
From: Sim' Hampel


I've seen this kind of thing happening in certain suburbs of Adelaide (the one's generally considered the "worst" suburbs socio-economically).

Agents in these areas now have a waiting list of eastern states investors wanting to buy a "cashflow positive" property in these areas. Properties that 12 months ago were selling (well... NOT selling actually !) for $40K and renting for $120pw, are now being "rented" for $140pw and sold for $70K sight unseen to people from the eastern states.

"Wow... $40K to $70K in 12 months... who says you can't get capital growth on cashflow positive properties ?", I hear people say.

Yeah, right.

I wonder... is this the development of a new market force ?

The "Gotta-be-cashflow-positive-don't-care-what-it's-like-I'm-not-an-investor-snob-no-way-never-not-me-look-at-the-yields-I'm-getting-Kiyosaki-would-be-proud" gang ?

Will these people drive the capital growth in these areas where regular investors people have feared to tread and owner occupiers have always seen practically zero growth ?

It is interesting to see some of the people who are making money here - flippers and such who can find a bargain and then hand it over to one of the bunch of salivating eastern staters for a fee - agents who know what these rabid investors want and mark up the prices as high as they can because they know they'll sell them.

Yet another market that I just don't understand.

*sigh*

Well... so long as the investors are happy, who am I to judge ? ;-)

 
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Reply: 2.1.1.1.1
From: Donna Larcos


Boy ..... such vitriole.... have you guys
been badly burned or something.....I just
asked a simple question.
 
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Sim

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Reply: 2.1.1.1.1.1
From: Sim' Hampel


Paul got badly burned (self inflicted - ask him, he'll tell you all about it !).

Me ? I'm just a cynic ;-)

 
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Reply: 2.1.1.1.1.1.1
From: Michael G


Ha,

I've been to Adl, some nice areas there and some really rough ones, even worst than Mr Druitt.

There's one 'burb north-west of Adl CBD, in which many houses there feature corrugated iron window security shutters (ie corrugated iron nailed over windows). I spose its better than replacing glass every week :p

But there are some just north of the main road away from the 'burb I was talking about that look much nicer and still are cashflow +ve, though some there were shockers - especially the paint schemes :p

Michael G.
 
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Reply: 2.1.1.1.1.1.1.1
From: Donna Larcos


Cynicism is one thing but, let me see if I
have this straight. In response to my
question I have been:

1. Called heartless.
2. Accused of feeding pensioners baked
beans.
3. Accused of buying substandard
property in substandard suburbs (- now
who is the snob)
4. Accused of Kyosakiism (I only bought
the book, didn't attend the seminar)
5. Accused of buying positively geared
property (previously I was called an idiot
for buying negatively geared).
6. Not doing due diligence and checking
the property values.

And you tell me to have a heart!!!!
 
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Reply: 2.1.1.1.1.1.1.1.2
From: Les .



G'day Donna,

On re-reading through the whole string, I can understand how some replies might have you start to think the whole forum is against you - but that really isn't so.

Let me see - hmmmm ...

> 1. Called heartless.
Les> Posted by Anon - doesn't mean squat.

> 2. Accused of feeding pensioners baked
beans.
Les> Posted by Anon - doesn't mean squat. It appears to be a poor attempt at humour - but I'm not sure (it was that poor ;^)

3 thru 6.
Les> I think the use of the word "you" in some replies had you taking these personally - but, reading them as an outsider, they appeared to me to be generic answers for all readers (using "you" to apply to ALL OF US).

I really think the first reply tended to taint your reaction to the very good input provided after by some stalwarts of the forum. I also don't think any of the latter were "accusing" you of anything.

Try re-reading the answers as though someone else had asked the original question, and read the responses as though they are meant to be helpful (which they are, I'm sure). I hope you will then see them as the "good advice" they were intended to be.

Regards,

Les


- "Eschew Obfuscation" - ;^)
 
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Sim

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Reply: 2.1.1.1.1.1.1.1.2.1
From: Sim' Hampel


Thanks for that Les, you saved me the trouble.

Donna... my posts - and I think this also applies to the others that Les mentioned - were discussing generalities, not your specific case.

Please don't take anything I said in my post personally !

 
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Reply: 2.1.1.1.1.1.1.1.2.1.1
From: Sergey Golovin


Donna,

In response to your original question - Pension units.

We used to have stall at the market many years ago (Balmain markets - when life was bit more relaxed in Sydney) and I did learn one very simply but very encouraging fact - people do buy anything and everything as longer as they happy to buy they will buy it.
One person comes along and sais - What that shit?... Next one staying behind says - Wow! How much?!...

What do you say - what can you say? You just say yes to one and yes to the other and give them the price they after.

Back to units - if it is what you want go for it and do not worry about anyone else's remarks.
If you are making dollar out of it and happy. Why not. Do it.

Serge.
 
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