Purchasing an apartment on a golf corse - Gold Coast

[Hoolign]

Hi, i am organising an inspection for a property on a golf corse on the gold coast. its asking price is $249,000

5th floor unit recently renovated, looks very clean.
rents currently at $350pw and body corp is $46
rates approx $1700pa

it is located 10 minute drive from the beach and the biggest shopping center on the gold coast. and faces over a man made lake.


Is there anything i should look out for in regards to this? the yield is a full 1% higher than all other 1 bedroom apartments i have been looking at.

Thanks for your help

 

[BoatBoy]

What about management fees as it sounds like a resorty type of thing?
What are vacancy rates like?
Hows it stack up @ 7.5% IR ?
Can you hold it and would you want to if/when IR go to 10+ ?
Is $46/week a lot for bodycorp? Sounds a lot to me

Being a GC unit complex, wouldn't you just be limiting the tenants to golfie types on holidays or weekends, compared to workers who need somewhere to live 365 days a year?

Dave

 

[Hoolign]

What about management fees as it sounds like a resorty type of thing?
What are vacancy rates like?
Hows it stack up @ 7.5% IR ?
Can you hold it and would you want to if/when IR go to 10+ ?
Is $46/week a lot for bodycorp? Sounds a lot to me

Being a GC unit complex, wouldn't you just be limiting the tenants to golfie types on holidays or weekends, compared to workers who need somewhere to live 365 days a year?

Dave

There are no management fees, only body corporate as far as im aware (of corse will check on this for sure)

can definately afford it if intrest rates push up toward 7.5%
some of these units have long term tennants in place 3+ years
i would be looking to hold this property long term, small capital gains, but mostly in it for rental returns, and paying my loan down asap to build equity. with rent and extra payments, should be able to take a sizeable chunk off the loan in first 12 months

this one has a lease in place but not sure when lease runs out.
$46 is quiet high body corp, but the current rental easily makes up for it.

 

[Rolf Latham]

Hiya

One thing may be the size of the place, if its substantially less than 50 m then finance may be restrictive, not impossible, just not as easy as above 50 m

ta
rolf

 

[Spectre]

we had clients buy on the GC in similar circumstances - the only person who could manage the place was the onsite manager who charged significantly higher than a property manager, and there was no option to acquire your own... so that might be something to check on. With these places sometimes its prudent to look at the net rent not the gross.

 

[WinstonWolfe]

Some DD

There's around 200 1/1/1s in comparable suburbs that you could get for $250k or less. I'd say that's a buyer's market.

THere's 140 rentals of 1/1/1s in comparable suburbs. So, there's lots of choice for good tenants, and a lot of room to negotiate rent down.

- ring 3 REAs, tell them you are a potential vendor, and ask bluntly whether they'd consider offers 10% below asking, ludicrous.

- ask for a copy of the rental lease of current tenant, and the previous tenant. Note the diff in rent.

- go visit the tenant, and pretend you are looking for the owner as you were interested in negotiatiing directly not using the REA. If the tenant knows the owner, then presume the rent is inflated beyond market value to hook someone like you. Also ask the tenant what their intentions are after the lease expires.

- ring PMs in the region and ask if $350 for a 1/1/1 is realistic.

- ensure your solicitor checks to ensure the body corporate has no ongoing litigation or liabilities that might transfer in a sale to you.

- visit residents of neighbouring units to see what demographic they fit into, and ask them if the tenant of your unit is respectable and has been there as long as the lease says.

- get a maintenance schedule from the BC to see what they have done since the building was completed, and what is intended for the next 5 years.

- ensure you check paintwork, gardens, lifts etc for signs of any additional expenditure that might be forthcoming.

- Ring Gold COast Centrelink/Council offices and ask where you can get figures on local unemployment trends and migration/population patterns.

- Ring GOld Coast newspapers and ask for job advert trends over last 2 years. i.e. no. of job ads per month for last 12-24mths.

- ask the REA why the vendor is selling.....most of the time they give you BS or nothing, but sometimes not.

- contact your insurance broker and ask if there's a premium for units on a golf course. even if golfballs aren't a risk to a 5 storey unit, they can still damage common property and people, which can effect public liability premiums.

 

[Hoolign]

Thanks for the replies, plenty of info for me to work off there

i have a feeling it must have its own property managers with high fees.
ill check it all out and see how it goes.

im inspecting a townhouse this afternoon that is $285,000, 3/2/1 with $300p/w rent and only $12 body corp

also a fairly central location (couple minutes drive from the M1 highway to brisban and 15 min to surfers paradise)

i feel it has more capital growth than this unit, but of course not as great rent returns. plus room for improvement with painting, landscaping on the townhouse

so im thinking it may be a smarter approach with less headache.

 

[Jacque]

In regards to body corp (owners corp) fees don't make the mistake of purchasing simply because they're cheap. In fact, $46 per wk is equivalent to $598 per quarter which is fairly reasonable these days.
You need to take into account the findings of your strata search, as there are many poorly managed buildings with very small sinking funds - when there's a major repair the funds need to come from somewhere, hence the practise of introducing special levvies to each owner. Common costs that owners can be unprepared for include lift and pool upgrades, waterproofing roofs and balconies, damp issues and plumbing issues.

Townhouses tend to have lower fees anyway for obvious reasons- not as many common area costs, and generally less in a complex than most unit blocks.

 

[BayView]

As W.W said about the rent level; could be a trap.

I had an alarm bell go if in my scone when I heard the asking price and then the rental return in your post.

 

[Hoolign]

Thanks for the info guys, i think i might give this one a miss, i have a 3bdr townhouse for 30k more only 15 min away that seems to be a lot "safer" investment.

 

[gwk]

Royal Pines Resort? I would give this a definite miss..

 

[DavidMc]

Terry Ryder from hotspotting.com.au has positive comments on returns from IPs near golf courses. Something to check out? I'd prefer just a regular IP though, not a managed one.

 

[FINANZ]

Sounds like Fairways Resort with those returns and body corp fees. I considered there too recently but chose something which i thought would return better capital gains in the long term.