Studio Apartments

Pros - Usually higher yields.
Cons - Hard to sell because banks won't like lending against anything smaller than 50 sqm. Also because it is a service apartment leased out to a corporate tenant - Banks hate that because it only attracts investors, not owner-occupiers so the market is diminished when you sell.
 
So did you think they would have been a good investment?
The East Melbourne apartment was listed at 90+K (can't remember exact figure) and the Flemington apartment at 129K. They appear rather low-priced to me but I don't know whether there are any "catch" in this type of investment property. I am inexperienced in property investment and am seeking opinions from others in this forum so that I can learn from their experience and wisdom.

I had just bought an IP so I was not considering these 2 apartments when I asked the question. If they are worthwhile investments, I will keep an eye on such properties in the future.

What are your opinions?
 
I guess I was asking the question, to see what you had been able to learn about those types of investments. You'll get many opinions on this site but ultimately you'll have to own one :)

As for me, there are very few property types that are no go's for me, however studio & serviced apartments are at the top of the list. Doubly so, if they are serviced studio apartments eg like the East melbourne one.

In saying that, there are a few forumites who I do recall have been particularly happy with their investment in serviced apartments (eg Quest).

However for me, LVR restrictions, limited market to re-sell, anectodally have heard of average capital growth in studio's, reliance on the operator of the service arrangement (you are effectively investing in their ability to manage hotel/serviced apartment business) add too many unknown variables to make me consider they are worthwhile. They may have their place in a SMSF style purchase but not for an investor looking to build a portfolio.

If you are attracted to them because of the price point, bear in mind you may have to contribute up to 50% deposit (and probably no less than 30%)depending on the commercial arrangement between yourself and the management company. If you are looking at a low price point, 50-70's style 1 or 2 bd flats up to 10-12km from the city would be a far better proposition for a first time investor IMO.

Good luck with the search and feel free to ask questions.
 
However for me, LVR restrictions, limited market to re-sell, anectodally have heard of average capital growth in studio's, reliance on the operator of the service arrangement (you are effectively investing in their ability to manage hotel/serviced apartment business) add too many unknown variables to make me consider they are worthwhile. They may have their place in a SMSF style purchase but not for an investor looking to build a portfolio.

If you are attracted to them because of the price point, bear in mind you may have to contribute up to 50% deposit (and probably no less than 30%)depending on the commercial arrangement between yourself and the management company. If you are looking at a low price point, 50-70's style 1 or 2 bd flats up to 10-12km from the city would be a far better proposition for a first time investor IMO.

Good luck with the search and feel free to ask questions.
Thank you very much. Your analysis will be very valuable to me during my future search. I just bought my 1st IP and don't know when will be a suitable time to consider a 2nd one.
 
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