Questions and Answers
Your Questions About Apartment Advice
Any advice/tips on how to maximize space in my apartment?
I have a one bedroom apartment. It seems like I don’t have enough space to put away everything. In other words storage! Any tips or advice? Thanks
Build shelves in your closets. Even high ones that you can’t reach. That’s where you put the stuff you never use. Storage bins work great too. You can get drawers that will go under your bed frame. They sell them at IKEA. First of all go through your stuff and get rid of anything you haven’t used in 2 years.
What advice would you give someone thinking of investing in a serviced apartment?
I’ve been thinking about investing in a studio or 1 bedroom inner-city apartment in Melbourne or Sydney as a long-term rental income stream. Any suggestions or advice welcome.
Serviced apartments are normal apartments that are leased out for short term stays and have additional services such as security or cleaning. Typically the owner of the apartment will buy a furniture package along with the apartment so the tenants can use them more like hotel rooms than traditional apartments.
Normally the entire block is leased through the one managing agent who operates the block like a small hotel and pools the rent to then be distributed to the owners.
Most lenders restrict the amount you can borrow quite significantly to 60% or 70% of the value of the apartment. First home buyers cannot get a loan for serviced apartments because serviced apartments are always used as an investment property. Lenders do not include the furniture package as being part of the property value.
Many lenders have the following conditions just to lend 80% of the property value
?Permanent occupancy of the property must be permitted (i.e. There are no restrictions on permanent occupancy of the property under the management agreement or under local zoning restrictions.
?An “Alternative Use” valuation (i.e. A valuation undertaken on the basis that the unit is not a serviced apartment) provides support and is to exclude the value of furniture, fittings and equipment.
?The property is not a hotel/motel type of apartment.
?The property can be removed from the letting pool (where applicable) within a maximum term of six months from the giving of such release notice. Where this involves the payment of a fee or penalty in any form, the fee/penalty is to be deducted from the valuation.
?Rental income utilised as the basis for servicing/repayment calculations reflects that considered achievable in the ‘Alternative Use’ valuation.
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