{"id":2061,"date":"2015-10-25T11:15:30","date_gmt":"2015-10-25T00:15:30","guid":{"rendered":"http:\/\/www.catebakos.com.au\/?p=2061"},"modified":"2015-10-25T11:36:30","modified_gmt":"2015-10-25T00:36:30","slug":"six-reasons-why-high-density-high-rise-apartments-scare-me","status":"publish","type":"post","link":"https:\/\/www.catebakos.com.au\/staging\/six-reasons-why-high-density-high-rise-apartments-scare-me\/","title":{"rendered":"Six Reasons Why High-Density, High-Rise Apartments Scare Me"},"content":{"rendered":"

Just this week we\u00a0had two lovely clients\u00a0and<\/em> a prospective new client ask us\u00a0about our\u00a0thoughts on a high-rise, high-density apartment they’d each picked out; one in the CBD and one in Docklands. It was an interesting adventure for one who’s preapproval was deemed invalid for the property she’d set her sights on.<\/p>\n

So while she was fully assessed and pre-approved, the lender was\u00a0not so enamored with her selection and it was only after our insistence that she\u00a0check in<\/em> with her lender about her chosen property\u00a0prior\u00a0<\/em>to signing a contract that we were able to save her from a frightening\u00a0mistake.<\/p>\n

Nobody wants to walk away from a 10% deposit cheque after all.<\/p><\/blockquote>\n

When clients ask me what I think about Docklands Apartments, or South Yarra\/Prahran Towers, (or the like), the investment advisor in me screams “no”<\/strong> for quite a few reasons, but the owner-occupier appeal is something I can\u2019t deny home-finders.<\/p>\n

What do you say to a client when the purchase is a terrible investment <\/em>idea and a fun<\/em> lifestyle concept?<\/p><\/blockquote>\n

Rather than be a voice of doom, I\u2019m better off spelling out the key risks for them.<\/p>\n

    \n
  1. Over-supply (both now and into the future) threatens the capital growth of these types of assets<\/li>\n
  2. Banks don\u2019t favour them and they are <\/em>harder to finance. Even if you<\/em> can finance them, mainstream buyers can\u2019t. Four\u00a0property-related things that\u00a0banks hate are:
    \ni) small floor area. Mortgage insurers won\u2019t touch anything with a FLOOR AREA under 40sqm (and often 45sqm). Don’t let an agent tell you that carparks are included in that area measurement. They\u00a0aren’t.<\/em>
    \nii) over-exposure to a block. In other words, if Westpac (as an example) decide to cap their exposure at 20% within a building \u2013 and if they already have reached their quota – they may decline your finance.
    \niii) vacancy rates. Many are vacant based on oversupply and banks know this.
    \niv) if the property is on a main road (they often are) and particularly if it’s commercially zoned or above shops, banks could view them quite differently altogether and commercial lending rates (and LVRs) could apply.
    \nNow is not the time to challenge lenders with quirky or difficult assets.<\/strong><\/li>\n
  3. Desperate\u00a0sales causing low valuations for others in the block<\/li>\n
  4. Investors competing with each other to find good tenants and edging down advertised rental<\/li>\n
  5. Views being blocked when a new tower emerges; then fire-sales often being triggered when owners panic. This in turn can cause valuations to dip.<\/li>\n
  6. SUPER high Body Corporate rates. Best to always check the\u00a0OC fees before getting excited.<\/strong>\u00a0Lifts, pools, gyms, concierge etc…. they all spell upkeep and expense.<\/li>\n<\/ol>\n

    \"1_high<\/a>There is no doubt the location, views and lifestyle can be\u00a0amazing. I say to anyone \u2013 “if you are happy with your investment portfolio and you can happily afford the high outgoings, I\u2019ll help you with whatever you decide, as long as you are doing this for YOU and not as an investment decision.”<\/em><\/p>\n

    “Let\u00a0this overview help\u00a0you to be mindful of the risks and costs associated with high-rise, high-density properties.”<\/p>\n

    And I’m not even\u00a0touching\u00a0<\/em>on Off-The-Plan… That’s another segment.<\/p>\n

    One of my\u00a0favourite<\/strong> sayings is “We don’t like properties which\u00a0the banks don’t like<\/a>.”<\/em><\/strong> Having worked as a mortgage broker thoughout the GFC was one of the most valued experiences\u00a0I could have had to prepare me for Buyers Advocacy.<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    Just this week we\u00a0had two lovely clients\u00a0and a prospective new client ask us\u00a0about our\u00a0thoughts on a high-rise, high-density apartment they’d each picked out; one in the CBD and one in Docklands. It was an interesting adventure for one who’s preapproval was deemed invalid for the property she’d set her sights on. So while she was… Read more »<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ngg_post_thumbnail":0,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[10],"tags":[],"class_list":["post-2061","post","type-post","status-publish","format-standard","hentry","category-sundayblog"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts\/2061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/comments?post=2061"}],"version-history":[{"count":6,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts\/2061\/revisions"}],"predecessor-version":[{"id":2068,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/posts\/2061\/revisions\/2068"}],"wp:attachment":[{"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/media?parent=2061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/categories?post=2061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.catebakos.com.au\/staging\/wp-json\/wp\/v2\/tags?post=2061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}