Income Resource Club > Property > Special Purpose Property
Special Purpose Property Strategy
Serviced Apartments
Advantages:
- Hassle free;
- Usually higher rental if managed properly;
- No need to worry about tenants and maintenance yourself;
- Desperate sellers.
Disadvantages:
- Harder to get finance due to commercial contract;
- Can be hard to resell;
- Growth is tied into yield and how well it's operated, not necessarily reflecting local
- property prices;
- Value of the property is affected by the financial viability of the operator.
Display Home
Advantages:
- Usually built to a better quality spec;
- Higher rent guaranteed for the contracted period;
- No need to look for tenants or do any maintenance.
Disadvantages:
- Can be over priced to compensate for guaranteed rent;
- Can be hard to get finance from some lenders due to valuation and commercial arrangement;
- Display operator's financial viability can affect the guaranteed rent;
- Property usually in outer areas with slower long term capital growth.
Student Accommodation (Managed)
Advantages:
- Higher rental if managed properly;
- No need to worry about tenants and maintenance yourself;
- Affordable purchase price.
Disadvantages:
- Can be hard to resell sometimes due to its special purpose;
- Growth is tied into yield and how well it is operated, not necessarily reflecting local prices;
- The value of the property is affected by the financial viability of the operator.
Renovation Strategy
Advantages:
- Instant increase of equity for further investment or better risk management;
- Most money paid to the 'land component' to ensure solid future growth;
- Instant increase of rent for better cash flow;
- More efficient use of funds;
- Great tax benefit;
- Lower town planning and building risk;
- You can buy under market value sometimes.
Disadvantages:
- Lot of work if you do it yourself or lot of management if done by others;
- Takes time to find the right property that can make the numbers work;
- Easy to underestimate the time, cost and work involved in a renovation;
- The increase of equity and rent may not be obvious enough to justify the cost and effort.
For further information on Property Renovation Strategies, please visit:
Property Renovation Strategies
Development Strategy
Advantages:
- Excitement and pride - you can call yourself a developer!
- Potential good profit above cost;
- You create the equity instead of waiting for it;
- Potential to get finance and capital based on the deal instead of your own capacity;
- Allows a lot of creativity to create value;
- Multiple exit strategies to make money.
Disadvantages:
- Inefficient use of your money due to long processing time;
- Easier to make a loss if you don't know your craft;
- Planning risk, building risk, finance risk and selling risk;
- Require larger capital base (than estimated usually);
- Require lots of commercial and people skills;
- Lower income while holding the site for permit.
For further information on Property Development Strategies, please visit:
Property Development Strategies
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