Hi all, long time no post. I am putting up this post to see what you might think about a little idea of mine. You see I really would love a place to buy for myself (as I have been renting for quite a number of years) but the Sydney market is very expensive. I have located a 1 bedroom unit in a suburb that I am currently renting in, which is not in a metro area ( i.e. not sydney). My dilemma is that the unit itself is only 39m2 & as I have found out, not many of the major lenders will lend on property under 50m2 (especially in the metro high rise areas), but I have found that 1 certain major lender is more than happy to lend me the money because it is not in a metro area. The price is $159,000 & has been on the market for say a couple of months atleast – according to the agent a couple of people have been willing to pay full price but could not find anyone to get finance through (because of the small size). I am curious as to what you might think of this situation. Firstly, it would get me a start in the property game, secondly, I am going to live in it for atleast 18 mths until I go overseas for a year to travel , so I can utilise the govt. stamp duty concessions & FHOG, it would be only a little extra in mortgage repayments on an IO loan than my current rent, I could rent it out whilst going overseas to help cover costs while I am away, but am unsure of its possible re-sale “liquidity” come time to sell maybe years down the track? – mainly because of its size? If it does sound like a go ahead, I am unsure of a realistic offer to put in – as it has been for sale for a while & because it seems hard for people to find finace ( although I found it on my 2nd phone call with a very reputable lender ) What do you think? Any advice on this topic would be hugely appreciated as I am unsure whether or not to go ahead. Thanx heaps for your time [
]Nathan.
G’day Nathan….
My concerns are the same as yours… size..resale…refinance one day etc
That is a small unit, and your resale market is restricted. However it is going to be a problem in that the overall market is softening and I would ignore the asking price. It is no point in thinking that others would pay the asking price but can’t get it financed.
The reality is…it’s not sold. You could also assume that it’s not worth $150,000 or it wouldn’t be their after 2 months if it was. So it’s worth less than $150,000. Make an offer of $130,000 and be prepared to have the Agent chase you.Stand firm for a week or so… it’s been there 2 months.
I would still caution you in buying anything that has not sold after 2 months given the market 2 months ago was still reasonably strong.
It’s cheap but ….for a reason
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Hi Nathan,
I agree with Bill in that size of the unit may be a problem for future sale or refinancing. But on the other hand, our daughter has had a similiar size unit in northern Sydney suburb for about 7 years, never untenanted. Good block with heated indoor pool. She recently sold a smaller 1Br with 2 balconies which were a great advantage, on market less than a week.
We also have a couple of units that are less than 50sm internally but we found that some lenders take into account balcony as living – which it is – and also garage/carport as well. These two are great little units in FNQ always rented & cfp.
And yes, as Bill said, why not offer $130000. We did just that – from $159000 and will be starting to renovate the 1BR unit in a week or so. I kept seeing it in the paper and thought there must be something wrong. It is bad inside, old chipboard cbds literally falling apart, needing paint, light fittings and floor tiling upstairs, carpet downstairs in the bedroom but it is in a trendy area, eg. the cafe set area and near beaches.
As you say, the unit you’re talking about may be a good start into the property market and even if you later rent it, there’s not much to rent under $200 a week in the outer Sydney area where I guess you are. Anyway, do all your searches and inspections to be sure.
Anna
Thanx for all of your insights guys & girls…. unfortunately the unit does not have the added bonuses of heated pools or any balconies, let alone 2 levels? Bummer, sounds like you have found better deals than I have….congratulations!! The unit is only 1 level and is in a block of seven, 4 one bedders & 3 two bedders. I am very concerned of the sale price & therefore the resale ability in the future? I am tempted not to pay any more than 100k given the fact that there are similar size units out there with more “side accessories” like heated pools, balconies etc….around the same prices. Not sure, will need to sit down & think about this one a bit more. Thanx for all your extremely valuable advice [
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