Hey guys,
An agent who is a friend of a friend has a bunch of NRAS approved apartments in Kingsbury (Near Bundoora in Melb) for sale. They are due to be built by this time next year. The price seems reasonable, if slightly on the high side (400k for 2 bdrm), but they are CF+ with the NRAS scheme. According the agent they will not even appear for sale on the internet as they will be snapped up so fast (am I to believe this?) Having now read just about every vaguely recent article on NRAS properties, they do seem worth the hype, however most of these have been for houses. I am sceptical of the capital growth potential of a small apartment (one of 27 in the block) about 16km from the city. Is this concern valid, or am i just nervous as i have not bought in IP before?
I’d be happy to provide more details if needed.
Cheers,
Marcus
Hi Marcus,
I would not touch one of these deals as your return is restricted & there are high costs involved. There are better strategies out there that you can get better return on for money for value. As you suggested your self you reliant on one thing & that is capital appreciation has to increase for you to gain we’re you would be better to purchase an older property that has the abiility to manufacture your returns through renovation.
Regards
LeftyThanks for the reply Lefty.
Would you be able to elaborate on why the return is restricted and what these costs are? I had thought the return was the best part of the NRAS deal. It is well above all other similar properties in the area.
I have no time or desire to renovate properties (Although i certainly appreciate the tactic, it just doesn’t work for me). As i am quite young and have a reasonably high income + low expenses, my strategy is to buy and hold allowing for capital growth over 10+ years (While buying more with the equity). The only reason these units came to my attention is because a friend of a friend offered them. They are not part of my buying strategy, but i could hardly fault them apart from possible lack of capital growth.
Any more thoughts are very welcome!
Cheers,
MarcusHi Marcus ,
While I’m sure others here with experience in these type of property’s will be able to help you more than myself , I would rather buy a slightly older unit in Bundoora. Something that actually has a real market value(Already built). There are a ton of threads on here regarding the risks with off the plan purchases , student accommodation , and large blocks of apartments and it sounds like what your looking at possibly is all 3 .(maybe wrong about the student accommodation) …but the area does have a lot of that type of property.
Good luck ,
Brad
Absolutely it would seem like a poor deal given that it is off the plan, is part of a large block of apartment and well, it is not student accommodation but is similar. That’s why if it were not NRAS (practically guaranteed CF+) it would be a terrible purchase. The agent said there would be good capital growth because of the area. But really, even though it may be in a good area the style of property is not conducive to capital growth. I will call the agent tomorrow and see if he has any opposing arguments. CF+ may be good but if there’s going to be negligible capital growth to use as equity for future properties it is not worth it.
Thanks for your thoughts Brad!
Any more ideas about capital growth of off the plan units in this kind of area very welcome.
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