Hello Everybody new to property investing, I am currently looking as I type to buy my first Investment property. My plan was I wanted to buy an apartment or even off the plan somewhere in the city or near the city with great location near public transport, schools, shopping etc. Of course I will do my homework and research my ROI and rental yields and if it is off the plan I will research the developer and previous projects…. so when I purchase my PPOR after few years I won’t have too much trouble renting my IP out or selling it. I mention to friends and colleagues about my plan but they just put me down and say that apartments will not go up, off the plan isn’t safe and risky, don’t invest just buy PPOR first bla bla etc.. without any experiences themselves I thought I would turn to a forum where people understand my situation.
My question I wanted to ask is there a website or anything that I can look at statistical growth in Melbourne properties for the previous years, for example this project Melbourne apartments has risen x amount over x amount years. Because people tell me “don’t buy in that area its not doing well, its risky” and I will say how do you know and they will reply because my friend works around there or I heard from that so and so. It would be great to get opinions from investors and people that have experience in property.
Thanks Everyone
Hello Ronnie,
You can explain to people a hundred times over that the conditions and the rules for property dont change .. and they'll assume you're talking out your backside.
There are really only three major things you need to worry about in a purchase.
Rarity – Demand – Initial Purchase Price
And three regarding the property itself
Condition, Flexibility, and Market Requirement.
Outside of that you are looking at CONSUMER and FINANCIAL variables. Yes thats what you are guessing .. but realistically how accurate can you be?
Can you predict that the car industry in Geelong packs up and heads overseas .. leaving a large empty gap in the local workforce and rental requirements?
Can you predict that the Victorian Government picks up VicRoads and decides to shuttle 400 municipal jobs to Ballarat? A boon to Ballarat but for how long?
No, obviously you cant predict things that are outside your actual control. But what you can do is make sure that your pick is close enough to right to start with so that regardless of the intrinsic variables that change the value of your property .. your property will hold and potentially increase in value.
Lets point out where the student properties go wrong based on the above requirements. They start off in fabulous condition but have literally no flexibility on tenancy due to being student-only by design. And once that temporary market requirement dissolves … who will you be catering to?
The inner cities buzz keeps growing as the cities gets more tourism .. more quality restaurants and free transport.
But they have a hell of a lot of property catering to this market with actually a stackload more on the way.
If I was a government printing hundred dollar bills like confetti .. how long would you be holding onto your dollar bills based on their purchasing power?
You'd probably be discarding them rapidy and heading for an asset which would hold the value of your money as long as possible.
Property is the same. In the late 80s there were enormous office space booms based on the 'potential' for the area. Then the computer revolution took hold in a major way and a lot of this existing office space was classed as redundant. Up and down areas like St Kilda Rd there was only demand for either A class property (at a reduced rate) or property that was literally brand new. All the rest of the property remained either largely empty or at a significantly reduced rate.
The only thing that kept the properties from rusting away altogether was a change in council planning allowing for residential conversions and land usage modifications.
You wont be a commercial investor. But on the same basis you can take the above and realise that the idea of a continually ever growing residential property market without limitations is a human fantasy.
Property has its feasible limits based on reasonable guidelines. Outside of reasonable guidelines … you place your trust in the risk component never affecting you.
Ronnie,
OFPs are always statistically dangerous because there is no property to begin with.
If you are genuinely looking for investment from an apartment complex .. buy within the first year of 'exchange'
Typically .. up to 40% of a block of apartments will exchange within the first year due to 'regrets' with the investment choice, financial difficulty in servicing the investment or realisation due to lack of needs requirements.
That means you will have an existing apartment to view .. and an idea of how good or bad the apartment is.
And dont listen to other people's basis for risk averse judgements. Make your own informed decisions and make the right choice based on that. I cannot tell you how many times I have had people adverse to an area I have chosen and I have been proven correct in my judgement long-term.
Make an educated judgement .. make the right call based on that judgement. And stop listening to the naysayers, they just get in the way of your success.
If you are worrying about stamp duty savings … and thats your only reason for investing in an OFP apartment .. then you are probably in the investment for the wrong reasons.
Thanks so much Xdrew, that was awesome. Not too concerned about stamp duty savings, more just on the development and location. What if the location was already excellent and the surrounding apartments or houses are already valued at X amount? and if the location was already very scarce with no more land to build on? I am thinking what if the property has really good capital growth after few years and prices booming and I don't want to regret and say I should of purchased that 2 years dammit lol.
Thanks Xdrew I am just speaking out loud what is going through my brain at the moment haha.
One more question how do people come up with the capital growth calculations just for example melbourne cbd has a capital growth 5.0% anually (just making it up for an example)
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