Hi peeps , So been getting some advise from buyers agents to invest in new or OTP units in brisbane to balance my high growth negatively geared properties but after a bit of DD I note there seems to be a lot of product coming on line with some reports saying 10,000 new dwelling within the next 2 years. I also am aware the rental demand is already weakening in some areas as a result of current new stock.. Particularly in the inner areas… What is you view on the state of this market now and into the future… Would you being buying this product now assuming you want to maximise DSR
Hi there
Welcome aboard.
Are you sure this advice is coming from an independent buyers agent working for you or is it coming from a property marketing company that sells OTP property and reaps sizeable commissions?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie,
Nice to be here, no they search all residential property types,also offer add value to old/Renovation advise, property management and financial strategy etc and seem to be interested in my circumstances, not just find me a property. My main question was about the new unit market? Any thoughts,
If I move forward I will probably stay out of the areas of current and future saturation and focus on smaller well designed stock within 7 –
Hi SAH,
My main question was about the new unit market? Any thoughts,
Although Units often have a Gross Rental Yield higher than houses, their Nett Yield is not often positive unless you buy very well. And purchasing OTP is not usually the way that one finds positive yields. I’d be interested to see if these ones are any different – can you share some basic numbers? (price, rent, Body Corp costs, number of units in block)
CBD’s have a habit of offering many units in bulk, often leading to oversupply and a pullback in rents. Consider too, that many NEW apartments are sold to the overseas market. If for any reason they then need to sell, other overseas investors CAN’T buy them (as they are no longer new, so second-hand sales are into a smaller market.
I choose to stay away from that area – but if buying at a greatly distressed price it might work out. Give me houses first any day, or units in small boutique blocks if/when price is favourable.
Benny
Hi bent,
Thanks for your response.
I wasn’t after a positive yield up front, just better than my other property.
As an example one unit is to buy (inc stamp and other up fronts) 420k, rent is around $450-460,,
Including all outgoings (8k) to cover body corp, manager, then building allowance and depreciation I work out holding cost at my tax rate to be -$10 a week give or take.. On this unit my concern is it’s proximity to all the development in the pipe nearby. Yes small block about 3/4 storeys , around 40Yes definitely stay outside the Cbd, good advise also. I don’t want to buy a house because my budget tops out at 500k, so there isn’t really options I can service. I have two inner queenslanders in brisbane now and they cost a bit to hold, need something to balance the serviceability so I can keep buying.
Hi there,
Off the plan and Independent Buyer Agent – thats humerous. OTP is driven by commisions – agents are severely blinded by the comms and for me i’m seeing this ripe in brissie. Not seeing many good options in the apartment market at all.
Cheers, Ivan
Redwood | REDWOOD | SMSF | PROPERTY | FINANCE
http://redwoodadvisory.com.au
Email Me | Phone MeSMSF - PROPERTY INVESTMENT - WEALTH CREATION AND FINANCE SOLUTIONS
It didn’t say off the plan only, I said new and or of the plan, does anyone want to answer my question about supply or thoughts on the unit market.. If you want to just pay out my buyers agent I will give you the phone number!
Hey safe,
Some of these guys who’ve commented have been around the block a few times and have had to unravel problems that people commonly get themselves into when buying new or otp. Independence of buyers agents is a big one and the property type you’re describing is high risk for this sort of thing. It could mean 40k to the bottom line in any deal. In my mind this would have a big bearing on whether an investment is priced right for investment purposes and I would be thanking them for their input.
As to the location I’m not familiar with it. But if there is a forecast for significant more supply and the rental market is already softening you’d have to question the fundamentals of what you’re looking at. Are there significant changes in the local infrastructure or economy that would bring people in to compensate for this?
anyway, good luck with it.
Andrew
itsandrew
Go as far as you can see and you will see further.
Hey Safe,
I agree with itsandrew, the majority of people who are commenting have masses of experience in this field, AND i get a lack of answer. :P
I think they are just trying to help because there are so many newbies out there who trap themselves and ruin their changes of a successful long term portfolio because of lack of knowledge. :)Brissy units growth are very dependent on locality at the moment. Some places are majorly oversaturated with units and some aren’t – and they will continue to build in these oversaturated areas for first home buyers,downsizers etc.
But best bet is you’re on the money to steer clear from an area that has potential influence from future pipelines.
You can get units for that price and that yield elsewhere, like 7km radius out from the CBD that are safer for your DSR and long term portfolio. Have a look at units that have demand from Universities, not just inner city dwellers for stability, and stick to smaller unit blocks, like under 30-40 if you can.
Avoid CBD and Inner City Units as there will be an oversupply of units when they all come to market.
Anything within 8 kms should be fine but personally i would avoid new properties.
I have just sold a block of 18 units in a Inner Western suburb which i purchased in 2002 for 1.8 M and sold for 5.8 M settling in October 14. Whilst i renovated them when we first purchased them the the growth has been more than encouraging. Rental demand was always good.
Certainly I would not have purchased a Queenslander for an investment given the higher upkeep costs so a well placed unit should help balance the books.
If you were a BA client of ours we would suggest a smaller established block (under 8 units) with 2 bedrooms close to transport.
This way the Body Corporate has been established and you have a good track record of the past expenses and can assess the sinking and administration funds.
Cheers
Yours in Finance
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This reply was modified 9 years, 10 months ago by
Richard Taylor.
Richard Taylor | Australia's leading private lender
Hi Richard,
As you and several others have mentioned above, why is it better to buy an unit in an apartment with less units (less than 8 units)? Are you able to explain this further?
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This reply was modified 9 years, 10 months ago by
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