we are looking at buying our first property, we just dont to know where to start looking. We jump from one suburb to another, ending up more confused. We can only afford up to $300K property. we plan to live in this property for up to 2years, and then rent it out as we will need to go overseas for some time.
now, how do u compare one suburb to another. what are the things we should be looking at ? for example, how can i evaluate that it will be better to buy a $300k property in Bentleigh (Melbourne) than a $300k property in the west like Point Cook ? When i say better, i mean that in 1.5 to 2yrs time, there will be less problem renting it out. And in the long run, say 7 years, Value of Property A will have increased more than property B or the vice versa.
I need some tips as to how and where should i start doing my research, which books, site etc ?. I need all the help i can get.
thanks,
aafreenHi Aafreen,
This is right up my alley, as I too am a Melbourian!!!
Firstly, there are many areas worthy of consideration, and if you are going to be living in it for while first, may qualify you for the FHOG which can total a nice little 12K sum towards its purchase!!!
I could name at least half a dozen areas in Melbourne, including ones I have invested in personally, however it is YOUR purchase and has to be areas that YOU feel would suit you.
The kind of money you are talking is fine in obtaining a reasonable place in many areas, but a lot depends on where you want to live for the next 2 years whilst occupying same (and travelling to/frow work etc). Some bargain areas include Werribee, Melton, Sunshine (West), Epping, Thomastown (North), Frankston, Carrum Downs (bayside) and there are many others.
My advice would be homes near parks, shops, transport and schools are always a MUST. If you can get one near a beach, even better!! Try http://www.domain.com.au and select the “suburb snapshot” and use this as a starting point, look at population, median house prices and cultural breakdown…it’s worth a peek!! Research the net and try and see what the council for areas under consideration have to say about present and/or future infrastructure (very important).
Remember, take your time, do your homework and look at lots of places, talk to people and ask lots of questions before you sign on that dotted line, and part with your cash!!!
Good luck and happing investing!!!
Jo
Hi Jo,
Thanks so much for your reply! Your advice on the suburb snapshot has given me a really good starting point. I visit domain.com and other RE websites but i just click from 1 property picture to the next and never noticed the link on suburb snapshot.
we are more interested in areas like sunshine rather than Franston although i have read a few good things about Frankston, just too far for us. At this stage, we probably wont go farther than Dandenong.
you have not mentioned about Point Cook or Caroline Springs or Laverton. What is your opinion on these places ? I have seen some 3 bedroom houses (around 300K) in that area.
I definitely need to do my homework, and lots of it. !!
Again thanks, your reply has made me more confident, that eventually I will be able to understand how this property investing really works!
Aafreen
Originally posted by Aafreen:you have not mentioned about Point Cook or Caroline Springs or Laverton. What is your opinion on these places ? I have seen some 3 bedroom houses (around 300K) in that area.
These areas are all worth further investigation, and I think that there are many entry level properties for first time investors or home buyers in same. Again, I’d encourage you to search the net for info on these areas, that is type in (for example) “Laverton” and see what you come up with; plus check out the local council website; how is the infrastructure, what population movements have occurred over the last 12 months???
All the best, feel free to PM if I can be of further assistance.
Cheers,
Jo
Aafreen,
I think some good investment locations are Windy Warrnambool (it’s pretty far out on the coast, but I still think it’s good value), and places like northcote and fitzroy will definitely ride out the waves of price fluctuations, I think. Northcote, in particular, has some pretty unique qualities housewise- it’s pretty as a picture.
kay henry
I have to agree, these areas are lovely!!!
I sold a place in North Fitzroy for 925K and although it may not have fetched this kind of figure in today’s market, Fitzroy (including Nth) still have high price tags attached to them due to the fact that they are inner CBD suburbs. I grew up in Fitzroy, and boy it has changed dramatically since I was a kid; very cosmopolitan these days, and unfortunately not too many 300kish properties around, even in its surrounding areas like Brunswick, Clifton Hill and/or Carlton.
Northcote and Thornbury both lovely suburbs, which have seen fantastic growth over the last decade; but unfortunately as they are also neighbouring suburbs to Fitzroy still attract a high price tag (not as much to in today’s market) but then they do have a lot of character and full of beautiful old world charm!!!
If these sorts of areas appeal Aafreen, I would suggest you check out say Thornbury or Preston, maybe even Reservoir as these suburbs are still escalating in value and have slightly less expensive prices attached to them.
When you do your search, try http://www.realestate.com.au and select a suburb (i.e. Fitzroy or say, Sunshine) and don’t uncheck the surrounding suburbs box, that way you can compare the homes in nearby. It’s always worth a peek!!!
Cheers,
Jo
you guys are lovely! thanks for showing me some starting point.
I’ve been in Melbourne for roughly 5 yrs, but the first 3 yrs i was a student and wasnt really interested in properties. Spent most of these years living around the MOnash Uni Caufiled area. So places like Prestone or Reservoir never crossed my mind. Always admired Fitzroy (not that i know the area like I know Caulfield) but yes that place is a bit too pricey for me. Or maybe i’ll look at some apartment in my price range in that area while doing the research on houses in other places like Reservoir or Sunshine ? I still have to learn the difference in owning an apartment and a house with land, but instinctively, im just leaning towards houses right now.
Gotta do some serious research now that i have some places to start with, and not waste anymore time wondering where to start
Thanks again, now i have a clearer mind !Love this forum!
Aafreen
Call Callum Reeves at PRDnationwide Research on (03) 9670 1399. He is very helpful and will be able to provide you with some very helpful information. Nice guy too.
IMHO, if your intention is to have it for a PPOR and rent it out later, the best value would have to be in a new housing development like Caroline Springs, Cragieburn, etc.
Reason being to buy land and build a house on top of it is cheaper than what you would have to pay for if you bought a new-ish house in an established estate.
Capital gain is also better too (i.e. higher rent as well) and you are lowering your mortgage at the same time. So when you do finally rent it out, it will be +ve CF from day 1.
I personally dont like new housing developments on the outskirts of a major city. The closer to the city you can invest, will result in better capital gains in the long run.
I don’t think that is totally true all the time.
For example, the place I am living in now is a new estate and the value of a house like mine has gone up in 2 years from $175K to $280K.
I guess its because outer new estate prices start low, there is more room for upward price movements.
Hi Bennido,
I understand both Yack’s view and share yours; as I too live in a still reasonably “newish” estate. My home, as with many of those that surround it have skyrocketed in value, and this tends to happen more as the estate fills up.
But they (new housing estates) are not everyones cuppa tea; and that’s cool, especially if you don’t want to be around young families (who are the ones that tend to buy into them).
It suits me, big house on a huge block now worth 3 x what I paid to have it built; can’t ask for too much more than that hey???
Each to their own I guess!!!
Jo
Yes – everthing has gone up over the last 2-3 years – even rural areas. Even those beach huts (dog boxes) on the beach.
It does not mean it will continue – land is more scarce closer to the city and over the long term, growth will be higher than new estates where the farmland next door will get developed over time.
If I had money to INVEST I would put it as close to the city as possible. But NOT inner city apartments.
Please don’t misunderstand me Yack; I couldn’t agree more!!! My home may have tripled in value, but in comparison to properties in inner suburbs (I sold one in Nth Fitzroy for 925K) it just cannot compete, nor would I expect it to!!!
It would be like comparing apples and oranges!!
Besides, you know me Yack, if I had my way, I’d buy up all of Frankston/Mornington; now that’s MY cuppa tea!!! [lmao]
Exactly what im trying to figure out…should i buy in the established suburbs or in those new development estate ? I dont have a crystal ball, and I dont’ have enough knowledge, facts and experience YET to help me be confident in making my own decision and direction. Im trying to learn as much and quickly as i can, but im totally new to RE investing so my learning progrress is a bit slow. Your opinions are such big help to me, so keep on educating me [exhappy]
like Yack said, everything has gone up in the last 2-3 years. But if i buy in the next 6 months, I wouldnt be expecting my property value to increase that quickly now would i ? Unless i find the right property. But how ?
Anyway, yes the intention is to make it a PPOR for a max of 2 years and then rent it out. But if in my learning process i’ll find an area where the value will go up so much that i’ll make money in selling the place at the end of 2 years, then that would be even better. But the question now is, HOW do i find that area/property ? Frankston seems to be popular these days. When you guys talk about Franskton what do u see ? Do you see CG in the near future (1-3yrs time) or positive cashflow from day 1 or what ? More importantly, HOW did you come to SEE whatever is the golden thing that you are seeing in Franskton now ?
and I am not lazy. I am more than willing to do my due diligence. Just a bit lost in the process at the moment. And the more i sit down here and try to compose my post, the more i realize how little i know about property investing. So please bear with me.thanks again for all the help/ opinions.
aafreen
Hi Aafreen,
The reason I mentioned Frankston was because I recently purchased an IP there, and Yack is very versed with the area, having lived there. Frankson is not everyones ideal investment suburb, and certainly there are good and bad pockets within this city. North Frankston for instance is still very very cheap (but still a bit of a “rough” section) which has homes (some ex-housing commission, not all) that have rental yields higher than other parts of Frankston, and indeed many Melbourne suburbs. But this is not to say, they are the ONLY ones. My preference for Frankston (particularly South and Central) is because Frankston is set to gain substantial growth as the rsult of the new marina and the Frankston-Mitcham freeway, as well as other infrastructure plans in the near future.
There are many “undervalued” areas in Melbourne, which have yet to experience growth spurts, some of these have been tipped for considerable growth over the next decade, and I specifically want to emphasise DECADE because property investing is a long term exercise….people who expect to buy and hold for short periods on the hope of getting rich quick risk getting burnt, and unless they know their areas of interest to the letter, stand to lose a great deal of money!!
As I said 300K gives you a great deal of options as there are still many quality homes in this price range. What you need to ask yourself first (mainly because you are looking to live it in primarily, and as such people tend to be more critical; because it is for themselves) is WHAT do you want, house/unit, new or established areas, are you predominantly wanting CF+ or CG??? As I mentioned in my last post, look at population sizes (declines/increases), infrastructure plans (council sites), socioeconomic breakdowns, surrounding industries/commercial business, transport facilities (some areas are poorly serviced, making renting less appealing to some tenants) and the list goes on…..
But do be kind to yourself, don’t rush, take baby steps….write down all your questions, post them on here (one by one if need be). I am sure everyone will do their best to oblige in helping you find your way. But at the end of the day, we are mere mortals just like you, and can only give you OUR opinions often biased by our own indiviudal set of circumstances.
And no; you’re not being lazy at all !!! Just inquisitive; and that is healthy!!! [thumbsupanim]
Cheers,
Jo
Hi Jo,
hope you will never tire of giving lengthy and detailed answers/ explanations to questions of newbies like me. it definitely helps us in the learning process. not to mention the encouragement you guys also give
i’d started making a list of all the questions that come to mind. and we have decided we will definitely go for a house this time, so that’s one question with a tick
just a quick question this time. What is considered as “good size” in terms of population size ? 10,000 ? 30,000 or this populaiton size matters only if im investing in the rural areas ?
thanks again
aafreen
Aafreen, I’m pretty sure pop sizes are for rural areas, where some go by the Maccas rule, no not Seve McKnights’s but wether or not the town has a McDonalds!
My brother use to drive from Carlton to Ballarat to work everyday only took him an hour he was starting to think Ballarat was an outer suburb of melbourne!!
Check out Melton too, still has enough of a stigma attached to it to make it a bargin hunters paradiseI think one of the problems with buying IP’s in places with a “stigma”, is that the rental yields are lower. An example was an IP in cabramatta sydney… 125k for a 1-bedder, old 60’s-70’s red-brick apartment. The rental yield was $115. If you double the price for thre cabramatta unit, you can buy a new apartment closer to the city- so you pay 250k but the rental yield is much much higher than $230. I think very outer regions have very poor rental yields. And I think Melton would be similar. I finsd Melton to be so far out geographically from Melbourne. I reckon if you’re going to buy in a city, that you buy in or close to the city- not as far out as Melton. Melton is almost regional.
kay henry
kay henry
Hi Wallflower,
I suggested Melton in my first post for the very same reason as you; because it is still relatively cheap!!! There are some good buying bargains yet to be snapped up, with new estates springing up and lots of young families buying into it. It is only 37km from Melbourne CBD, and is very accessible via the Western Ring Road which helps cut down a lot of travelling time to and from the city. Although it is one of those slower growing western suburbs, I think you’ll find that stigma you are referring is gradually diminishing and (albeit slow) is indeed progressing nicely.
There are many suburbs that still have “a stigma” attached to them, but it doesn’t seem to deter buyers all that much. Once upon a time Ashburton was prodominantly all housing commission, with a very pronnounced “stigma” but today entry prices for a 2 bedder in Asburton are in the high 300’s!!! Go figure…..
Melton is definitely worth a look; it does have some industrial pockets but this provides work for many of its residents. Rental returns are (in some sections) probably higher than many of its surrounding suburbs, including those closer into the CBD.
Finally Aafreen, in reference to your pop size question…I’m afraid I can’t really comment on the size of population you should aim for rurally speaking, but I would guesstimate that at least 15-20,000 is a good figure, but more importantly that its infrastructure is well established or at least in the planning pipeline!!! (Check with councils)
Cheers,
Jo
Thanks again, now i have a clearer mind !
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