Hi Everyone,
I was wanting to get some opinions on buying flats.
We are going to be buying an investment property (our first) mid year in Melbourne, somewhere wittin a 10 km radius of the city.
Do you think flats will do well if it’s in a decent location or is it always better to buy a house?All opinions will be greatly appreciated.
Thanks
Andrea
Melbourne is a beautiful city that I enjoy every time I visit.
I just wonder if there is an over supply of units in the city?Have fun!
[specool]
I don’t know if there’s an over supply…..maybe of the high rise brand new one’s but that’s not what we want.
What we had in mind is approx 6k’s from the city and a smaller block.
Houses are just so much more expensive that if we were to get one it would take us forever and by then the prices may be out of reach.
Andrea
I don’t think you would achieve as much growth with a unit but you may get good rental return if you find a good buy. Are you looking for immediately return or capital gain?
Capital gain.
We are getting so much different advice about this that it’s driving us insane![angry2]
I’m currently on maternity leave so a flat is more within our budget, we don’t want to wait too long to get started otherwise we probably won’t be able to afford anything.
Of course in the ideal world we would love to start with a house but we think that a flat is better than nothing for now.
Andrea
I am also interested in peoples opinions on this. I am tossing up wether to look into flats or houses, only difference is I was looking at flats about 10k’s out of the Sydney CBD as opposed to Melbourne or houses in other locations (not CBD based)
I am from Melb.
Generally, it has just about hit the bottom of the cycle, interest rates have beeen moving up, so now is a good time to buy for c.g, as there aren’t a lot of buyers out there, and the rental demand is tight, so the rents are moving up.Generally, the rent return for Melb is going to be about 4-5%. Yuk.
Of course, if you can buy low and add value, and in some areas where the prices have dropped, the return will increase a little.Flats are good for entry level (cheaper), and the cap growth for them can be nearly as good as houses sometimes, depending on where they are, but generally the properties with land content perform better in the long run. Town houses and semi-detached villa units for example.
Read Monique Wakelin’s and Mike Yardney’s books to get a good idea about what type of property will do well in Inner City Melb. The only problem with their strategy is you are going for more period style, limited supply, older and in demand properties, so you won’t get them real cheap and the cashflow drain will be higher.
You won’t be able to buy many properties with this strategy I suspect, and a 2 bed apartment in somewhere like Caulfield and Hawthorn ( ‘leafy’ suburbs) will set you back around $300k or so (a bit of a guess, but last time Iooked there a few years ago that’s about what they were).
If possible, it might be better to locate an ‘overflow’ suburb with good amenities and infrastructure near a more expensive suburb. I wouldn’t be in too big a hurry; generally, I don’t think the prices in Melb will do a lot until at least the end of this year. There is a deal of the century every day.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Thanks for the replies.
Does anyone have an opinion about buying flats in the inner west of melbourne?
Thanks
Andrea
Originally posted by andrea01:Thanks for the replies.
Does anyone have an opinion about buying flats in the inner west of melbourne?
Thanks
Andrea
Hi Andrea
Our statistics show you will get as good long term capital growth from a well positioned apartment as you will from a house in Victoria – not the same in other states.
I would avoid the inner west – for the 30 years I have been in property people have been waiting for the inner west to catch up – and it never has.
I would be looking in the inner south east or bayside suburbs.
Some apartments we have bought for clients in these areas have increased in value by over 10% in the last year alone .
By the way I have put my money where my mouth is – I have just bought a block of apartments in the inner eastern suburbs.
If you are not sure where to start you could consider using a buyers agent to help you. The pros and cons have been discussed at length in other threads on this forum.
Give Warren Loone a call at Metropole Buyers Agency on 1300 20 30 30 http://www.metropoleproperties.com.au
They specialise in buying apartments for investors- no new stuff or developer’s stock – in fact they have nothing for sale – just access to every property on the market
Michael Yardney
METROPOLE PROPERTIES
Publisher of Australia’s leading property e-magazine.
Join over 17,000 readers.
FREE subscription http://www.PropertyUpdate.com.auI like flats and think they are a good place to start.
Sure, capital gain on houses will be more. But if I have x amount of dollars, I would often prefer a good flat in a boutique building (not a city highrise) that is located close to the city than buying a house in the suburbs at the same price.
Heres why…
I can almost garantee that the right flat in a good near city position will be almost 100% occupied. So there is more margin for error, esp good if you are starting out. Houses in the suburbs may not always be in such rental demand. Generally speaking, single people with good incomes live in appartments near the city, while young and established families live in the suburbs and therefore want to own their own home, not rent.
I will try to buy in high demand areas with proven capital growth, usually there is limited room for further low rise development so demand will only increase. (both rental and buyer)
I can forcast expenses more easily than houses. Sure there is body corp (usually minimal in low rise appartments), but houses tend to throw unforseen upkeep expenses at you.
Slightly tired units are also easy to make improvements to, this increases the rental return. Houses are often more expensive to update or make improvements on.
If you can only afford an appartment, go for it but choose wisely. A year or 2 later, use the equity to move into the housing game if you choose…
Good Luck[thumbsupanim]
Thanks for the replies everyone,
We just thought the iner west would be a good place to start as there are hospitals and uni’s there.
We realise that it’s not a glamorous area but inner east is very expensive.
As i’m currently on maternity leave we are using this time to explore the market and different areas.
Any other opinions would be greatly appreciated.
Andrea
I had friends that bought a flat in airlie beach 5yrs ago for 75 , sold it 12 mths later for 150 , bought another one for 160 and sold that 18 mths later for 300 . Couldn’t believe it.
Ofcause that was at peak boom but i never would have thought untis or flats could have done that .
Then again I dunno how much weight that carries because I guess anyone buying 5 yrs ago has doubled their dollar min’.Cheers
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