I am trying to decide whether or not to invest in a unit. I already have one investment unit and own my residence. I probably have the capacity to save around $2,000 per month. My savings at the moment are deposited into a bank savings account which is currently earning 7.75% pa. I am looking at purchasing a 2 bed unit in a large block of units located 5km from the cbd and close to public transport with freeway access to the city. It should cost around $250,000 and I will go into debt for this amount but use my other unit as additional security. This will tie up my funds and increase my debt in a time of rising interest rates and also rising rents. Is now a good time to invest in the Perth property market or should I hang on and save my money? Is investing in large blocks of units in this situation a good investment?
Would you be interested in big cash flow properties in the Buffalo and Niagara Falls area? Thank You
Dont think thats what Im looking for thanks. Looking local at this stage. Dont think I would ever buy without seeing up close.
units in smaller blocks are more likely to rent over large complexes if the market tightens up. is it a good time would depend on how many others are planned or being built, ask yourself ; what are the pre sales like on off the plan developments and what are the days on market for resales.also body corp fees have to be weighed up these vary considerably between complexes. new units usually have lower sinking funds to make the figures add up better for investors.some older units have a fortune sitting in the sinking fund waiting for a push by a few of the owners to spend the funds and get the complex looking fresh. remember too that when property values go up it is the land component that is rising. The bigger the number of units on a site, the lower the actual land component you are buying.
gd17 where abouts are you looking ? (im from Perth) I agree with what Jeff said about the bigger the complex the lower the actual land component you are buying. I personally prefer to buy villas where you are getting in cheaper than a house but you also get some land value as opposed to multi level dwellings.
thanks for the comments. I take the point about the land content but i guess it comes down to capital growth. Whether its land or building, if the growth is good then thats what Im looking for as well as good rental return and low fees. I was looking in Glendalough. Seems to be good value – units are cheap and seem to have high rentals compared with cost of unit. Only 5km from city and easy access to freeway and public transport, shops etc. I have been re-thinking it lately and considering the shares option of playing with your own money and buying some good shares while the values are down. Wesfarmers and QBE look pretty good and any of the big banks. I was thinking I should wait until property stabilises a bit. It may go down further later in the year and there may be some bargains too.
Hi GD17
I think you miss the point about land content, land is the only bit of property that goes up, that's why the ATO gives people a tax deduction on the building cause they depreciate over time and eventually end up worth nothing, little do they tell you that many depreciationshave to actually be paid back if you sell.
Ok so why buy a unit ? with virtually no land content?
Is this positive cashflow?
If not why negative gear in a situation where everyone is bleating about interest rate rises and with little end in sight of a change from this?
Personally I beleive now is a better time to be in cash rather than debt. At least then one can take advantage of the "Bargains" when they appear.
Have you read Steve's latest book? he talks about the property cycle in that and how to maximise the strategies to your own benefit.
Personally I would not touch units again – having been burnt once before unless I could buy the whole block add some value in some way and sell them off, assuming they were negatively geared as this is something I definitely D NOT subscribe to.
Hope this helps
SueMIT | Owen Real Estate
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