Hi,
I was just looking at suburb Bacchus Marsh in VIC after reading something about it here.
Am i reading correctly when it states you can buy a house and land package for $200k upwards? The listings on real estate.com.au dont list the land size or any of the finer details about inclusions etc so i would need to make a few calls but i was just thinking, after looking at the rents in the area ($320 a week) it would make a great investment.
Does anyone know anything about Bacchus Marsh as a suburb?? Whats the attraction, main industries? Any info at all appreciated.
Amanda
Hi Amanda. Good thoughts. I haven't researched suburbs out that way at the the moment. As you might know, in Melbourne things are all abuzz in the East while those who are knowledgeable enough will probably be picking up bargains in the West.
Looking at basic figures it sounds like a good deal, considering you'd also be able to claim depreciation costs on a new home and possibly have it positively geared (ie. making you money, generating an income) from day one. My guess is that newer estates would feature McMansions on tiny blocks of land, which is not what everyone is after. Some investors like to have more land obviously because land is the thing that appreciates in value. The other side of the coin however are speculations that in the future, the newer generations would rather have smaller, low maintenance and drought-tolerant backyards.
The other thing to consider is vacancy rates. At sqmresearch they offer free vacancy rates for suburbs and although I don't know how accurate or how up to date they are, it would be a good idea to look at this before deciding where your future investment property is going to be. If you buy in an area with a 4% vacancy rate compared to one where vacancy rates are just 1%, then you might have to tolerate a longer period without a tenant. The exception I believe however, is if you were wise enough to buy in a location that were close to amenities: schools, transport, shops, potential work places. Yet, this spot would need to be safe and have generally lower crime if you're hoping to attract a young family (which I believe would be the demographic in that area) for your 4 bedroom house.
Finally, another thing that concerns me regarding new estates is a little snippet I read about Craigieburn in the Herald Sun. The residents were worried that initially, promises were made to create more amenities, more shops etc but the plan was subsequently abandoned and never went ahead…this is what I remember reading. Again, authenticate this info in your research…what I was trying to say is, if there are 'plans' for infrastructure in Bacchus Marsh at the moment but very little 'existing' ones, then your purchase would be as good as a gamble. When these fools break their promises, you'll have a house sitting out there with no infrastructure to support it. Vacancy rates may then rise and you'll be forced to lower your fees. Vacancy rates can also rise as the place starts to get more built up and supply increases.
All this not withstanding, I've had friends and colleagues who've made good and easy money by buying in newer estates. One of them made a good fortune in areas like Berwick and Lyndhurst. Another did well just buying land in Cranbourne, holding, and selling a year later.
If you ask me, I'd rather buy an older house in a well-established suburb with great amenity and pay a higher price. That's because amenities in a well-established suburb are not likely to disappear. And if you buy into these suburbs where there is little or no vacant land left for sale, then its essentially built up. An influx of apartments would still be a threat to your investment, but I'm pretty sure that a good deal of people still want an old style, big Aussie backyard. Apartment living is not for everyone.
Have you thought about Melton or Kurunjang? Just some thoughts (even if it doesn't help).
Bacchus Marsh isn't a suburb of Melbourne. It's a town and part of the Moorabool shire. As far as industry goes there's not much there. There's orchards, a small quarry and that's about it. There's one tiny shopping centre to service the town and not much of a main st. The basic things are there if you need them though. One of the big things for bacchus marsh is The avenue of Honour but the government are cutting down all the trees to make room for the new bypass.
The town is serviced by a v/line train that goes through very regulary and the train ride into melb CBD is about 45 mins.
There are a lot of new estates going in around the maddingly and darley areas and the land size isn't too bad either. Only thing I would be concerned about it that there's too many houses being built. If you're thinking about buying and holding it might be ok but if you're looking at building and selling soon after look at it in the eyes of the buyer – would pay extra for a house that's not brand new, or build one of your own?
But in terms of paying 200k for a house and land, the phrase "you get what you pay for" comes to mind. If you're talking about the people I think you are I wouldn't build with them to save my life. The money you save by building cheap you have to spend on the house in the near future when things start to fall apart.
If I were to invest in bacchus marsh I would buy one of the older houses closer to town (possibly as a rejuvination project) as down the track land close to town will always be in limited supply, but in the outer areas there's lots of room to expand.
I think too many investors focus too much on areas or locations for that next big thing or growth suburb, rather than considering what type of property they need to buy in order to be able to obtain finance to buy the next one after that to build their portfolio.
Is it capital growth you need, is it income or rent yield, will higher depreciation benefit you, do you need to find a property that the entry costs are lower (meaning deposit required), is land tax an issue, will buying interstate benefit you because of lower stamp duties, is a lower priced property required, are you planning to do a renovation or sub division?
Determine the type of property and price, then work out the location. The normal considerations still apply after that, transport, schools and facilities, infrastructure and development, tenant demand and type of tenants, vacancy rates etc.
Whether Bacchus Marsh will work for you will be determined by what you need the property to achieve.
Good luck
GregHi goldies,
Are you still looking at Bacchus Marsh? I've just come across your comment. We have been buying property at Bacchus Marsh personally and helping our clients purchase there as well since 2007. The outcomes have been great. Having built new houses there there has been immediate equity created, good yields and they are rented quickly.The comments about the avenue of honour above are incorrect. The freeway straightening is very advanced and the trees are still beautiful (and there). A number of our clients have recently purchased NRAS approved properties there which just adds to the story. This is where the government provides a tax free incentive of about $10,000 for 10 years to property investors. It makes most properties cashflow positive. Ruby Janssen's report about NRAS incentives is a really interesting starting point.
Unfortunately all the NRAS properties in Bacchus Marsh have just sold so you'd be looking at another location.
Hi goldies,
Sorry. Someone has just corrected me. There are two NRAS properties in Bacchus Marsh not sold yet.
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