Hi everyone,
I am not new to this forum, and I always received extraordinary info regarding investing in Australia. This time, I have my eyes in Liverpool NSW, Sydney.
First look of the suburb, with house median price at $360k and unit median price at around 250K (from Investsmart), looks very affordable.
However, there is always the famous “crime” hotspot that really let Liverpool become a “stop better don’t touch” area.
My questions is, I am look at buying this offplan project on Lachlan st, which is around 1.5km from the Liverpool railstation, around 1km to westfield shopping centre; price for a proper 2 beder with 2 bathroom at $370k. The main reason I want to consider is, this project won’t be complete for an other 2 and half years. (sounds more like 3 years to me)
Having need to put in 10% deposit for offplan projects, (just like others) earning 3% interst for the next 3 years in a Trust account, hoping time will do the magic and increase by around 10% when it comes to settle? Is it reasonable expectation or I just being a lazy investor?
Thank you in advice!!
startxing wrote:Hi everyone,
I am not new to this forum, and I always received extraordinary info regarding investing in Australia. This time, I have my eyes in Liverpool NSW, Sydney.
First look of the suburb, with house median price at $360k and unit median price at around 250K (from Investsmart), looks very affordable.
However, there is always the famous “crime” hotspot that really let Liverpool become a “stop better don’t touch” area.
My questions is, I am look at buying this offplan project on Lachlan st, which is around 1.5km from the Liverpool railstation, around 1km to westfield shopping centre; price for a proper 2 beder with 2 bathroom at $370k. The main reason I want to consider is, this project won’t be complete for an other 2 and half years. (sounds more like 3 years to me)
Having need to put in 10% deposit for offplan projects, (just like others) earning 3% interst for the next 3 years in a Trust account, hoping time will do the magic and increase by around 10% when it comes to settle? Is it reasonable expectation or I just being a lazy investor?
Thank you in advice!!
Just my 2 cents, why off the plan? To me it seems a little too expensive and to rely upon growth by itself is a "hit & miss" approach. I'm a firm believer in you make your money on the way in. We just negotiated an older 2 br unit for 175k and with a paint and carpet will get between $280 & $290 pw rent. It may not be the prettiest suburb but it gets the yield, growth etc. After all, it still comes back to supply and demand.
Doesn’t seem transparent enough, ‘hoping it will increase 10%?’ doesn’t seem you would control any of the money and sounds more of a liability.
And be careful some developers may run out of money and may need more through the process.
Something to think about.
Im with the anothers..OTP is a big no no for me…
1. Your paying today’s price…by the time it’s finish the market would be a lot different…
2. Investing 10% and not seeing the good till 1 + year later, that’s one years rental yield gone.
3. Risk of not completing/delays , price increase, construction problems etc…
4. Dont know hows the strata is like.. only a prediction- there’s a famous case of the apartment in Sydney CBD in pitt st…where after completion the strata went from $900PQ to $1400 PQ…due to unforeseen problems that was not part of the builders granuntee.,I would only consider OTP if it’s sold below the current market by at least 10% + your have another good foundation investment properties and lastly instead of giving 10% cash/cheque…do it as a deposit bond.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
startxing wrote:Hi everyone,
First look of the suburb, with house median price at $360k and unit median price at around 250K (from Investsmart), looks very affordable.
price for a proper 2 beder with 2 bathroom at $370k.
So the median price is $250K and you're going to pay $370K. WHY???? If you believe Liverpool will see 10% growth in 3 years buy something below market price now. Great yields to be had too (not on your OTP though).
thank you everyone for the feedback!!
Firstly, I just realized there is a lot of writing misktakes in my 1st post
Secondly, I need to explain a bit regarding why I want to purchase a OTP property. The reason being I have invested in a OTP property last year, and it is getting completed within the next 6 months, base on the 2nd sales record so far, I have made a solid 10% growth on a 365k purchase, the suburb is Northmead, which is near parramatta. (of course, before the money is in the pocket, we can't say it is in the pocket yet do we ? )
This liverpool project is from the same agent, but I am not a no brainer, and I can tell there is a big gap between the medium price and the price they are offering, but what is interesting they already sold 70% of them ! I mean I could maybe get it down to 350k, with a 2 + years settlement, but a 100k difference does make me worry………….
As I was facing the same decision when I purchase the Northmead project but the medium price was not much differ back then, so I made the go ahead. However, for this one, I do agree with Steve-w post above, negotiate a good little 2 bedder and get much better return both on capital + rental, coz you can even capitalize on the new units being sold in the area with much higher price !
startxing wrote:Having need to put in 10% deposit for offplan projectsHi startxing
It’s too late now but deposit bonds are generally a cheaper option. The calculators on the deposit access and deposit power website quote how much it would cost.
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]
I think you may have got lucky. I have been part say of hundreds of purchases and every time we see a 12 – 48 month ol purchase its 50 – 100 k less than original vendor paid. I know liverpool well and 370,000 is too expensive. You can buy 2 older units with 300 pw rents or a house for that price. Furthermore 10 yrs time thats going to be old crappy unit just like the others also. Hope this helps and good luck. NB
I heard an anecdote from someone yesterday when we were having coffee – he said he and two of his mates bought at about the same time in Sydney 15 years ago approx, one an old semi in the innerwest @ $150k, the other in Campbelltown got a new house for his money & he got a run down house on the north shore. His first mate sold for $850k+ having continued the maintenance & minor works, the other is only sitting on a $400k house and he is around the $1m. Always consider what you are buying & the prospects.
(PS – Northmead will continue to pick up, just a hunch).
Hi Startxing,
Like Michael,I have not been much of a fan of OTP. My colleague however, has bought a number of units OTP and she seems quite happy with the investments.
I won't say whetehr or not it is too expensive what you are paying, as I am not sure what quality the inclusions are.
In any case, if you are ready to purchase, have a look around and you will probably be able to get a 3 bed townhouse for less than your proposed purchase. If there is growth, you will probably get more on the a bigger property, rather than a 2 bed unit.HI everyone again ~~
I took the day off and drove down the Liverpool for the 1st time in my life ~ sounds exciting ~~
I follow my GPS and arrived in the area with no traffic, drove pass Westfield, it looks huge ~
Parked the car infront of the vacant land, and suprisingly, there is a project going up right next to it, which only contains 38 units however. Right across the road, it is some brand new Apartments, range from 5 levels to 8 levels I believe, they all look very new to me.
I rang the one just at the opposite of the road that have a For Lease sign outside, the girl told me they have sveral units that is available now, but they are 3 beds, rent starting from $475 per week !! no funiture inside !! 3 bed, $475 per week rent …..
Then I asked how old is this build, she said it is only compeleted couple months ago!
Then I drove around this part of Liverpool and saw a lot of new Apartments in the area, thinking the medium unit price from Investsmart isn't really that close the real market conditions ~ ( just my opinion)
I open my ipad do a quick search for units/apartments for rent in the area, they ranging from $320-370, some goes for $400, all for a 2 beder.
After all that, I park the car in westfield, walk around the area, can't argue with the amount of people traffic flow there, it is like Parramatta, but only bigger. It was during lunch time, people seems friendly ~ no complains ~
I will check out what kind of townhouse/house it is offering in the area next week to make up my mind. Overall, I am satisfied with the place and the price that offered, just don't really think 2+ years is going to be a good factor for wealth creation.
Walk Liverpool at night…then it be a different story
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Or hang around the court there!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
living in Sydneys west I wouldn’t recommend buying new units of the plan as they are priced at the top end of the market. You def. see more growth in the lower end of the market for units.
Youre looking to spend close to 400k when houses in the area go for similar prices. Its a case where the developer has to sell at at that price to make a 25% return. good chance a 400k unit will be worth the same for at least 5 more years imo, then again, who knows!!
You would be better off putting 400k in the inner west such as dulwich hill, marricville etc.. this been the average house price is 900k and units around 400k where in liverpool houses are 350k; the price youre looking to pay for a unit!
I understand the temptation of buying something new but I wouldn’t regard it a blue chip property in liverpool even though its new.
startxing wrote:I rang the one just at the opposite of the road that have a For Lease sign outside, the girl told me they have sveral units that is available now, but they are 3 beds, rent starting from $475 per week !! no funiture inside !! 3 bed, $475 per week rent …..
Then I asked how old is this build, she said it is only compeleted couple months ago!
Then I drove around this part of Liverpool and saw a lot of new Apartments in the area, thinking the medium unit price from Investsmart isn't really that close the real market conditions ~ ( just my opinion)
I open my ipad do a quick search for units/apartments for rent in the area, they ranging from $320-370, some goes for $400, all for a 2 beder.
After all that, I park the car in westfield, walk around the area, can't argue with the amount of people traffic flow there, it is like Parramatta, but only bigger. It was during lunch time, people seems friendly ~ no complains ~
I will check out what kind of townhouse/house it is offering in the area next week to make up my mind. Overall, I am satisfied with the place and the price that offered, just don't really think 2+ years is going to be a good factor for wealth creation.
The asking rent is just that "asking". Doesn't mean they'll get it. Especially as the new units are available. With many fdor rent peolple will lower the price to get someone in.
Liverpool may (on the surface) look like Parramatta but believe me it's not.
startxing wrote:Secondly, I need to explain a bit regarding why I want to purchase a OTP property. The reason being I have invested in a OTP property last year, and it is getting completed within the next 6 months, base on the 2nd sales record so far, I have made a solid 10% growth on a 365k purchase, the suburb is Northmead, which is near parramatta. (of course, before the money is in the pocket, we can't say it is in the pocket yet do we ? )As you mentioned- you have made nothing. What the agents sell for is not a reflection of what they would sell for on the open market. People get roped in by the hype- It will be worth more before you settle etc. Northmead (in my opinion) is a growth suburb ATM and I don't think you'll go wrong there but don't ddelude yourselkf to think you could sell yours for that.
If there are more units going up in Liverpool then yours will be the old ones in 5 years time. How will it stack up against the median then? You say the median is wrong but you are only looking at the new units which (based on history) are over priced. As Nathan said there are bargains to be had 1-2 years after these projects finish. People who underestimated the return, over estimated the rent etc (in other words- believed the hype). Then they need to sell. Get a few of those and the price goes down. Simple demand and supply.I'm not against OTP perse. They arte great in a rising market. You just nered to time it right. If the market does not rise you can be in trouble. Eg if the value doesn't come up the bank will not lend you the money. You need to make sure you have extra cash in case. I would not risk buying 2 OTP at once.
Yep I agree with the above comments. A $400k unit in the inner west (Dulwich Hill, Ashfield, Marrickville) would be a way better buy IMO.
One other thing to consider is that you mentioned that there are a lot of apartment buildings being built or just having been completed in Liverpool at the moment. This means that there is no shortage of apartments that will be up for sale in the coming years, and so with no shortage of demand, prices are unlikely to rise much.
I would definitely not buy an OTP apartment in Liverpool.
Cheers,
LukeWhat other forumites should also be aware of though is that unlike Dulwich Hil or other areas, Liverpool has one of the highest population growth anywhere in Australia. At one stage something like 20% growth.
Add on top of this the development of Liverpool hospital as one of the major hospitals in the Southern hemisphere, and the city being earmarked as a regional city, then the price can only go up. There will only be a certain amount of land close to Liverpool CBD, and that is one of the main reasons why a lot of high rises are going up. Everything is there and a lot of development and infrastructure being put in. e.g. the South West rail Link, then there is a reason for all this. Keep in mind also that the new release blocks further South in Edmondson Park is around the 300k mark for a block of land. You had to get a lottery just to get a chance to buy a block, so there surely is demand out there.
Just do the sums….high pop growth doesnt equal high cap growth, if it did then every new subdivision would be an investors dream, IMO the opposite is true in this comparison of outer suburbia versus inner city for cap growth. its a no brainer for so many reasons I dont have time rabbit on about.
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