Hello all!
First post, have been lurking for a while. You are all very knowledgeable.
My question is it worth taking a hit on my first property so that I can get my foot in the door.
When you say apartment package, is this an off the plan purchase? If so, you need to be aware that normally with OTP purchases, settlement is a long way away, and most lenders won't allow unconditional approval until closer to the date. Also valuation is done at that time as well and with todays market, it could mean a drop in value which could mean you might be up for more of a deposit.
Talking about deposit, why have you suggested a $50K (25%) deposit? Being an investment, you should look at a smaller deposit, and place the excess funds in an offset account.
Bacchus Marsh is still really a country town even though its within reasonable distance to surburbia, though I can understand why you're looking at it, it's relatively cheap. However you need to look at the rental yield, and what type of future capital growth is expected.
I think you've answered your own question already. You know that the tenant base in Bacchus Marsh demands houses, so why would you be considering an apartment?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I agree with the above points……
And I'd add a few more,
What has the growth been like in the area over the last couple of years? What major infrastructure is going in? What has changed in the area to make apartments happen? What is the likelihood of this project going ahead? Who has offered you the project, how do you know them? What is the rental return? Who is the renter going to be?
You need to look at it from every angle. If you know something about the area, such as a new train is going in, or a major uni is being built etc, to warrant apartments, then maybe it's a go. But you need to really do your homework.
The other question I have is – what do you mean take a hit? I never invest to lose money……..
Cheer
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeHi there
I don't understand the $30k part? Is your friend saying that he/she will sell it to you at a discounted price or is there some sort of rebate?
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]
What I am trying to say is, what research do I have to do to justify purchasing it, when I get a free 30k upon purchase, holding it for a period of time then selling, with the possible income from tenants? Ignore how I ge the 30k, its a sticky family situation that I get from buying in Bacchus. Hence my dilemma. Do you have any recommendations on how long I should hold it? The developer is solid. Friend of mine. Very experienced and even a friend is purchasing through him. Its the justification of purchase that I am worried about. You've all been amazing so far.
Ok,
So a another friend is buying too…. how many properties do they hold? Are they seeing value because they are knowledgeable or are they new to investing like yourself?
You asked a lot about whether you should get in due to family, you haven't told us the most important part – WHAT IS THE INCOME? (not shouting, just making a point).
I would invest with the man on the moon if he was going to guarantee me the return on my hard earned money that I require.
The main investigation you should be doing is – is there demand for what you are buying as far as renting and selling, what RENT will you be collecting while you own it? What is the yield of the property?
Try and buy a cash flow positive property first, then you will live to buy more. If you buy something that sucks money out of your pocket every week and you have a hard time making the payments, then you have a recipe for going broke.
Ask yourself, if it wasn't your friend, would you still buy it? if there wasn't the money incentive (30k) would you still be able to or want to buy it? If it wasnt your friend, would you still buy in Baccus..?
Lots of questions you need answers to.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeYou are saying "So upon purchase I make 30k.". No you don't. Developers mark stuff up heaps, which the punters tend to find out after settlement when they decide to put their property on the market. To their horror, they realise it is worth less than what the market is prepared to pay for the product.
"Because it's my friend that is selling it" is a terrible reason to buy something as expensive as property.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Sorry forgot to ask – What exactly are you buying? 2 or 1 bed.
http://www.realestate.com.au/property-apartment-vic-bacchus+marsh-111483355
Something like this already exists and after a 1 minute check will prob rent for $190-200 pw.
There is a LOT of stock both for sale and for rent. There are brand new 3 and 4 bed homes for rent for $280… where will you be sitting in this market?
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeHahaha so it sounds like you are all saying no, even with the 30k incentive.
I have looked at SQM Research and noted the increase in vacancy rates and listings over the last years.
Horribly increasing.
As for Bacchus Marsh, besides the increase in population and a claim of a 'cafe' culture,
I can't see much for infrastructure or employment increasing (even with the low unemployment rates).
The only positive I can see is the 'tree-change' lifestyle for families and seniors.
As for an apartment, I don't see much potential for tenants when there are plenty of listing for homes.
And "my friend is buying one" isn't an excuse to buying it. Nor am I considering it. I just want the opinions of (hopefully) experienced investors before I consider anything.
And I may re-consider. Especially with the cautious attitude you've all given me.
Stay away from off the plan purchases period. They are a very high risk investment and generally you do not come out on top.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Good on you for listening to advice and being sensible. All too often we see people asking advice and getting offended when they hear it.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Don't trust your friend – who is just trying to sell you a property. Do your own homework to find the true value before you sign up
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
I say this 'take a hit' simply because this purchase is a once only offer as the developer is a friend of mine, who can get me finance and a reduced cost price. Otherwise, if i refused, it would be another 3-4 years before I could even afford to look at another property and though I might be able to save enough for a deposit, doesn't guarantee the bank will give me a loan, especially in this economic climate.
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