$250K Melbourne City ShoeBox Apartment vs Inner Suburb Apartment

Hi all, I am currently a young single professional looking to buy a place at Victoria instead of paying rent with a budget of $250K.

I am kinda new in the IP scene, currently looking to buy a place and occupy for the next 2-5 years then possibly resell or hold depending on the CG. Currently considering shoebox city pads (1bed or Tiny 2 beds) vs Zone 1 suburb apartment (1bed + carpark) in close proximity to train/tram stations.

Some city shoebox pads 1 or 2beds are going at about 7-8% yield, while suburb apartment probably produce higher resell value. Which option would you recommend as a better suit for my situation?

To all the IP masters out there, your help is much appreciated.

Edit: No longer looking for property to buy with FHoG, since everything new are 400K+ in Zone 1 :(
 
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Can't agree with either idea, I'm not into apartments.

If you decide to go down this path, be crystal clear in your understanding of the body corporate fees and other bills.
 
Hi all, I am currently a young single professional looking to buy a place at Victoria instead of paying rent with a budget of $250K.

I am kinda new in the IP scene, currently looking to buy a place with FHG and occupy for the next 2-5 years then possibly resell or hold depending on the CG. Currently considering shoebox city pads (1bed or Tiny 2 beds) vs Zone 1 suburb apartment (1bed + carpark) in close proximity to train/tram stations.

I'd go the zone 1 suburban apartments in pref to CBD things.

http://www.realestate.com.au/property-apartment-vic-glenroy-115599215

http://www.realestate.com.au/property-apartment-vic-glenroy-115762727

http://www.realestate.com.au/property-apartment-vic-glenroy-114814639

Body corp costs in the CBD fancy stuff tends to be very high, and can easily shave 1~2% off your rental income.

The Y-man
 
Go for a one bedroom apartment, not a studio. Banks hate lending against a studio and you will need to wack a fair bit of deposit into it, therefore making it a pretty poor investment with very limited growth opportunities.
With 250K you can definitely buy a decent sized 1 bedroom apartment or an older 2 bedder in the west.
I have a 1 bedder in seddon which has performed well and was purchased at 250K. Areas such as west footscray, kingsville, seddon, yarraville and maidstone are 8kms west of the city and for within your budget
PM me if you want any more advice on the area, I know it quite well
Here are some options perhaps?
http://www.realestate.com.au/property-apartment-vic-west+footscray-113081123
http://www.realestate.com.au/property-apartment-vic-west+footscray-115197803
http://www.realestate.com.au/property-apartment-vic-west+footscray-114858563
 
I'm pretty sure you won't get anything for that price NEW as you want to use the FHOG.

Ah! Very good point - I overlooked it needs to be a new thing.............yes, it will be very difficlut for one of them new things in Zone 1.

The Y-man
 
Ah, didnt realise they removed grant on established properties. Thanks for alerting.

In regards to glen roy and footscray, rumours are these suburbs are not "desired" especially footscray area, would this affect the resell-ability for the property say in the next 5 years? Many agents have advised to stick to the "east", are these just propaganda?

Once again, thank you all for sharing your IP master insight.
 
Ah, didnt realise they removed grant on established properties. Thanks for alerting.

In regards to glen roy and footscray, rumours are these suburbs are not "desired" especially footscray area, would this affect the resell-ability for the property say in the next 5 years? Many agents have advised to stick to the "east", are these just propaganda?

Once again, thank you all for sharing your IP master insight.

Hi ethanl, first of all "desirability" is subjective. Comes down to the target population, so I wouldn't rule out anyplace unless the numbers don't stack up and you personally feel uncomfortable about it. You still need to sleep at night. However I would definitely avoid studios and cbd apartments even if yields look good. The oversupply of stock in the cbd is a concern so best to avoid for now. The east side will most likely be way outside your budget. Take what the agents say with a grain of salt and do your own research, end of day it really comes down to numbers and what your goal and strategy is. I am not an IP master btw, hope you don't mind me sharing my opinion. :D
 
Hi Ethan, with ~$250K you don't have the budget to buy anything in the East really... With that said Tom has provided some good examples. I'd personally choose Footscray and surrounds over the CBD and/or further North like Glenroy (sorry YMAN).

As others have been mentioned, it's more important to have some goals in mind and then find the market, area and property that fit in with those goals rather than focusing on the property first in the hope that it will be a good investment.
 
In regards to glen roy and footscray, rumours are these suburbs are not "desired" especially footscray area, would this affect the resell-ability for the property say in the next 5 years? Many agents have advised to stick to the "east", are these just propaganda?


It's going to be largely YOUR preference - after all you are planning to live there for up to 5 years right?

And as long as you do not have outrageously eccentric tastes, chances are that any place you are going to love living in will be appealing to others to (who rent or buy from you).

The Y-man
 
i found this property (not my own but near where i live now) and has good transport to Highpoint, Footscray, Moonee Ponds and to city via tram.

http://www.realestate.com.au/property-apartment-vic-maribyrnong-115785655
"near" where you live, so you live in Maidstone or Avondale Heights?

Maribyrnong recently recorded amazing CG for 2013, almost #1 for Victoria according to a newspaper article I read on Saturday.

Anyway, @Ethan: Zone 1 on the Sunbury line will get you to Albion Station, there are a LOT of properties you could get for $250k in these areas. I wouldn't discount them just because they are in the West...
 
Guys, thanks for the heads up. Currently considering between 1 bedders in the west and studios in the east. Which areas do you think will have better overall yield and CG balance? Also, on a side note, how does the north compare? (eg. Coburg/NorthMelb/Brunswick/Essendon etc)

Studio in the east example:
http://www.realestate.com.au/property-apartment-vic-st kilda-115834111
http://www.realestate.com.au/property-apartment-vic-east melbourne-114905143
http://www.realestate.com.au/property-apartment-vic-collingwood-115764479
http://www.realestate.com.au/property-apartment-vic-oakleigh-112458275

Are these bad? Also for Footscray, which are the street/area pockets I should stick to?

http://www.realestate.com.au/property-apartment-vic-west+footscray-113081123
Is this a bad area?

Sorry for all the questions XD Once again thank you all gurus :D!
 
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It might be worth while seeking some financial and taxation advice as this all seems a little ad-hoc.

If you're planning on buying a property to "save rent" then I'd suggest that you're buying for an impractical wealth building reason. I say this on the basis that you'll not really be saving that much as most of your repayments go towards interest anyway (if you're moving in).

A more practical suggestion if you're looking for solid returns would be to focus on areas where your $250,000 can buy something that the local market actually wants to live in.

The studio apartments and other poorly located apartments are not desirable to the vast majority of people in those areas so you'll have a hard time selling the property if you ever need to and as such you leave yourself open to the risk of losing any gains accumulated from a positive income.

$250,000 is enough to buy a reasonable 3 bedroom house in some of Victoria's major regional hubs. The market in those areas prefers to live in 3 bedroom homes so they should rent reasonably well and when you look to sell there will naturally be more appeal for your audience.

Banks will also like it more if you buy a house as you have land as security as opposed to a dog box to which banks will be reluctant to lend you (and future buyers) any more than 80%. This leverage restriction will further reduce the amount of people who could purchase from you in the future...

Also, if you think about the FHOG that you'll not be getting you'd be better off buying an IP and having the rental income. If you can earn ~$7k in 6 months from rental income you'll be just as well off as if you had the old established property grant.

Please consider your position more seriously as I'm of the opinion you're rushing in and going to make a purchase that you will wish you hadn't...

Alas, if you're 100% intent on your current strategy then East Melbourne would be the only property to consider... It's still a box though
 
EWL-S1-project-design-map_large.jpg


For more info see: http://www.linkingmelbourne.vic.gov.au/pages/key-downloads.asp
 
Hi all, I am currently a young single professional looking to buy a place at Victoria instead of paying rent with a budget of $250K.

I am kinda new in the IP scene, currently looking to buy a place and occupy for the next 2-5 years then possibly resell or hold depending on the CG. Currently considering shoebox city pads (1bed or Tiny 2 beds) vs Zone 1 suburb apartment (1bed + carpark) in close proximity to train/tram stations.

Some city shoebox pads 1 or 2beds are going at about 7-8% yield, while suburb apartment probably produce higher resell value. Which option would you recommend as a better suit for my situation?

To all the IP masters out there, your help is much appreciated.

Edit: No longer looking for property to buy with FHoG, since everything new are 400K+ in Zone 1 :(

What are you after? rental performance or capital gains? The two are usually [ but not always] at opposite ends of the spectrum.
If you are after CG- go for the suburban one.
If you want rent/yields- go for the CBD.

Yeah there are few that have both CG and great yields- but they are surely priced in at a premium.
 
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