500K to spend on IP - Northern Beaches?

Hi all,

For the past few months I've been trying to buy an IP on the Northern Beaches (110K+ deposit, 400K+ pre-loan approval).

I've been picky, so in 3 months of searching, I've only found three desirable IPs. But on each occasion I've been out-offered by another buyer (I was willing to pay more, their offers were more timely and persuasive). Meanwhile, prices have risen - to my horror, 2 br units in Northern Beaches are now too expensive for my budget.

My new strategy is:
a) Become more aggressive in making offers
b) Focus on 1BR units in Northern Beaches (mainly because I know the area relatively well)
c) Expand search to encompass other areas (Inner-west, Parra, and possibly even regional areas)

I've been really impressed by the knowledge of posters on this forum, and would like to ask for advice:

* What would be the best NB suburbs to focus on? (Last year, SeeChange mentioned that MonaVale and Narrabeen were good, since they had yet to rise as much as Dee Why -- is that still a valid assessment, or has the state of play changed?)

* Are 1 BR units in NB (or inner-west or Parra) a generally sound investment (assuming low strata, boutique block, good location, etc.)? My understanding is that 2BRs are better since they appeal to more tennants and generate higher yields; does this mean 1BR units should be avoided?

I'm focussing on good-investment units (well-located boutique blocks with no gym/pool/etc.) and my goal is capital growth over next 5-10 years (I know that once the market lulls, it could take another 7-10 years until it peaks again; and I know it's a bad time to buy in Sydney. But my current PPOR is the family home - so I want to buy an IP that I can move into if required {which is another reason I've been reluctant to consider regional areas})

Thanks in advance for your advice

Stephen
 
At that stage I was watching that market closely . Now not sure , but I'd assume that the upper northern beaches have moved more now .

I have several happy patients .

Cliff
 
Hi all,

For the past few months I've been trying to buy an IP on the Northern Beaches (110K+ deposit, 400K+ pre-loan approval).

....Last year, SeeChange mentioned that MonaVale and Narrabeen were good...

* Are 1 BR units in NB (or inner-west or Parra) a generally sound investment (assuming low strata, boutique block, good location, etc.)? My understanding is that 2BRs are better since they appeal to more tennants and generate higher yields; does this mean 1BR units should be avoided? ...
Stephen

Hey Stephen

Must admit I had more enquiries for appartments between Dee Why and Narrabeen rather than further out in Mona Vale. With transport being the major issue in the area you'd like to pick a location which is closer facilities, major shopping (Warringah Mall) and schools etc. Consider proximity to the new Frenchs Forest hospital. Also I would select locations that may have the best chance of getting improvements to the traffic congestion situation in the future, e.g. Bus Rapid Transit (BRT) public transport system from Mona Vale to the CBD and from Dee Why to Chatswood or the proposed (dream?) Northern Beaches Link, from the Gore Hill Freeway to the Burnt Bridge Creek Deviation via a tunnel under Mosman and a new bridge over the Spit. Dee Why seems to be more in the centre of all this activity. Check this link:

http://shoroc.com/portfolio-item/public-transport-roads/

A 1 bedder is not necessarily an inferior proposition to a 2 bedder. In many areas there is more demand from renters and buyers for the 1 bedders. Rental yields are often higher. The key is top location (and spacious layout, renovated and a well managed strata). Think about your target market: where would they like to live and what facilities and life style attractions would they like to have in walking distance / short drive away.

Good luck!
 
FYI Worriewood is getting a major overhaul with the shopping center getting an extra 50 stores.
Ingleside and Elanora Heights are both going through rezoning right now with 2,500 more homes planned.
That is all around the Mona Vale hub.
My view is Dee Why end is really busy and has a different vibe. Narrabeen, Colloaroy and Mona vale are more desirable. They have the NB feel and lifestyle. Further up Newport and Avalon are great if you don't have to commute.
So Mona Vale and Narrabeen are the better choices if you can find one for your budget.
In the future, there is not a lot of room left for future development on the NB.
Arguably the best place to live in Sydney.
 
Hey Stephen

Must admit I had more enquiries for appartments between Dee Why and Narrabeen rather than further out in Mona Vale. With transport being the major issue in the area you'd like to pick a location which is closer facilities, major shopping (Warringah Mall) and schools etc. Consider proximity to the new Frenchs Forest hospital. Also I would select locations that may have the best chance of getting improvements to the traffic congestion situation in the future, e.g. Bus Rapid Transit (BRT) public transport system from Mona Vale to the CBD and from Dee Why to Chatswood or the proposed (dream?) Northern Beaches Link, from the Gore Hill Freeway to the Burnt Bridge Creek Deviation via a tunnel under Mosman and a new bridge over the Spit. Dee Why seems to be more in the centre of all this activity. Check this link:

http://shoroc.com/portfolio-item/public-transport-roads/

Thanks for this info, Logica. I was aware of the "Bus Rapid Transport"
scheme but didn't realise that Baird has already committed $633M to the project (I wasn't sure if it would actually go ahead or not - looks like it's going to).

Appreciate your comments about 1-bedder units, too. I'll make sure I focus areas where 1-bedders are in demand (which will probably be places where young professionals live - probably close to Parra or city, or hopefully, Northern Beaches - will do more research). And I will definitely make sure that the area has nearby lifestyle attractions.

Cheers
Stephen
 
FYI Worriewood is getting a major overhaul with the shopping center getting an extra 50 stores.
Ingleside and Elanora Heights are both going through rezoning right now with 2,500 more homes planned.
That is all around the Mona Vale hub.
My view is Dee Why end is really busy and has a different vibe. Narrabeen, Colloaroy and Mona vale are more desirable. They have the NB feel and lifestyle. Further up Newport and Avalon are great if you don't have to commute.
So Mona Vale and Narrabeen are the better choices if you can find one for your budget.
In the future, there is not a lot of room left for future development on the NB.
Arguably the best place to live in Sydney.

I was reluctant to consider Collaroy and Monavale at first, as I work in the city and from where I live (Curl Curl) it's nearly a 3 hour round -trip. But you're right, there are other things to consider - like lifestyle. And it's great to hear about Warriewood Mall being expanded. I'll keep my options open...
 
At that stage I was watching that market closely . Now not sure , but I'd assume that the upper northern beaches have moved more now .

I have several happy patients .

Cliff

thanks cliff. I wasn't even considering the upper Northern Beaches at first (as I thought they were too far from CBD - even getting to CBD from Curl Curl is a pain), but after reading your old posts, and hearing about the Warriewood Mall development and transport upgrades, I'm seriously considering it.
 
You should still manage to grab some good ones (1960s -1970s 2 hrs units) in Dee Why, albeit on the other side of Pittwater road. A few pockets of older stock there that hasn't moved as much as the rest of Dee Why. Good access to transport on Pittwater road and a short stroll to the Dee Why lagoon and its bicycle track that leads straight to the beach.
Admittedly it's not the most trendy corner of Dee Why, but I reckon excellent value since it hasn't moved as much - I've been looking around there, just don't have the funds right now.
 
You should still manage to grab some good ones (1960s -1970s 2 hrs units) in Dee Why, albeit on the other side of Pittwater road. A few pockets of older stock there that hasn't moved as much as the rest of Dee Why. Good access to transport on Pittwater road and a short stroll to the Dee Why lagoon and its bicycle track that leads straight to the beach.
Admittedly it's not the most trendy corner of Dee Why, but I reckon excellent value since it hasn't moved as much - I've been looking around there, just don't have the funds right now.

Thanks mate - I haven;t even looked on that side of Pittwater Road, as I figured the best investments would be on the beach side. But with prices being what they are - and the advantages you mentioned - it might be worth looking into.

Otherwise, I might have to focus on 1BR's on the beach side.
 
Hi all, just a quick update - I've bought a 525K 1BR IP in Dee Why.

The unit is on the 2nd floor of a 3-storey building - a boutique block of 12 built in 1969, that's been very well maintained. The location is good - very close to Coles, express bus-stop to city, and 10 minutes walk to beach and restaurant/cafe strip. Strata is relatively low, and cash flow will be just a tiny bit negative. The only downside is the aspect - 1 wall faces West, the other East (North and South walls are adjacent to other lots)

My question now is about the arguments put forward by my father. He is a pessimist and thinks it's a BAD time to be in debt. With the mining boom winding down, and unemployment set to rise, it could soon be hard to find get good rent or find tenants. Also, prices could dip as people start struggling with repayments.

My view is more optimistic - even if there's truth in what my dad says, well-positioned property (near beach or CBD) will always be in demand. Also, Dee Why's population is forecast to grow somewhat significantly (according to Mike Baird's "Metropolitan Strategy "), and the area could soon be developed (if Council follows through on "Dee Why Master Plan").

Which view do you think holds more weight for the Northern Beaches? Sorry is this a newbie question.

Thanks
 
Hi all, just a quick update - I've bought a 525K 1BR IP in Dee Why.

The unit is on the 2nd floor of a 3-storey building - a boutique block of 12 built in 1969, that's been very well maintained. The location is good - very close to Coles, express bus-stop to city, and 10 minutes walk to beach and restaurant/cafe strip. Strata is relatively low, and cash flow will be just a tiny bit negative. The only downside is the aspect - 1 wall faces West, the other East (North and South walls are adjacent to other lots)

My question now is about the arguments put forward by my father. He is a pessimist and thinks it's a BAD time to be in debt. With the mining boom winding down, and unemployment set to rise, it could soon be hard to find get good rent or find tenants. Also, prices could dip as people start struggling with repayments.

My view is more optimistic - even if there's truth in what my dad says, well-positioned property (near beach or CBD) will always be in demand. Also, Dee Why's population is forecast to grow somewhat significantly (according to Mike Baird's "Metropolitan Strategy "), and the area could soon be developed (if Council follows through on "Dee Why Master Plan").

Which view do you think holds more weight for the Northern Beaches? Sorry is this a newbie question.

Thanks

Hi there,

Thanks for the update! Looks like you've been pretty quick!
I wouldn't be worried about the aspect East-West is not bad at all IMO - you get sun in the morning from one side, and sun in the arvo from the other. going by your description, I guess you bought on the beach side of Pittwater road?

Regarding what you are worrying about - I personally would not worry too much. If you've done the research, you know how much rent you will get from the unit and how that will cover your costs. It looks like you have picked a good location and Dee Why is a good suburb, there is always demand, especially since it's not quite high profile as its neighbours. I think there is always demand for a one bedder: Either singles or couples.

Good on you!
 
Hey Bentfinger. I'd be interested in which one it is, I know the area well ;) You can PM me. I was doing weekly open homes (units) to get a feel for the market for a few months before Christmas and I would regularly do half a dozen new ones within Pacific to Richmond area each week. Over the last couple of weeks I have been looking again at the listings and there is SFA new listings coming on the market other than all the new off the plan stuff which as another kettle of fish altogether.

I have not gone out to any open houses for this reason or to ask agents what is happening, but I suspect that most who were going to sell have and anything that comes on the market now might be fought over quite strongly due to limited stock.

I was concerned with the amount of new units being built, mainly high rise and fearing this would keep values down a bit as no shortage of stock but all agents I mention this to (including those who have been in the area decades) tell me that there is so much demand to live here that there is no surplus, and one said he only had a couple of vacancies on his rental list.
 
Hey Beachside,

What your RE contacts told you about a lot of people wanting to live here is reassuring; and the demand should increase even more once the "Bus Rapid Transport" system rolls out.

Meanwhile, yeah it's surprising how the listings have suddenly gone dead. There's practically nothing for sale at the moment - not even in surrounding suburbs.


Hey Bentfinger. I'd be interested in which one it is, I know the area well ;) You can PM me. I was doing weekly open homes (units) to get a feel for the market for a few months before Christmas and I would regularly do half a dozen new ones within Pacific to Richmond area each week. Over the last couple of weeks I have been looking again at the listings and there is SFA new listings coming on the market other than all the new off the plan stuff which as another kettle of fish altogether.

I have not gone out to any open houses for this reason or to ask agents what is happening, but I suspect that most who were going to sell have and anything that comes on the market now might be fought over quite strongly due to limited stock.

I was concerned with the amount of new units being built, mainly high rise and fearing this would keep values down a bit as no shortage of stock but all agents I mention this to (including those who have been in the area decades) tell me that there is so much demand to live here that there is no surplus, and one said he only had a couple of vacancies on his rental list.
 
Yes I bought on the beach side. Ever since reading See-Changes comments a few months ago, I focused only on that side of Pittwater Road!

Thanks for you thoughts on the aspect - you're right, it's not really that bad. The place was pretty well naturally-lit during inspection.

And perhaps about you're right about good location and cash-flow being the ultimate factors. I'm still quite new to investing, and have started reading the Steve McKnight and Jan Somers books, so I'll learn more as I go along - but for now, even if I've bought a the wrong point in the cycle, I think this could be a good thing (especially if the "Bus Rapid Transport" and "Dee Why Master Plan" go ahead).

Hi there,

Thanks for the update! Looks like you've been pretty quick!
I wouldn't be worried about the aspect East-West is not bad at all IMO - you get sun in the morning from one side, and sun in the arvo from the other. going by your description, I guess you bought on the beach side of Pittwater road?

Regarding what you are worrying about - I personally would not worry too much. If you've done the research, you know how much rent you will get from the unit and how that will cover your costs. It looks like you have picked a good location and Dee Why is a good suburb, there is always demand, especially since it's not quite high profile as its neighbours. I think there is always demand for a one bedder: Either singles or couples.

Good on you!
 
As for earlier points mentioned:

and the area could soon be developed

Yeah, once they cut down the trees, remove the koalas, clear the undergrowth and bring water and electricity to the area. :D You mean OVERDEVELOPED.

Also, Dee Why's population is forecast to grow somewhat significantly

That is a negative, the more the population increases the less desirable it becomes due to traffic, difficulty to park, noise from high density living and closeness to each other - at least to those already living here. Traffic increase over the last 10 years due to development is a PIA. An old agent in the area told me they are having to space open houses further apart to allow time to get between properties and park - and we are only talking a few streets.

30 years ago it was unit-ville with only about 10% houses remaining on the beach side of Pittwater Rd hence limited development left. :) This has been an eyeopener because you always hear about never buying in areas where there is a lot of vacant land around which can be developed and thereby limiting CG, and buy in areas where there is no more land which forces prices up. Other than 3 blocks of units higher than 3 stories all other units were 3 stories. That meant 10% of the area could be developed from single story houses or 2 story old flats into 3 storey units. Never thought of air space above 3 stories in the area being developable, and blocks of 100+ units build where 20 would have once been built.

The rapid bus and master plan are less drivers than the draw of the natural beauty of the beach from DY point to Long Reef and the cafe and restaurant strip across the road from the beach rather than on the main drag (ie Narrabeen, Mona Vale) or further from the beach (ie Freshwater) or having the main drag between the cafes/restaurants and the beach with 4-5 lanes of traffic and buses passing between (ie Collaroy). This makes DY quite rare, outside the tourist mecca of Manly. I also expect many people looking for a place to rent when the new hospital is built will choose to live/chill in Dee Why and do the small commute rather than live 10-15 minutes closer in surrounding streets to the hospital.
 
Yes I bought on the beach side. Ever since reading See-Changes comments a few months ago, I focused only on that side of Pittwater Road!

Any chance you could point me to the posts you have in mind or share the main points raised by see change about the other side of pittwater?
 
Any chance you could point me to the posts you have in mind or share the main points raised by see change about the other side of pittwater?

Seechange's view was that one should buy on the beach-side of Pittwater road, as it's closer to the beach , caf?s, restaurants.

If you buy on the other side of Pittwater, you need to cross 6 lanes of traffic to get to the shops and lifestyle attractions, so it's less convenient for tenants.

Also, I think I recall see change mentioning that it's not a good idea to buy on pacific parade - but I might have remembered incorrectly!
 
My question now is about the arguments put forward by my father. He is a pessimist and thinks it's a BAD time to be in debt. With the mining boom winding down, and unemployment set to rise, it could soon be hard to find get good rent or find tenants. Also, prices could dip as people start struggling with repayments.

He might have had a point if you had bought in Perth or a mining town.

Just explain to him that very few Dee Why residents work in the mining industry...
 
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