Advice on this property

[mikelima]

Hi all

New comer and hoping to buy my first investment. Just after some opinion on the following property

http://www.realestate.com.au/property-villa-act-amaroo-119498331
or
http://www.realestate.com.au/property-villa-act-amaroo-119498335

It's in Canberra and off the plan - 4 beddy villa, bathroom and ensuite and double garage. 100m walk to a primary school, construction for a Coles supermarket 150m away is underway and no body corporate. Rent is expected to be around the $500 mark.

I would like to know if this could potentially be a good investment, though it is quite dear for a first investment. I know people say to never buy off the plan etc so therefore questioning these ones.

Thanks

 

[Propertunity]

.....It's in Canberra

Canberra is not in what you'd call a rising market ATM. Sydney and Melbourne are.

.......and off the plan

Don't buy OTP except if you are in a rising market and by the time you are ready to settle on it, you are still in a rising market and IRs are the same or lower, and your job is the same or better.

Just my $0.02

 

[Azazel]

Hi all
New comer and hoping to buy my first investment. Just after some opinion on the following property
http://www.realestate.com.au/property-villa-act-amaroo-119498331
or
http://www.realestate.com.au/property-villa-act-amaroo-119498335
It's in Canberra and off the plan - 4 beddy villa, bathroom and ensuite and double garage. 100m walk to a primary school, construction for a Coles supermarket 150m away is underway and no body corporate. Rent is expected to be around the $500 mark.
I would like to know if this could potentially be a good investment, though it is quite dear for a first investment. I know people say to never buy off the plan etc so therefore questioning these ones.
Thanks

No body corporate? How odd.
Being in Canberra, you'd know that prices are definitely moving - even if everyone else is still too busy talking up Brisbane to notice.
I would still prefer a house over that, a better land component.

 

[Rixter]

I concur with Propertunity comments above..

Stay away from OTP for the same reasons plus contracts are mostly written to protect the vendor and also the bad supply demand factors when OTP developments come on line all competing for tenants/sales etc

I would include Brisbane above Melb & Syd.

I hope this helps.

 

[Propertunity]

From: http://www.rpmonline.com.au/news/13445-brisbane-booms-while-other-capitals-struggle

Melbourne has been overtaken as Australia?s second-fastest growing market, according to the Australian Bureau of Statistics.
Sydney residential property prices grew by 3.4 per cent for the three months to 31 December 2014 and by 12.2 per cent during the 2014 calendar year.
Brisbane has now become Australia?s number two market, after prices rose 1.4 per cent over the quarter and 5.3 per cent over the year.
Third place was filled by Melbourne, which recorded 1.3 per cent quarterly growth and 4.5 per cent annual growth.
Adelaide climbed by 0.8 per cent over the quarter and 2.5 per cent over the year, while Hobart climbed by 1.0 per cent over the quarter and 2.2 per cent over the year.
Canberra posted 0.2 per cent quarterly growth and 1.7 per cent annual growth, while Perth posted 0.3 per cent quarterly growth and 1.2 per cent annual growth.
Darwin fell by 0.6 per cent over the quarter but rose by 0.8 per cent over the year.
Inflation reached 1.7 per cent during 2014, which means that Canberra prices remained steady in real terms, while Perth and Darwin prices went backwards.

Agree with adding Brisbane to the "better than Canberra at the present time" mix.

 

[mikelima]

Thanks guys, in some area in Canberra I can still get a house on a decent block. Been looking into Brisbane and Melbourne as well, within 20kms of the city, on my current budget I can barely get a house so might look into some townhouses or something.

 

[hugh72]

I beg to differ for $475k you can still buy a reasonable house in BN just, but maybe not as easily inside 10km. You might need to just expand your search criteria Slightly

 

[Rixter]

Thanks guys, in some area in Canberra I can still get a house on a decent block. Been looking into Brisbane and Melbourne as well, within 20kms of the city, on my current budget I can barely get a house so might look into some townhouses or something.

Not sure what size portfolio asset base you need to build so as to generate the income per annum you're planning for, however by electing to purchase townhouses/villas you should be able to hold more IP's across your portfolio due to the lower entry levels into the market in comparison to purchasing houses.

By doing so you may (depending upon age of IP's) also increase your total portfolio yield & cash flows due to each townhouse/villa having a greater tax depreciation deduction ratio of the purchase price in comparison to house.

Bottom line, it costs you less to hold and increases your CG exposure potential across your asset base.

 

[Azazel]

Agree with adding Brisbane to the "better than Canberra at the present time" mix.

Hmm, doesn't match the more recent data:

"The latest CoreLogic RP Data house price index [March] also revealed slight increases in values in all capital cities except Brisbane, where values dipped 0.3 per cent."

"Canberra was also a strong performer during the month and quarter with its values up by 1.9 per cent and 4.1 per cent respectively."

March

Sydney 3%
Melbourne 0.6%
Brisbane -0.3%
Adelaide 0.1%
Perth 0%
Hobart 0.2%
Darwin 0.9%
Canberra 1.9%
Combined capitals 1.4%

FIRST QUARTER PERFORMANCES

Sydney 5.8%
Melbourne 3.5%
Brisbane -0.5%
Adelaide -0.9%
Perth -2.7%
Hobart 0.9%
Darwin 0.4%
Canberra 4.1%

Although it was from
http://www.news.com.au/finance/real...-property-market/story-fncq3era-1227287419813

 

[Rixter]

Hmm, doesn't match the more recent data:

Whilst recent stats are important, in this situation more so its the historic data you should be comparing with.. tip: in particular date of last substantial influx of CG attained.

Brisbane's market correction is near.

I hope this provides some food for thought.

 

[Azazel]

Brisbane's market correction is near.

I don't disagree.
And I think some people will be surprised by Canbrrr this year

 

[mikelima]

Currently I think Melb and Syd is out of my price range, the prices on some of the property is ridiculous. I've been looking at Brisbane and particularly around the Beenleigh/Logan area, the houses are very affordable. But not being a local, it does look to be quite far out from Brisbane city and I don't know if people are willing to rent out there. 4 beddy for high $300s in the Beenleigh area is quite good

E.g if you're in Canberra and you buy something outer south or north side, there's still a very good chance for that to be rented out and have decent capital growth.

 

[hugh72]

Check vacancy rates on SMQ Research, online listings and ring some PMs

 

[cimbom]

You can make money in Canberra but you have to buy well. I would avoid anything OTP or in a relatively new suburb. I purchased our PPOR just before the last federal election and have seen good gains.

 

[JameZ]

Vacancy rate is the Beeneligh/Logan area is very low, as long as your price is reasonably, you will not have trouble finding quality tenants.

Currently I think Melb and Syd is out of my price range, the prices on some of the property is ridiculous. I've been looking at Brisbane and particularly around the Beenleigh/Logan area, the houses are very affordable. But not being a local, it does look to be quite far out from Brisbane city and I don't know if people are willing to rent out there. 4 beddy for high $300s in the Beenleigh area is quite good

E.g if you're in Canberra and you buy something outer south or north side, there's still a very good chance for that to be rented out and have decent capital growth.

 

[Rixter]

Vacancy rate is the Beeneligh/Logan area is very low, as long as your price is reasonably, you will not have trouble finding quality tenants.

I googled Beenleigh & Quality - all my search returned was the word 'Oxymoron'.

 

[S1mon]

everyone around here is pretty anti OTP.....sure there is risks, and i have no stats, but vast majority must work out ok. If you bought OTP unit in canberra anytime between probably 2000 and 2010 you did well between exchange and settlement. Not that i would recommend a unit, but a separate titled towny is a bit different.

Something like that should be a few k cash flow positive. Not sure how much land tax would be, whats the UV?

Having said that, not a big fan of out that way given there is so much new development...but gungahlin does seem to be going ok, young families, govt offices moving there etc.

im also a bit wary there will be move public service cuts in the may budget..(more sentiment holding back prices, rather than force sellers etc) but as others have illuded the market seems to be going ok at the moment...aside from rental oversupply with units.

 

[cimbom]

I'm sure you would have done well if you purchased a dog kennel between 2000 and 2010 too

 

[Bran]

Whilst recent stats are important, in this situation more so its the historic data you should be comparing with.. tip: in particular date of last substantial influx of CG attained.

Brisbane's market correction is near.

I hope this provides some food for thought.

I'm a simpleton and can't work your comment out. Can a market 'correct' into a boom?

 

[mikelima]

Thanks for replying guys.

I'll probably stay away from OTP at the moment and look at current houses. I'm leaning towards a house in Canberra but will keep looking for a good opportunity around the Logan area or if my budget allows, move up into the Sunnybank area. But I'm still early into my research so we'll see what happen