Are 1 Bedroom units worth investing in?

Hi Everyone .

I have set myself up with one IP bought for $460K and currently also building a PPOR which will end up costing me another $460K.

I would like to have another investment property but my funds are now very limited. I'm looking at trying to find and snap up a good deal below 100K like retirment units or just 1 bedroom etc. Are these any good from an investment point of view? I know they are never really going to go up in value much but I was thinking more long term so when in retirement it can supplement our retirement. Also what are strata fees etc usually like, how much generally etc etc? Anyone have any good areas or tips would be greatly appreciated.

Thanks
 
Hi

Hi,

I would stay away from 1 bedroom units or retirement units etc.
Two or three bedroom units are not bad and if you buy these properties in good areas you can do well :)

But retirement units or villas are different. Retirement units are usually owned and operated by retirement specialist.

I know a couple of people who have bought units in retirement villages and here is an example of why I would stay away.

they bought a unit at 200K and then they wanted to sell the property 3 years later. They could only sell the property through the owner of the retirement village and when they sold the property for 300K the owners of the retirement village kept the 100K it was in some sort of clause.

Sorry to keep going on: If you are going to invest, invest in quality or don't at all :)
 
Ok so stick to 2 to 3 bedroom units. My brother has bought quite a few units in good areas. His most recent purchase of a unit was at Lavington NSW. Does anyone have a good analysis of this area as my brother seemed to think it has potential. I have been looking and some good little units are popping up at good prices.
 
2 excellent responses above:

1st hurdle: Restrictive to manage, sell. They also add no scope to renovate or subdivide.

2nd hurdle: Finance. These are hard to finance, and you're already short of funds. They will require higher LVR generally, as lenders know the restricted nature listed in #1.

Which bring me to my point:

Brocky05, you sound like a young bloke trying to get ahead. I recall from your other posts you have bought a regional IP which is not able to be value added and if you sold today you would lose money. Add in a PPOR as your second property and you have already backed yourself into a corner.

Unfortunately (and Im not having a real dig here), this is a common example of 'getting in' to the market for the sake of 'getting in'.

If you're going to get into this investing game, your very first property should have in your mind not the immidiate property in mind, but subsequent properties. The very first should be a foundation property that can quickly and easily get you your next one. It should have at least some sweat equity (small reno, face lift), so you can get a tenant in for a 6mth term at a good rent return with view to reval at 3-6month mark. Even better subdividable (down the track when you get more confidence and enhanced ability).

Once you pick up the next property, the next property should already be in your mind and how you are going to get there. Stonewalling yourself by only purchasing stock for the sake of purchasing takes a long time to save between deposits.....as you are finding out.

So why all the hot wind above? Well, how does purchasing a restrictive, hard to finance property fit into purchasing the next property? It doesnt.

I feel that young people with a decent income and above average drive to forward progress themselves (like yourself) should plan right from the start, be a little agressive in lending (88%+LMI) and always have the next property in their sight for renovation, subdivision or development. No need for speculating one horse ponies, or getting into OTP developments etc - just stock that gets rooves over heads and LL onto the next one. When you get confident in your ability, thats when you know its the right time to progress. I encourage you to search some of the Ali girls stuff - they are pulling this off perfectly - as have may other people on here.

In hindsight I personally have fallen short of this, however proped up with the inclusion of my business which has got myself where I am. It does seem the more function, progressive way to do things.

Foundation property/ies (to get you CG properties), moving onto CG properties (to get you deposits for cashflow properties), cashflow properties to get you the cashflow you desire (to get into any property/investment you desire).


pinkboy
 
Foundation property/ies (to get you CG properties), moving onto CG properties (to get you deposits for cashflow properties), cashflow properties to get you the cashflow you desire (to get into any property/investment you desire).

Wow - very helpful pb. Sounds like experience talking here.
I'm also thinking that there's nothing wrong with taking a breather now and then - to really consolidate that foundation.
 
Ok so stick to 2 to 3 bedroom units.

Im not saying that at all

I have some clients that have done really well.

It comes down to the actual Asset

Be careful trying to compare a HB Torana to GTS Commodore.

They both have 4 wheels and an engine, and they do similar but different things

ta
rolf
 
all things being equal, a 1bdr unit would be the last place id be looking at,

depending on the location, maybe an existing 1bdr, in a small complex, or one with a wow factor or huge open space

or even one where you can build a second floating bedroom,
 
I agree with pb

My strategy is to manufactor equity through renovation, the property must pay for it self and not in a one horse town or crap area.

With my foundation equity I am flipping props in metro areas to generate revenue and to buy a few properties outright. The beauty with propetproperty is that there are many ways to skin a cat. Do what works for you.

What the Ali girls have done just amazing
 
Foundation property/ies (to get you CG properties), moving onto CG properties (to get you deposits for cashflow properties), cashflow properties to get you the cashflow you desire (to get into any property/investment you desire).
pinkboy

What a fantastic formula pinkboy.
 
Thanks for the advice everyone....appreciated

So I have found a property that I think is a pretty good price just looking at the moment and pondering

It is Offers Over $220K and is a 3 Bedroom house that currently leases for $280 per week on a 697square block of land in NSW.

It seems to have been purchased in 2011 for $200K with all the windows boarded up and obviously someone has gone in and done it up a bit new kitchen, paint etc. It does look to be an ex housing commision style home but I'm familiar with the area and it does not have a bad reputation pretty sure all the housing commision has been sold off.

Now my PPOR land purchase has an offset account where im pooling all my funds. Assuming the bank would loan me the money Im also assuming I could withdraw the $25K sitting in the offset to use as a deposit for this new purchase. Plan would be to move in asap to live in new purchase as im currently renting and for the 1 year it will take to build our new house dress this property up a bit. If I do I/O payments it will pretty much pay for itself.
Suburb is reported as having an average annual growth of 3.55%

Im thinking this would be a much more worthy investment giving its 3 bedroom and the land size + the advantage of no strata fees etc
 
Assuming the bank would loan me the money Im also assuming I could withdraw the $25K sitting in the offset to use as a deposit for this new purchase.

Dont. Have your lender reduce your loan and split off the paid back funds as your deposit in a new loan. Effecitvly pays off your PPOR (bad debt) and gives you new debt which is deductable giving your new purchase 100% deductability.

pinkboy
 
Broky05,
one bedders are good. As younger people are putting off marriage and children, the demographic of people who want them is on the up.

They are also a cheaper place to live and can deliver higher yields than.

There are some brand new waterfont ones for sale on the Gold Coast for under $400k.:)
 
I've had friends do well with old character 1 bedders in old buildings in good locations

Hi Sanj

Care to share the locations for a browsing view point. I did myself come across some one bedders priced very well in Taree NSW however not much happening in Taree and I doubt the future holds any real prospects for Taree so I gave it a miss.
 
I only know of perth ones, highgate and mount Lawley come to mind, especially in small wall up blocks. They also tend to move pretty quickly when put up for sale
 
Location, location, loc.....
and demographics.

Sydney CBD and surrounds, goldmine. With the possible exception of overly-densely-apartmented suburbs eg alexandria, wolli creek.
One-bedders in satellite cities near business centres can also do well. eg macquarie. Although they may still be harder to rent than 2-bedders in such areas.

Family-oriented suburbs where renters tend to families with kids, not so much.

Edit: Speaking from my own experience. I bought a 2-bedda in a far-flung location. On hingsight, for the same money (or less!) I could've bought a studio or one-bedda near the CBD at the time. Now, prices for one-bedds near the CBD have doubled or even tripled.
 
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