Buying an IP in Frankston?

[youngm]

Hi guys,

Been lurking here for a while and find this to be a very informative Forum with lots of very knowledgeable individuals contributing!

I'm now thinking of buying my first IP in Frankston (Vic) for around the $350k - $360k mark, which has been very nicely renovated and has timber floors, 3BR, 1 Bathroom, single brick garage and undercover outdoor entertainment area. It sits on the south side of Cranbourne Rd, in-between the Peninsula Link FWY and the Frankston FWY. i.e. it doesn't sit in the Karingal pocket of Frankston. The property is pretty much a turn key rental property and very clean and neat. Nothing to do but start renting it out.

It's a 3 min drive to the Karingal Shopping Hub & the Frankston CBD/Power House Retail Shops/Monash Uni/Frankston Hospital etc. Decent location as far as I'm concerned.

I plan to hold onto this IP long term and just keep rent it out until retirement age, then sell it and hopefully enjoy the capital growth of the property over a 20 year lifespan. I'm sure by then the area would see significant gentrification and capital growth (i.e. ~doubled in 10 years, and then ~doubled again in 20 years).

I don't really want to spend more than $360k on my first IP. Even when I look for my second IP in a couple years time, I'd probably be looking in the same price point of around $360k - $400k.

What's your opinion on this idea guys? Sound worthwhile?

Thanks in advance for tuning in!

 

[grand dad]

Forget what salesmen and buyer's agents say. IMHO you may get away with spending a lot less than $350,000 if you are prepared to hunt around.

Every month or so, its possible to see value like this: http://house.ksou.cn/p.php?q=Frankston&sta=vic&id=352098

It's a dual occ site. Rentable.

I am a huge fan of Frankston. There's no shortage of infrastructure and it is one of Australia's cheapest beachside suburbs.

That 40% of blocks are potential dual occ suggests that developers/investors will soon move in to take advantage of the Council's pro-development policies. The crime rate in Frankston is frequently overplayed, it is no worse than that of inner-city Melbourne.

 

[WattleIdo]

sits on the south side of Cranbourne Rd, in-between the Peninsula Link FWY and the Frankston FWY. i.e. it doesn't sit in the Karingal pocket of Frankston.

This is where my property is too. I like the area. Only just outside the highschool zone.

I agree with your reasoning and projections. If you're prepared to handle a very average yield for the first however many years, the rest will be history.

Are you already looking at something?
The price sounds fair if you want something already cleaned up and maybe even reno'd considering there's been some capital growth just recently - mind you, that's after a 6% drop in value. That wasn't confined to only Frankston, though. Check SQM to see how it's going now.

It's a 3 min drive to the Karingal Shopping Hub & the Frankston CBD/Power House Retail Shops/Monash Uni/Frankston Hospital etc. Decent location as far as I'm concerned.

This area is called Frankston Heights - a little amusing. But is considered to be a safe and pleasant place to live, right between South Frankston and Langwarrin.

The nearby station is not really useful at this point in time - still need to get to Frankston station.

Things to be mindful of:
1/ yield - can you cope with the unsatisfying yield for however long?

2/ there are plenty of investors who can't and they always seem to be selling up. Just when you think the stock is diminishing, another round comes onto the market (still a good time to buy).
Of course, this can't go on forever - especially if first home owners continue to buy up

3/ not as close to the train station (maybe a good thing from what I've heard) and properties closer to the beach seem to be more popular with investors.

Once you are ok with all of that, I'd have to agree that your plan sounds damn good.

wattle

 

[Spades]

Distance wise Mt D ruitt by the sea imo and a rising population for melbourne predicted to take over the harbour bridge by 2028,i forget what month etc.

Do your DD and use the search button above as well:

http://somersoft.com/forums/showthread.php?t=94531&highlight=frankston

Cheers Spades.

 

[youngm]

Forget what salesmen and buyer's agents say. IMHO you may get away with spending a lot less than $350,000 if you are prepared to hunt around.

Every month or so, its possible to see value like this: http://house.ksou.cn/p.php?q=Frankston&sta=vic&id=352098

It's a dual occ site. Rentable.

I am a huge fan of Frankston. There's no shortage of infrastructure and it is one of Australia's cheapest beachside suburbs.

That 40% of blocks are potential dual occ suggests that developers/investors will soon move in to take advantage of the Council's pro-development policies. The crime rate in Frankston is frequently overplayed, it is no worse than that of inner-city Melbourne.

Thanks grand_dad. That IS a very good and cheap buy indeed. I'm not really looking to buy and re-develop tho. I'm planning to utilise SMSF funds to procure a number of IP's and hold onto them long term, which is why I'm looking for properties which are already nicely renovated, without nothing left to do. Funding properties via SMSF prevents you from further re-developing the property. I can do renovations, but I cannot subdivide and redevelop etc. That's something I'd probably look at doing in ~3 years time when I have more equity in my POPR though.

Totally agree about Frankston. Abundance of infrastructrure , close to beautiful beaches and shopping complexes and schools. As the area gentrifies over time, it'll see lower crime rates and very good capital growth.... much like Sunshine in time. That's another area I'm currently considering for an IP due to it's proximity to Melbourne CBD and plans for the Railway Hub to Melbourne Airport etc...

@WattleIdo,

Yes, that area is just slightly outside the Frankston High School Zone. It's actually a nice, quiet area and the surrounding BV houses are all in good condition. Not run down weatherboard homes in dire need of demolition.

I have already put in my offer and it's been accepted, so it's definitely a go'er

Not too fussed it's not as close to Frankston Station. I think a 5-6 minute drive isn't too bad at all. I live in Chelsea Heights and I have a 5 minute drive to Chelsea Station. No big deal, and the area is nice and more modern than Chelsea is too.

As for the rental yield, I'm prepared to live with a lower yield for the first few years. I'm really just looking for long term appreciation / capital growth of the property over ~20 years, so when my wife and I retire we'll have ~4 x IP's which we can leverage off and have a comfy retirement. I'm not aiming to be the richest stiff in the cemetery here. Just looking at a comfortable retirement nest egg at age 60 or so.

That's the plan anyway

 

[alicudi]

Hi

To Youngm sounds like you have your plans well laid out.
Congratulations on your purchase in Frankston, sounds like you have been looking in Narambi Crescent!
Might see you around the area some time as I live in Patterson Lakes.

Regards,

alicudi

 

[youngm]

Just some interesting developments in the area:

Frankston Station Precinct Improvement Project
http://www.dpcd.vic.gov.au/planning...rankston-station-precinct-improvement-project

$13.8 million to improve the area around Frankston railway station.

?The Coalition Government is acting to improve local infrastructure, making it easier for locals, workers, students and visitors to access buses and trains in Frankston.

?This funding will cement Frankston as a regional transport hub where people can easily catch a bus or train and get to Chisholm Institute of TAFE, Monash University, Frankston Hospital and Frankston Arts Centre,? Mr Guy said.

Improvements to the Frankston transit interchange delivering a safer, brighter and cleaner area include:
railway station upgrades including new lighting, signs, improved safe taxi pick-up area, ?kiss and ride? and public art;
new footpaths, public seating and upgrades to the pedestrian underpass, bus shelters and covered ways to shield passengers from heat, wind and rain; and
traffic light and signal upgrades to improve bus access.
The 2013-14 Budget commitment for the two projects will be managed and delivered by the new Department of Transport, Planning and Local Infrastructure.

Frankston Activities Area projects
Refining the existing TAFE to Bay Structure Plan. This review provides the chance to take stock and for key partners like Council and State Government to confirm their commitment to the vision for the Frankston Activities Area.
Positioning the Frankston Activities Area for investment. Frankston presents fantastic opportunities for urban renewal and development, with affordable property prices, great infrastructure, excellent access and water frontages.
Trade Training Centre. In cooperation with high schools in the Frankston area, Chisholm Institute is constructing a $19.5m Trade Training Centre.
Streetscape improvements. Funding priorities and designs are being prepared to improve streetscapes and amenity in the city centre.
Bus interchange improvements. Planning is underway to better organise the bus interchange.
Frankston Regional Aquatic Health and Wellbeing Centre. Construction of the $46.3 million Aquatic centre, funded by both Frankston City Council and the State Government, has commenced and will be completed in June 2014. The State Government has contributed $12.5 million to the new centre, which will be located at Samuel Sherlock Reserve, Cranbourne Road, Frankston.

Completed projects
Construction of the Kananook Creek Boulevard, completed in February 2010. The project was funded by State Government and took around one year to build. It will encourage redevelopment of buildings on Nepean Highway and, with a new road bridge over the Creek, Council can redevelop the Yacht Club and improve the Long Island dune park.
Major expansion of Bayside Shopping Centre, including the cinema complex
Frankston foreshore improvements including surf club, restaurant development and dune board walk
Wells Street pedestrian improvements
Wayfinding signs for pedestrians
Frankston Hospital redevelopment works
Smart bus service to Melbourne Airport
Upgrades to Frankston pier
Improvements to the train station

All this can only mean good things for the suburb going into the future. It can only get better from here

 

[WattleIdo]

put in my offer and it's been accepted, so it's definitely a go'er

Good one youngm!

Guess I'm not a very good 'devil's advocate'. I can only agree with your strategy wholeheartedly. It makes perfect sense to me - 'cause it's how I'm approaching things too.

Look forward to sharing more of these positive threads in time to come. The only way is up!

 

[neeko]

Just some interesting developments in the area:

Frankston Station Precinct Improvement Project
http://www.dpcd.vic.gov.au/planning...rankston-station-precinct-improvement-project

$13.8 million to improve the area around Frankston railway station.

?The Coalition Government is acting to improve local infrastructure, making it easier for locals, workers, students and visitors to access buses and trains in Frankston.

?This funding will cement Frankston as a regional transport hub where people can easily catch a bus or train and get to Chisholm Institute of TAFE, Monash University, Frankston Hospital and Frankston Arts Centre,? Mr Guy said.

Improvements to the Frankston transit interchange delivering a safer, brighter and cleaner area include:
railway station upgrades including new lighting, signs, improved safe taxi pick-up area, ?kiss and ride? and public art;
new footpaths, public seating and upgrades to the pedestrian underpass, bus shelters and covered ways to shield passengers from heat, wind and rain; and
traffic light and signal upgrades to improve bus access.
The 2013-14 Budget commitment for the two projects will be managed and delivered by the new Department of Transport, Planning and Local Infrastructure.

Frankston Activities Area projects
Refining the existing TAFE to Bay Structure Plan. This review provides the chance to take stock and for key partners like Council and State Government to confirm their commitment to the vision for the Frankston Activities Area.
Positioning the Frankston Activities Area for investment. Frankston presents fantastic opportunities for urban renewal and development, with affordable property prices, great infrastructure, excellent access and water frontages.
Trade Training Centre. In cooperation with high schools in the Frankston area, Chisholm Institute is constructing a $19.5m Trade Training Centre.
Streetscape improvements. Funding priorities and designs are being prepared to improve streetscapes and amenity in the city centre.
Bus interchange improvements. Planning is underway to better organise the bus interchange.
Frankston Regional Aquatic Health and Wellbeing Centre. Construction of the $46.3 million Aquatic centre, funded by both Frankston City Council and the State Government, has commenced and will be completed in June 2014. The State Government has contributed $12.5 million to the new centre, which will be located at Samuel Sherlock Reserve, Cranbourne Road, Frankston.

Completed projects
Construction of the Kananook Creek Boulevard, completed in February 2010. The project was funded by State Government and took around one year to build. It will encourage redevelopment of buildings on Nepean Highway and, with a new road bridge over the Creek, Council can redevelop the Yacht Club and improve the Long Island dune park.
Major expansion of Bayside Shopping Centre, including the cinema complex
Frankston foreshore improvements including surf club, restaurant development and dune board walk
Wells Street pedestrian improvements
Wayfinding signs for pedestrians
Frankston Hospital redevelopment works
Smart bus service to Melbourne Airport
Upgrades to Frankston pier
Improvements to the train station

All this can only mean good things for the suburb going into the future. It can only get better from here

thats correct youngm. espicially when local investors are putting their own coin in their own suburb. and also local developers who are want to see great things for frankston. it would be amazing when frankston station gets "another upgrade" frankston is a brilliant place. and i'll be happy to stand by that comment any day of the week!

 

[sherules]

Cheaper suburbs with big plans

BANG!!!

I haven't been to Frankston. But learn a lot from forum.

Does anyone knows,any other ran down suburbs like Franga with big plans to come. There are lot close to Gibson Desert, guys I mean something decent n close to city.Cheers..

 

[youngm]

Well, unfortunately the deal fell through. Building and pest inspections uncovered major structural issues with the property due to previous termite infestation. We terminated the contract and have gone back to the real-estate websites to search all over again.

Bit disappointed, but looks like we've dodged a bullet with this one. Well worth spending the money for the inspection.. saved us a world of pain later down the track!

Thanks guys!

 

[rabidz]

Well, unfortunately the deal fell through. Building and pest inspections uncovered major structural issues with the property due to previous termite infestation. We terminated the contract and have gone back to the real-estate websites to search all over again.

Bit disappointed, but looks like we've dodged a bullet with this one. Well worth spending the money for the inspection.. saved us a world of pain later down the track!

Thanks guys!

It's good that you found this earlier..
If I were you, I spent my money in the middle-ring area (probably a unit/villa/apartment).

 

[WattleIdo]

That's a pity.

My IP has previous termite damage but only in the garage window and nowhere else - strange.

Yes, those inspections are definitely worth it - find out quite a lot.

Oh well, back to the drawing board. At least you know what you're looking for.

Did you tell the REA why? They really shouldn't be trying to sell it at that price.

 

[youngm]

It's good that you found this earlier..
If I were you, I spent my money in the middle-ring area (probably a unit/villa/apartment).

Yeah, I'm now shopping specifically for new/near new Townhouses instead of older renovated houses. God only knows what these renovators are trying to cover up when they renovate these old properties. As I'm trying to find IP's to hold onto until retirement, I want to buy-in when the property is almost brand new to minimise maintenance down the track.

That's a pity.

My IP has previous termite damage but only in the garage window and nowhere else - strange.

Yes, those inspections are definitely worth it - find out quite a lot.

Oh well, back to the drawing board. At least you know what you're looking for.

Did you tell the REA why? They really shouldn't be trying to sell it at that price.

Yep, told the REA why we're bailing and sent him the comprehensive report which stated major structural issues with the sub-floor due to termites. The REA said the vendor said he'd fix it all up for us, but I'm not comfortable with that at all as the infestation could have potentially eaten away at the wooden framing in the walls etc, so I'd rather just walk away and spend my money elsewhere.

Now looking for near-new Townhouses instead...