Buying Apartment off the plan in Moonee Ponds

[Jk200sx]

After many discussions with my accountant he has mentioned that I need to look into buying a further property. Based on my situation, he suggested to purchase in Melbourne (I already have 2 IP's in Bridbane), ideally withing 10km of the CBD and meeting the usual criteria of close to schools, transport, hospitals, etc,etc. He also said to consider looking at apartments, which will allow me to buy closer in (but not in CBD or its Fringe) at a price point of ~500K.

So, I have done some research and am seriously considering the purchase of an apartment in Moonee Ponds. It is in a block to be developed that consists of 54 apartments and will be a low rise 6 floor construction. The development consists of a combination of 1, 2 or 3 bedroom, with the majority being 1 bedroom, followed by 2 bed with one bathroom. The one I'm considering is a 2 bed, 2 bathroom with 1 car park space for $499K - I think this type will probably be a better investment choice for an apartment. From a location point of view, the block will be built only 400 m from Puckle St, and 900m from Moonee Ponds train station. It has a tram line right in frnt of it, and a big bus interchange just up the road, for those who know the area. Moonee Valley is just around the corner, and it is right on 4.9km to Vic Market (ie edge of CBD). There are plent of schools around the area and hospitals just up the road in CBD (but plentiful medical clinics in the area).

I understand that apartments can be a risky investment, mainly the ones in the cbd, due to oversupply), but what are your thoughts on this proposal?
It should be completed early 2016, and projected rental at that time will be approx $500/week (comparable rentals at the moment range between 450 to 530 per week for similar apartments in the area).

Thanks,

JK

 

[Redwood]

After many discussions with my accountant he has mentioned that I need to look into buying a further property. Based on my situation, he suggested to purchase in Melbourne (I already have 2 IP's in Bridbane), ideally withing 10km of the CBD and meeting the usual criteria of close to schools, transport, hospitals, etc,etc. He also said to consider looking at apartments, which will allow me to buy closer in (but not in CBD or its Fringe) at a price point of ~500K.

So, I have done some research and am seriously considering the purchase of an apartment in Moonee Ponds. It is in a block to be developed that consists of 54 apartments and will be a low rise 6 floor construction. The development consists of a combination of 1, 2 or 3 bedroom, with the majority being 1 bedroom, followed by 2 bed with one bathroom. The one I'm considering is a 2 bed, 2 bathroom with 1 car park space for $499K - I think this type will probably be a better investment choice for an apartment. From a location point of view, the block will be built only 400 m from Puckle St, and 900m from Moonee Ponds train station. It has a tram line right in frnt of it, and a big bus interchange just up the road, for those who know the area. Moonee Valley is just around the corner, and it is right on 4.9km to Vic Market (ie edge of CBD). There are plent of schools around the area and hospitals just up the road in CBD (but plentiful medical clinics in the area).

I understand that apartments can be a risky investment, mainly the ones in the cbd, due to oversupply), but what are your thoughts on this proposal?
It should be completed early 2016, and projected rental at that time will be approx $500/week (comparable rentals at the moment range between 450 to 530 per week for similar apartments in the area).

Thanks,

JK

Hi JK,

Unless your accountant is licensed i'm not sure your accountant should be recommending property.

For OTP, its imperative to to receive a independent valuation prior to purchase, banks are now varying their lending criteria for OTP and see a major oversupply which will impact your investment value now and in 2016. For inner city I try to use a cost per sqm, anything more than $8000 per sqm I would not touch in inner city.

All the best

Cheers

 

[Jk200sx]

Thanks for the reply.

The apartment is 67sqm with 9sqm baclony = 76sqm. Therefore the cost per sqm is $6500. Does that sound ok for that area?

I didn't include car space as I don't know its size.

 

[Jk200sx]

Anyone have any thoughts?

 

[Zos]

Thanks for the reply.

The apartment is 67sqm with 9sqm baclony = 76sqm. Therefore the cost per sqm is $6500. Does that sound ok for that area?

I didn't include car space as I don't know its size.

I don't think you should include the balcony into the equation, but I could be wrong?

 

[Redwood]

Also with the proposed rental, ensure you verify the rental with a independent rental valuation and ensure you check the vacancy rate - and include that in the equation.

Banks are cutting ind vals of apartments by 10% or so.

Cheers, Ivan

 

[alexlee]

How reliable can a rental estimate 18 months in the future be?

 

[Jk200sx]

Ok, so do you consider the position to be a suitable one?

 

[thatbum]

Does no one else want to just cut to the chase and say buying OTP is almost always a bad investment?

And in the rare cases where its not, then there are almost certainly better investments out there anyway?

 

[Jk200sx]

Back to my question- is moonee ponds currently a good suburb to invest in?

 

[S.T]

Back to my question- is moonee ponds currently a good suburb to invest in?

What does your extensive research tell you?

 

[Jk200sx]

My research shows it to be a good suburb.

 

[The Y-man]

Does no one else want to just cut to the chase and say buying OTP is almost always a bad investment?

And in the rare cases where its not, then there are almost certainly better investments out there anyway?

I'll do it too

Don't do OTP there!

Too many big projects flooding the area at present.

The suburb itself is ok, just buy something established.

The Y-man

 

[The Y-man]

I understand that apartments can be a risky investment, mainly the ones in the cbd, due to oversupply), but what are your thoughts on this proposal?

Look the main risk is simply that the thing won't come up to val at settlement. So as long as you have access to say 30%~40% of the purchase price from other equity that you can get, it shouldn't be an issue,

So for a $500k purchase, have about $150~$200k ready as cash just in case.

The only other issues will be the body corp - rent might be $530 a week but the body corp could be $3000 p.a

Allow for some vacancy and management costs and your yield could be as low as 4% on purchase price, but you have other IP's so you'd already know about this.

The Y-man

 

[imbi3]

The only other issues will be the body corp - rent might be $530 a week but the body corp could be $3000 p.a

That would be definitely the case re body corp fee. My sister looked at an apartment in Essendon and the body corp fee was around $3.5k pa