Buying on main road

[BigDreams]

Hi all,

First post for me . I am after a range of opinions on buying on a main road. The property is a townhouse in a gated community, would be aiming at people looking for an easy commute into the city. The road is three lanes each way with an established green belt down the middle. It is opposite a good shopping centre, near a school, ten minutes from the city (SA), growing area, near transport.

Obviously there are many more factors involved in making a decision but my question is : do a whole lot of good 'ticked boxes' get cancelled out by being on a main road?

Thanks in advance!

 

[Propertunity]

do a whole lot of good 'ticked boxes' get cancelled out by being on a main road?

Have a read of this thread on the same topic. http://www.somersoft.com/forums/showthread.php?t=65896
It also has links to 3 other threads on the same topic. And welcome to the SS forum.

 

[Steve Basin]

Hi Big Dreams,

Not necessarily, what I found was that Buyers and Renters perceptions are different from you and I, as well as from suburb to suburb.
For example.

Buyers or renters that are looking close to CBD, expect that there will be main roads, high traffic etc. As opposed to buyers and renters when looking further out, in the suburban locale, would want a more quieter, peaceful setting.

Never assume anything, it does look like its ticking alot of boxes as a good investment property.

In worst case scenario, you can install sound proof windows, and put that in your advertisement when renting or if you will sell. Put lots of emphasis on the amenities surrounding the home - this is what will be the big winner.

Good luck and I hope this helps

 

[chilliblue]

I personally would never do it.

 

[mary&mat]

I personally would never do it.

Plus one for me on that!

Hard to get out of driveway at peak times, people with animals/kids may be turned off as furkid/kids could get hit on road, noise factor and parking factor for the residents as well as visitors.

 

[Gools]

What sort of traffic on the main road BD?
Are we talking a Port Rd that has lots of trucks or an Anzac Highway that has less heavy vehicles?

Have a look at past sales history for comparable sales to see what the market thinks of main roads.

Gools

 

[ABC123]

main roads

Hi Big Dreams,

I own two properties on a main road and haven't had any concerns as of yet (but they are not three lanes each way). The first property is a townhouse setback enough from the road with other properties in front of it that the sound issue is not so much of a problem. The townhouse is also on a slope and partially built below road level which probably helps. Something that may be relevant in terms of the location of the property you are considering in the gated community?

My second property is on a main road and at the top of a steep hill in a country town and there have been noise issues from trucks coming up the road in the very early hours of the morning (when I lived in it). But I found out that the trucks were more or less a temporary thing due to some construction further up the road. Tenants so far haven't complained. Sound proofing is likely to be a very very expensive option, especially when considering things like double glazing windows, etc. I did look into this for my second property and it just wasn't worth the expense. Type 'sound proofing' into the search function on this site to find a previous discussion on this issue by other people. For me, I felt it was still a good investment because of various other factors associated with the property itself (development potential further down the track) and macro factors leading to good capital growth such as local infrastructure development, population growth, etc.

If noise is going to be an really significant issue you may want to do an estimate of the potential costs associated with a high turnover of tenants. Do a worse case scenario - estimate the increased vacancy rate per year and the cost of doing a new lease every year. You may want to use a spreadsheet or computer program to calculate how this impacts on your cashflow. Weigh this up with all the other factors that will influence capital growth.

Personally, I would avoid buying on a main road unless the other factors linked to capital growth or development potential significantly outweighed the potential cost of a high turnover of tenants. Its easy for me to say because my properties aren't on roads with three lanes each way though.

Thats just a few thoughts I have, for what its worth.

 

[Gools]

ABC, nice write up. Thanks for spending the time on it.
With your main road purchases did price come into your decision at all? Did you look at it and see they were x% under comparable non-main road sales for the area?

It's certainly an interesting topic involving a lot of crystal ball work....

Gools

 

[ABC123]

main roads

Hi Gools,

I didn't have access to anything like RPData for sales data, but I did inspect similar properties nearby that weren't on main roads. Price was one of many factors.

I looked at the general value of the types of properties in the respective suburb/town in relation to comparables in neighbouring areas.

Im no expert, but I think if you can identify an area/suburb going through a mini-boom and buy a similar product in a cheaper undervalued area/suburb next door you are likely to get a domino effect soon enough. Thats certainly what happened with property 1 with a 39%+ increase in only two years (in terms of the median value for units in the area - I haven't had a valuation yet). Yield has been a healthy 5%+.

Property 2 was partially an emotional purchase because it used to be my PPOR. But I also researched the area generally beforehand as I knew it would be an investment eventually. So good history of capital growth, good existing infrastructure, multiple examples of recent development of new properties nearby, lots of examples of town planning to generate a new image for the area, surrounding areas that are much more expensive (so hopefully the 'pimple' effect one day!), good population growth projections, and lots of potential to add value to the property itself and double my income in the future if I want to.

I wasn't worried about the sound issue in property 1, but it did concern me a little with property 2. But so far no problems! Overall, I think both have more positives than negatives.

I don't think its fair or accurate to make a blanket reply to a poster that a main road purchase is either good or bad. I accept it can be both. I wanted to give my two properties as an example of two that I think were good purchases. At the end of the day, I think there are multiple things to consider.

I vaguely recall some research (it was some time ago in API I think) stating that potential tenants were more influenced by location to infrastructure, jobs, schools, etc. It seemed to downplay the impact of being on a main road.

I guess I would counterbalance that by saying no landlord wants to risk having to finding new tenants all the time if they can possibly avoid it.

For me, I would suggest spending as much time as possible with one's own analysis of capital growth / value adding prospects / yield / personal cashflow and weighing it up with the negatives.

 

[Michael Yardney]

Here's an interesting article on why buying on a main road is a no go:
Why main roads are a no go.

 

[Luv2Travel]

Here's an interesting article on why buying on a main road is a no go:
Why main roads are a no go.

That article uses a property in Elwood as an example of location location location. The whole of Elwood has seen pretty decent gains recently from my experience. Are you saying that a property on Ormond Esplanade (main road on the beach) with ocean views would be a no go?

I'm just saying that because yes, main roads are generally a no go, that I accept and agree with. However, I don't think it should be a black and white yes or no. A property may have other things to offer which offset something that isn't positioned on a main road may not have. I know I'd be happy to live on a busy beach road over an inland street in a bayside suburb for example.

 

[ABC123]

main roads

I agree with Biggles.

The article is written by a buyer's agent for Metropole - Michael Yardley's company. Of course a little hyperbole about main roads is good for raising buyer's anxiety about location and generating business for potential property buyers.

Making black-and-white statements about main road properties is just simply misleading.

The risk of over development - That risk isn't just exclusive to main roads. Anyway, some property investment commentators espouse the benefits of investing around Transit Orientated Developments (TODs). Terry Ryder, for example.

One of my main road properties is potentially going to benefit from a reduction in traffic due to a massive tunnel being built under the city to divert traffic.

The article makes exaggerated comments like '..Guaranteed to see the value of your property decline.." - WTF?? Not likely if its in a well-placed area. Lets say inner city close to transport, jobs, and othe infrastructure, for example.

And how about '..less desirable social elements it can attract...'. Pure assumptions and hyperbole. One of my properties (on a main road) is in a town that had a reputation for 'undesirables' but is making a positive transition with lots of local government commitment to infrastructure planning and a new social class moving in. Read any of Margaret Loma's comments on this issue.

(Note: Margaret Lomas and Terry Ryder aren't buyer's agents)

Different types of buyers buy different types of properties in different locations for different reasons. In terms of resale, the fact that the property is on a main road will effect the market value of that property but that doesn't mean it wont benefit from the overall price growth of comparable properties in the same suburb. A property valuer for residential properties will tyically use the sales comparison approach. The value will be influenced considerably by the price obtained for recent sales of nearby and very similar types of properties (regardless of whether the comparables are on the same road). For example, lets say you own an apartment on a main road in a blue chip inner city suburb that has experienced considerable growth for apartments for a range of fundamental reasons (population growth, demand for low maintenance housing, close to infrastructure, jobs, schools, transport, etc). Lets say theoretically that there aren't many other apartments on the same road, but there has been a number of recent sales of very similar comparable properties on non-main roads in nearby neighbouring streets. You are definately going to benefit from the overall high price growth of those other properties in the same suburb, despite factoring into the valuation an inferior market value for the fact that its on main road. In other words, a inferior value due to being on main road is a market reality, but so is the price growth of other comparable neighbouring properties in the local vicinity, most other things being equal.

Renters may very well be put off by a main road. I totally agree. But there may be many other factors to offset this.