Now you make me feel bad, mine will be in a complex of 5 building and total 500+ units, plus a pool and a gym and elevators (strata fees!!)
But yeah, the size of the complex doesn't sound bad
Buying OTP Apartment for Living
- Thread starter Bruc3
- Start date
Now you make me feel bad, mine will be in a complex of 5 building and total 500+ units, plus a pool and a gym and elevators (strata fees!!)
But yeah, the size of the complex doesn't sound bad
OTP v AC
hi Bruc3 let me give you a really contrary view here ( & its not meant to talk up OTP buys guys): I am a developer & I can tell you that if this boom continues & the developer holds back some stock for release (i.e. they have deep pockets) especially the better units in the block then it is quite possible that you could pay more by waiting till completion (of that building); illustration is in 2004 I developed 18 apartments in regional NSW & sold all before completion; had we held some or all back from OTP sales we would have finished way in front of where we did on prices achieved during OTP marketing; not complaining mind you but the point is that the OTP buyers were the winners. I know its a different time & place all you sceptics but it could happen where you are looking given certain market conditions.
good luck!
hi Bruc3 let me give you a really contrary view here ( & its not meant to talk up OTP buys guys): I am a developer & I can tell you that if this boom continues & the developer holds back some stock for release (i.e. they have deep pockets) especially the better units in the block then it is quite possible that you could pay more by waiting till completion (of that building); illustration is in 2004 I developed 18 apartments in regional NSW & sold all before completion; had we held some or all back from OTP sales we would have finished way in front of where we did on prices achieved during OTP marketing; not complaining mind you but the point is that the OTP buyers were the winners. I know its a different time & place all you sceptics but it could happen where you are looking given certain market conditions.
good luck!
i think it boils down to more like demand vs supply.
anybody who bought anything in 2004 would have made money during the property cycle rise.
anybody who bought anything in 2004 would have made money during the property cycle rise.
Nope, I have been renting long enough and its due time to buy. I get tired of moving around all the time. Plus kids will be coming in near future and would like to have our own place by then.
The plusses of OTP are that you get to choose the unit you want in the building (if you're an early buyer), you may have limited scope to customise it and you do lock the price in. If it's going to be a long term PPOR then capital gain may not be so important to you, though it's a factor if you want to use equity to finance IP down the line.
My experience has been unfailingly poor. Two Central Equity apartments in Melbourne CBD bought OTP in 2000 and 2003 (I lived in the UK at the time so was subject to FIRB), each sold after seven years, lucky to get my money back (significant holding costs in the meantime) and my home now (449 units x 43 storeys) bought new when just completed in 2007 would now sell for just a little more than I paid - some in our building have resold twice with the price dropping along the way. When I bought the developer rebated half the stamp duty - done this way, I guess, to keep the higher price on the official record.
IMO key factors for OTP poor performance include overseas OTP buyers only being able to sell to Aussie buyers and people only realising the effect of OC levies after completion - I pay around $8K, would be around 20% of the rent if I was letting. The legal position has changed somewhat since 2005/6 but our developer locked our OC into highly unfavourable contracts, probably getting kickbacks in return. Most of these have been unwound, but at great expense and only because certain OC committee members have put thousands of hours into pursuing this.
Ultimately it's your call: going OTP is a gamble, but so is waiting and buying down the line. But if you were to rent in the building with a view to buying after a year or two, you'd then know exactly what you were getting in terms of building quality, management, OC levies etc.
My experience has been unfailingly poor. Two Central Equity apartments in Melbourne CBD bought OTP in 2000 and 2003 (I lived in the UK at the time so was subject to FIRB), each sold after seven years, lucky to get my money back (significant holding costs in the meantime) and my home now (449 units x 43 storeys) bought new when just completed in 2007 would now sell for just a little more than I paid - some in our building have resold twice with the price dropping along the way. When I bought the developer rebated half the stamp duty - done this way, I guess, to keep the higher price on the official record.
IMO key factors for OTP poor performance include overseas OTP buyers only being able to sell to Aussie buyers and people only realising the effect of OC levies after completion - I pay around $8K, would be around 20% of the rent if I was letting. The legal position has changed somewhat since 2005/6 but our developer locked our OC into highly unfavourable contracts, probably getting kickbacks in return. Most of these have been unwound, but at great expense and only because certain OC committee members have put thousands of hours into pursuing this.
Ultimately it's your call: going OTP is a gamble, but so is waiting and buying down the line. But if you were to rent in the building with a view to buying after a year or two, you'd then know exactly what you were getting in terms of building quality, management, OC levies etc.
Yeah that is an option, however like you said you would be limited to the choices of the Apartments by then.
And yes, I do agree it is a bit of a gamble both ways, either buying OTP now or established next Year once its complete. Right now I am definitely leaning more towards OTP because I know the current price I can afford and likely to be able to cover the valuation difference. Also I do intend to live in it permanently if I can else at least 10+ years or so before I would consider turning it into a IP.
Not necessarily . Mirvac , when they started had a business model where they deliberately priced their units under market value so they could sell everything upfront to mitigate their risk .
We've bought an OTP in Brisbane that appeared to us to priced around 50k under market price ( our observation prior to seeing it ) When we met and talked to the developer he raised this as a point without us mentioning our observation. He raised the mirvac story ( which I was already aware of ) .
We've also seen OTP's in sydney which also seem good value in the market at the time .
Cliff
Well if it sells for that price that's the new market value isn't it?
Not if you can find comparable sales for 50 k more ...
Just looked to see how prices are tracking in dee why . Daughter bought an OTP late last for 425 k.
At that stage I couldn't find any comparables under mid - high 400's . Currently nothing under around 510 .
There are times when you'd be an idiot to buy OTP , and there are places wher I wouldn't buy OTP , and most specific blocks don't offer good value , but there are times when OTP can be a very good investment .
Cliff
