Commission housing area. Would you buy in one?

[The_Bludger]

Currently looking at an area which has quite a few commission houses. This particular street has 7 commission houses out of 30 and a few streets surrounding this area have a few too.

Area is pretty close to shops and train station, but I'm worried that in the long run, it may be a bad decision. Ie, harder to sell, rent, bad neighbours, not appreciate as quickly, etc.

The suburb I'm looking at is Reservoir, Vic, which is 14km's from the city which also has some lovely parts to it.

What are your thoughts? Would you buy in?

 

[feihong]

Currently looking at an area which has quite a few commission houses. This particular street has 7 commission houses out of 30 and a few streets surrounding this area have a few too.

Area is pretty close to shops and train station, but I'm worried that in the long run, it may be a bad decision. Ie, harder to sell, rent, bad neighbours, not appreciate as quickly, etc.

The suburb I'm looking at is Reservoir, Vic, which is 14km's from the city which also has some lovely parts to it.

What are your thoughts? Would you buy in?

One of my mates bought an ex-housing commission area for 280k (Summerhill Rd) in December 06, and he's laughing all the way to bank now (currently valued at least 380k). Since Reservoir is undergoing massive gentrification, I would think that housing commission area would get cleaned up as well in long run. Perhaps in short term price may not move much as Reservoir as a whole has gone up so much in the last 12 months, but as long as the number stacks up then I'd say go for it.

 

[steveadl]

Hi Bludger, not familiar with Melbourne so can't comment specifically.

One question I would pose - what are the prospects for the area in general? ie. if it's an area that is well located, is it starting to experience development in pockets ie. 2D1U, gentrification, Housing Trust starting to sell off on a decent scale etc?

If this is the case, or looks likely - then you may want to consider the area.

On the other hand, if it's poorly located, and there are plenty of other areas which will be regenerated first before this one - it may be better to look elsewhere.

PS I have bought in areas that fall into category 1 above.

 

[skater]

I've bought many & done well out of them. If there is only 7 of them in the street, what is the problem?

 

[steveadl]

Reading Skaters post I realised I must have skipped over the part in the first post where you said it's 7 houses in a street of 30.

Wouldn't bother me in the slightest. Not sure what it's like in Melbourne, but from memory - even in new developments in Adelaide about 10-15% of lots are reserved for Housing Trust.

The areas where I've bought had much higher percentages than these, or the one you've mentioned with 7/30.

 

[BV]

The_bludger

I generally avoid them because I don't like being involved with entry level rents but as Skater said there is money to be made because there will be less competition and you are likely to have lower holding costs while you wait for the next cycle.

IMHO if you find something of good value go for it.

Cheers

 

[fernfurn]

There is a huge lot of renovation of these properties in Reservoir which has been going on for at least 6 years. Some of these houses come up lovely and with the price of houses in Melbourne, I'm sure they will continue to be sort after so the prices will keep going up. I remember a girlfriend of mine bought an ex housing commission home in Hampton 30 years ago. Wish I had bought one too.

 

[kum yin lau]

Hi, my 1st foray was into genteel neighbourhoods. Fantastic tenants, not so fantastic yields, fantastic capital gains.

Then I bought into housing trust suburbs. Mixture of good & bad. Then tenants, my god, I couldn't believe what I saw. Sold out because I can't deal with it. FANTASTIC cap gains, because the original price was so low.

In fact, the 3 housing trust areas delivered the highest % capital gain. But then, had I held on to the genteel ones long enough, they'd have surpassed the cheaper ones.

KY

 

[oc1]

Currently looking at an area which has quite a few commission houses. This particular street has 7 commission houses out of 30 and a few streets surrounding this area have a few too.

Area is pretty close to shops and train station, but I'm worried that in the long run, it may be a bad decision. Ie, harder to sell, rent, bad neighbours, not appreciate as quickly, etc.

The suburb I'm looking at is Reservoir, Vic, which is 14km's from the city which also has some lovely parts to it.

What are your thoughts? Would you buy in?

Look to the other side of Broadway and the other side of the train station near Coles. Reservoir is a HUGE suburb. One end (Oakhill Estate) is superb while the further you are away from Ruthern Station way it is *****. If that's the area you are looking at you will need to be very very picky, down to the street. My builder mate has put up 5 new townhouses near Ruthern Station and many others have built near there. They have done well and sold with relative ease. While it's an ex-housing commission area it is better than most other sections of ex-housing commission. You can PM me for more info. I live there (the better end though )

 

[buzzlightyear]

Currently looking at an area which has quite a few commission houses. This particular street has 7 commission houses out of 30 and a few streets surrounding this area have a few too.

Area is pretty close to shops and train station, but I'm worried that in the long run, it may be a bad decision. Ie, harder to sell, rent, bad neighbours, not appreciate as quickly, etc.

The suburb I'm looking at is Reservoir, Vic, which is 14km's from the city which also has some lovely parts to it.

What are your thoughts? Would you buy in?

About 10-15 years ago (maybe even earlier), they started selling housing commissions in Preston. The blocks wouldn't have been as large as Reservoir on average and many have been re-modelled, knocked down and new residences built. All the housing commission homes I have seen are relatively basic, very basic design and little or no aesthetic appeal. I would consider only if big enough to redevelop down the track or if you wanted to build your dream PPOR on.

Again the normal DD applies about access to main roads, transport, schools, shopping centres etc etc......

 

[imonmyway]

Look to the other side of Broadway and the other side of the train station near Coles. Reservoir is a HUGE suburb. One end (Oakhill Estate) is superb while the further you are away from Ruthern Station way it is *****. If that's the area you are looking at you will need to be very very picky, down to the street. My builder mate has put up 5 new townhouses near Ruthern Station and many others have built near there. They have done well and sold with relative ease. While it's an ex-housing commission area it is better than most other sections of ex-housing commission. You can PM me for more info. I live there (the better end though )

You are right Reservoir is a very large suburb, I used to live in Oakhill estate a very nice place but all the people from the not so good parts of Reservoir I reckon used to come down there to steal things and do damage. Other then that though it was a good place to live.

 

[oc1]

You are right Reservoir is a very large suburb, I used to live in Oakhill estate a very nice place but all the people from the not so good parts of Reservoir I reckon used to come down there to steal things and do damage. Other then that though it was a good place to live.

Hahahaha.....I have been kept awake a night or two with loud shouting. No stealing though

 

[phil]

I did it in Canberra in 1998. Even though less than than 7 years later, I could have tripled my investment, I sold early because of a few issues with the neighbourhood; but I still would not do it again. It probably sounds a bit snobbish now, but I grew in public housing and I cringe whenever I see government housing stock.

Just my thoughts.

Phil.

 

[Nathan]

I love Dept Housing stock....

means bargain, good potential, and most likely good yeild.

dont see any problems, although be careful of lanways and park facing properties.

 

[The_Bludger]

Thanks for all the replies. I actually though 7 out of 30 houses was a lot. Imagine each household has 2 or 3 brats. That's possibly 20 or so kids running riot and causing trouble in the one street!

To be honest, I don't think many could pick these houses as being commission housing, but I think the general area has a certain stigma to it and potentially it could frighten off good renters. I showed my wife some pics of the property and she thought it was down right ugly. LOL.

Will keep you guys posted on how I get along.

 

[The_Bludger]

The_bludger

I generally avoid them because I don't like being involved with entry level rents but as Skater said there is money to be made because there will be less competition and you are likely to have lower holding costs while you wait for the next cycle.

IMHO if you find something of good value go for it.

Cheers

I don't get it BV. If the house looks ok from the outside, well presented on the inside and is close to amenities, why would this type of property produce entry level rents? It's not in a "scummy" area as such, although I must admit, I have not driven through or walked up and down these streets on a Saturday night, which could say a lot.

 

[steveadl]

To be honest, I don't think many could pick these houses as being commission housing, but I think the general area has a certain stigma to it and potentially it could frighten off good renters. I showed my wife some pics of the property and she thought it was down right ugly. LOL.

Well no, you can't buy a place in an area with a certain demographic and expect to be able to move higher class tenants in. Won't happen. But if the existing tenant class is providing a good return, does it matter?

I'm assuming you are looking at it because the deal/house looks good. If you want the higher demographic, you'd need to buy where they are, and I'm assuming the house prices are higher, and less attractive?

 

[skater]

Thanks for all the replies. I actually though 7 out of 30 houses was a lot. Imagine each household has 2 or 3 brats. That's possibly 20 or so kids running riot and causing trouble in the one street!.

You know, not every housing commission home has kids & not all the kids are brats. It is often only a percentage that are troublemakers.

In my street, there is a mix of approx 1/2 housing dept & half private housing. My house is number 35 & sits not quite halfway, so there are many more houses in my street than the street you are looking at. Of all those houses, there is only 1 house where the kids are brats. They belong to the single mother who has 5. There are also a couple of houses with teens, but they pretty much keep to themselves the same as the private households.

Don't put them all into the same box.

To be honest, I don't think many could pick these houses as being commission housing, but I think the general area has a certain stigma to it and potentially it could frighten off good renters. I showed my wife some pics of the property and she thought it was down right ugly. LOL.

Will keep you guys posted on how I get along.

 

[zee]

this might be a dumb question, but how do you find out/tell it's a commission house? what makes it a commission house? what are its characteristics?

someone please enligthen me.

thank you.

zee

 

[skater]

this might be a dumb question, but how do you find out/tell it's a commission house? what makes it a commission house? what are its characteristics?

someone please enligthen me.

thank you.

zee

If it is owned by the Housing Department.