docklands rents

Gday

For all of you out there who think that Docklands apartments are over supplied.....Well, heres some information for you from someone that actually owns 2 apartments down there.....

I personally own 2 Docklands apartments. One is a fully furnished 1 bedder with a carpark and and its rented out for 6% net for the next 2 years - $22,500 p/a - I bought this apartment last month for $370k, and i just had it valued for $420k by the bank, so i think thats a pretty good deal too!

And i also have owned the other one bedder with a carpark in Docklands for over 3 years now, and it has never , "ever" been without a tenant!!! I just got a phone call from my property manager today as the 12 month lease is up , and before he has even had a chance to advertise for a tenant, he has already got another couple lined up to rent it already as of today, pending my approval of course, and my previous tenant hasnt even moved out yet !! The previous rent was $310 p/w, and the new couple are prepared to pay $330 p/w, which is a 7% increase on last year, and it will return 4.5% gross, or about $17k annually, which is a fairly good return for Melbourne at the moment, and totally acceptable by my standards. I still have the option of furnishing this one too, but i don't know if i will bother as yet....

So for all the people out there saying that there is an over supply in Docklands, they are ill informed and they don't know what they are talking about! Also, the building complex i have bought in ( Watergate ) is running at an occupancy rate of 96%, so out of 350 apartmetns in total, there is only about 14 that are vacant. And this information came staight off my Body Corporate Minutes Meeting that was sent to me, so it is 100% correct...

So in conclusion, i still am 100% convinced that if you can hold onto a Docklands apartment for another 5 - 10 years, you will be laughing all the way to the bank ! If you have to sell it in the next 2 years, it could be a different story , i admit!

Cheers

Lozza
 
Lozza, what do the body corporate fees and council rates look like for your $400k apartment? What is your net cashflow on it?

What would you say to someone who said houses (or small blocks) would have better returns based on the fact that in 10 years, the Docklands apartment will be older and you have few ways to add value. On the other hand, you can subdivide a house block, renovate a small block apartment, etc?
Alex
 
alexlee said:
Lozza, what do the body corporate fees and council rates look like for your $400k apartment? What is your net cashflow on it?

What would you say to someone who said houses (or small blocks) would have better returns based on the fact that in 10 years, the Docklands apartment will be older and you have few ways to add value. On the other hand, you can subdivide a house block, renovate a small block apartment, etc?
Alex

gday

council rates and body corporate rates at watergate are amoungst the lowest in docklands. i am paying about $1k a year for rates, and about $2k for body corp. Trust me, i have looked at all complexes and Watergate is the best value for money by far.. As for cashflow, both are breaking even.

As for other types of investments, i am not against that at all. In actual fact, i am going to buy a house in the Ashburton area or the mitcham area later on in the year, so i think that all investments should be juded on their own merits. As for a better return from buying a house and land....Well, i honestly believe that my return ( Long Term ) at Watergate will be great! Once everything settles down, and more infrastructure is in place . Then the true value of Docklands will be realised.. But i am prepared to wait about 10 years for that. And thats the key isn't it - Long term benifit always beats short term speculation and the hope of a quick profit.



Cheers

Lozza
 
If you're in that 400K range for IPs, why risk your money on a brand new flat in Docklands when u can get a house with land or 2 older flats in a decent suburb.

At least u have potential for improvement/add value.
 
Lvr

Lozza, that's interesting information.

The whole financing issue is another factor for Docklands. When you purchased, what LVR did you have on your loan if you don't mind me asking?

For example, if you need at least 20% deposit, that makes the IP decision more problematic when compared to an area where you can borrow 90% or more (serviceability issues aside)
 
Buzzlightyear - 80 / 20 lend ratio, which is standard.

Units4 me - Why would i buy a flat in another suburb when i can get higher rent in docklands ? - As for risks of future capital growth, well, i consider Docklands as a high growth potential area within the next 10 years, so there is no more or less risk than anywhere else as far as i am concerned. ANd if you read my post, you would realise that i bought my unit for $370, and i just had it valued for $420 by the bank, so there is already $50k equity growth already - try and beat that !

Willy008 - I dont really care how many are holiday let, as long as mine is let, thats all that matters to me - but i think that only a minority would be holiday let anyway as the demand for rental in Docklands is high - Why would my property manager already have another tenant lined up , willing to pay $20 per week more before he even had to advertise? ( think about it ) ....

cheers

Lozza
 
I think you will find the vacancy rates all around inner Melbourne are improving at the moment. Docklands is certainly not the only place where vacancies are low.

You also wouldn’t want to have all your eggs in the one basket either. :) I’m certainly not anti docklands but Melbourne is a big place with lots of great investment opportunities out there. Docklands is only one small area, with a long way to go.

http://www.theage.com.au/news/business/apartments-flat-in-market-terms/2006/06/15/1149964673117.html
 
Ruby said:
I think you will find the vacancy rates all around inner Melbourne are improving at the moment. Docklands is certainly not the only place where vacancies are low.

You also wouldn’t want to have all your eggs in the one basket either. :) I’m certainly not anti docklands but Melbourne is a big place with lots of great investment opportunities out there. Docklands is only one small area, with a long way to go.

http://www.theage.com.au/news/business/apartments-flat-in-market-terms/2006/06/15/1149964673117.html

Ruby is right! It's definitly not just the Docklands experiencing low vacancy rates and higher rents - it's most of inner Melbourne! We're trying to find a place to rent now (we've decided to rent out our apartment in South Melbourne because of the higher rents people are willing to pay - and have had no problem in that regard) but finding a place for ourselves has been extremely difficult! Most of the inspections we've been to have had over 20 people viewing, and numerous applications put in. We've been searching the general inner 5km radius of the CBD.

Cheers,
Jen
 
JenD said:
. We've been searching the general inner 5km radius of the CBD.

Cheers,
Jen


We may have a vacancy very soon (I hope) - in the process of evicting non-rent paying tenants....

Cheers,

The Y-man
 
A lovely 2BR apartment in very cosmopolitan Prahran with off street parking, bathroom (shower over bath) with laundry facility, sep toilet, BIR in both, security screens on windows.... (I wonder if that is a good enought spiel?) :D

Cheers,

The Y-man
 
lozza said:
Buzzlightyear - 80 / 20 lend ratio, which is standard.

Units4 me - Why would i buy a flat in another suburb when i can get higher rent in docklands ? - As for risks of future capital growth, well, i consider Docklands as a high growth potential area within the next 10 years, so there is no more or less risk than anywhere else as far as i am concerned.

Some banks are willing to lend to 100% without extra security for suburban homes. Which means they're reading extra risk into Docklands (correctly or not) if they are only willing to lend to 80% LVR. If you're just starting, there's a big difference between 10% deposit and a 20% deposit (probably a year or two worth of savings, at the $370k purchase price you mentioned).

For that sort of price, you'd be able to get a house in a decent Melbourne suburb (since the median is only in the $300s), not a unit, surely. A house that you might be able to subdivide, renovate, redevelop in the future, which changes the growth prospects significantly.

Reminds me of that article in the Sydney Morning Herald that quoted a guy who said he couldn't find a decent-yielding unit for his budget of $400k. What an idiot. He could have gone to Harris Park (next to Parramatta), bought 2 x 2 bedroom units for $200k each yielding 5.5% (and that's just on www.realestate.com.au).

But then I'm biased against inner city units. I think that type of tenant is not as dependable (a recession will drive all those young professionals back home or into shared housing) as families who live in houses, too much competition in getting properties rented (100 identical units next to you) and you can't add value (can't renovate, can't redevelop, etc). However, I'm tipping a recession and in a recession inner city and luxury properties go to the wall first. If you don't expect a recession in the short to medium term, inner city might do ok.
Alex
 
You would get higher rents and capital growth off two older well located flats than one docklands flat.
Good lifestyle if you like to live there yourself though.
 
units4me said:
You would get higher rents and capital growth off two older well located flats than one docklands flat.
Good lifestyle if you like to live there yourself though.

I dont necessarily agree, sorry. I think there are plenty of other factors to consider.

Alexee, you seem to be very pesamistic in your views with your last comments. And it is clear that you are biased to inner city units and you have even stated this yourself in your above comments. This opinion is ok, as thats your opinion, and i respect it. I just want to ask you something - Why do you think we are heading for a recession?

Alexee, i see where you are coming from in saying that there is no chance for capital gains with units that all look the same, but i don't agree that rennovating or sub dividing is the only way that capital growth will occur. Firstly, i believe the location of the property is the main driving factor to increase capital growth. The whole capital growth thing is mainly driven by "supply v demand." And i like Docklands because i can see , (with my forsight) that once all the appropriate corporate, retail, and other infrastructure is down there ( in another 10 years) then the true value will be realised. Docklands is a bit different to other aparetments in the way that it is a massive urban renewal project, and the fact is, no other docks around the world that have been re vamped or totally done up have ever failed ! Look at capetown south africa and canary wharf in London as examples. Therefore, i am prepared to bank on a long term gain in a minimum of 10 years with this area. If i was looking for a quick gain, or quick capital growth, i would not invest in docklands necessarily, but i see the long term benifit of the area, so thats why i want to include a few of these apartmetns in my portfolio.

2 very smart investors that are my friends each have 10 Docklands apartmetns, and 4 Docklands apartments in their portfolio's respectively. And i listen to their advice, and i am convinced that having Docklands in my portfolio is the way to go...But i will also diversify for my next 2 properties also.

Finally, there are many different pro's and con's for buying an apartment or a house and land. Both have their advantages, and as i said in an earlier post, i am just about to buy a house in probably the Ashburton area. But buying brand new or "newish" apartments have their advantages too. One, is the fact that there is no stamp duty if you buy off the plan, there is big tax breaks due to the depreciation schedules, and the other big advantage is the fact that the maintainence on a new apartmetn is minimal. My docklands apartments have cost me "$000 in costs in maintainence so far.

If you buy an old apartment, or an old house, you may have to rennovate, you will get bugger all depreciation, and you are likely to have maintainence issues shoprtly down the track. Also, it is statistically proven that if you own a new house or a new apartment, there is more of a chance of higher rent than if you own an older house. so therefore, i believe that having a portfolio of a mix of apartmetns and houses is the way to go.

Also, a few years ago, the LVR ration for docklands was anywhere between 60 - 40 and 70 - 30 -- Now its 80 -20 ! So wouldnt that mean that banks think that its a lower risk than before if they are prepared to lend up to 80% now?

Cheers

Lozza
 
lozza said:
Gday

For all of you out there who think that Docklands apartments are over supplied.....Well, heres some information for you from someone that actually owns 2 apartments down there.....

I personally own 2 Docklands apartments. One is a fully furnished 1 bedder with a carpark and and its rented out for 6% net for the next 2 years - $22,500 p/a - I bought this apartment last month for $370k, and i just had it valued for $420k by the bank, so i think thats a pretty good deal too!

ALozza
******************************
Dear Lozza,

1, Can we know if you have purchased your unit directly from the Developer or from the secondary re-sale markets?

2. Were there price discounts given for your purchases? If so, how much and under what circumstances if we may ask?

3. Thanks.


regards,
Kenneth KOH
 
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lozza said:
Gday

So in conclusion, i still am 100% convinced that if you can hold onto a Docklands apartment for another 5 - 10 years, you will be laughing all the way to the bank ! If you have to sell it in the next 2 years, it could be a different story , i admit!

Lozza
************************************
Dear Lozza,

1. Isn't this the very problem when some "inexperienced"/greedy investors who have over-extended themselves, will have to sell their units at a loss within the first few years upon the unit completion.

2. Are you presently investing for capital growth or for rental yields? What have been the past few years capital growth rate and rental yield rate like for your unit apartments?

3. Thank you.

regards,
Kenneth KOH
 
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lozza said:
Also, a few years ago, the LVR ration for docklands was anywhere between 60 - 40 and 70 - 30 -- Now its 80 -20 ! So wouldnt that mean that banks think that its a lower risk than before if they are prepared to lend up to 80% now?

Lozza

***************************
Dear Lozza,

I agree with you, if the bank has indeed increased its LVR loan for Dockland apartments.


regards,
Kenneth KOH
 
lozza said:
Firstly, i believe the location of the property is the main driving factor to increase capital growth. The whole capital growth thing is mainly driven by "supply v demand."

And i like Docklands because i can see , (with my forsight) that once all the appropriate corporate, retail, and other infrastructure is down there ( in another 10 years) then the true value will be realised.

Docklands is a bit different to other aparetments in the way that it is a massive urban renewal project, and the fact is, no other docks around the world that have been re vamped or totally done up have ever failed !

Look at capetown south africa and canary wharf in London as examples.

Therefore, i am prepared to bank on a long term gain in a minimum of 10 years with this area.

If i was looking for a quick gain, or quick capital growth, i would not invest in docklands necessarily, but i see the long term benifit of the area, so thats why i want to include a few of these apartmetns in my portfolio.

2 very smart investors that are my friends each have 10 Docklands apartmetns, and 4 Docklands apartments in their portfolio's respectively. And i listen to their advice, and i am convinced that having Docklands in my portfolio is the way to go...But i will also diversify for my next 2 properties also.

Lozza
**********************************
Dear Lozza,

What kind of capital growth rate are you expecting for your units in the Dockland in 10 years time? How much do you reckon your unit's market value will be then?

Cheers,
Kenneth KOH
 
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