FHB jitters!! Any tips

Hi all,

Previously I posted that I was looking at OTPs in Canberra and today I was allocated an apartment in a new development today.

I think I will be going for it! :eek:

Any tips for new players?

I am particularly worried that on exchange (in 2 weeks) I will need to hand over 5% deposit and this will reduce my savings. Will this affect my ability to get a loan when settlement comes around? My MB said that I only need to show 5% genuine savings at that point and they will take the deposit I already paid into account. Is this true??

Also should I do my own valuation now before signing the contract? My MB said this was a bit of a waste of time. It will hold no weight with the bank when it's time to apply for a loan. It's the risk I have to take...

I know OTP is risky but in Canberra it does present one of the best ways to get a bit more with your money...

Any hints or opinions appreciated :)
 
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I would recommend you read this thread if you haven't already:
http://www.somersoft.com/forums/showthread.php?t=55459

Who is the development with? How long until settlement?

To be honest $360k seems a bit much to be paying for a 1 bedder - Having said that I have not researched the general prices in Bruce, so I really have no idea. Make sure you have done you research about this though. What are other units / apartments going for in Bruce.

Bruce is a good suburb to invest in, IMO. for a multitude of reasons.

What do you think the unit wil rent for? What are other similar units / apartments in this area renting for?

You do realise that your most likely market (although admittedly not the only market) in this suburb would be uni students, are you happy renting to uni students?

Your mortgage broker is correct about the 5%.

As for getting a valuation done, it really is up to you. I never have, but then I have researched other properties in the areas I have been looking extensively and have a good knowledge of what the places I am looking at should be worth.
 
Just realised my last post may sound a little negative - I did not intend that, Just wanted to make sure you have considered everything. If you have and it all still stacks up then go for it!

Good luck.
 
Who is the development with? How long until settlement?

The developer is Hindmarsh and the settlement is not until end of 2010. So some time away....

That's okay Rugrat I have the same reservations. Bruce is getting built up heavily and I have a fair bit of competition in terms of other apartments if I do decide to rent out. I think I will be living there for at least 3 years or so.

I have a few things in my favour...it's a large unit with a separate study (almost like a second bedroom but no car space) and it has a good aspect.

The price is below the median price for the suburb but I've noticed properties in Bruce hasn't moved much on All Homes. Despite things getting bought up left, right and center in other areas...

Any other thoughts welcome :)
 
Thanks very much Rugrat :)

Actually the one beddie rentals in Bruce is not that bad $350 to $380 per week. Plus I had a look at the share rental ads and while there are some students there is also a good proportion of young professionals.

I would prefer to rent to professionals rather than students of course but that will be a few years into the future.

If I went through with it I would like to enjoy living there first :)
 
its Ok HH , the first place me and my, bought for 95K we were s h i t t i n g our selves, so i supose its normal , good luck ,
 
Also should I do my own valuation now before signing the contract? My MB said this was a bit of a waste of time. It will hold no weight with the bank when it's time to apply for a loan. It's the risk I have to take...

Most times with OTP, the val can't done until the thing is complete - which makes it a bugger, because you lock in a purchase, and there is a risk that the completed product doesn't come up to the value you signed for (i.e. you sign for $300k, but the place is only valued for $250k, the bank may only lend you 80% of $250k instead of 80% of $300k.... and you need to make up the difference.

Cheers,

The Y-man
 
Thanks for the support CraigB.

I think it will be okay as I don't think I've overpaid for this place.

Most one beddies for sale at a comparable price are smaller than the place I'm looking at (79 square metres).

Plus I look at the kinds of established flats at my price range and I think I would be happier living in something new :)

The only thing that worries me is the study which is big enough as a second bedroom but has no window. I imagine it may limit future rental prospects as it can only be advertised as a one bed + study rather than a two bedroom...Any thoughts?
 
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Most times with OTP, the val can't done until the thing is complete - which makes it a bugger, because you lock in a purchase, and there is a risk that the completed product doesn't come up to the value you signed for (i.e. you sign for $300k, but the place is only valued for $250k, the bank may only lend you 80% of $250k instead of 80% of $300k.... and you need to make up the difference.

Cheers,

The Y-man

Very important to take note of the above. I've had clients who have had no problems after buying OTP and a couple who have struck hurdles. one was so unlucky that onsales were permitted and someone obviously had to bail out 3-4 weeks prior to completion. They sold under FMV and this affected the valuation as places were identical.

Again this isn't meant to scare you off but just provide food for thought so you can make an informed/educated decision :)


Regards
Steve
 
The only thing that worries me is the study which is big enough as a second bedroom but has no window. I imagine it may limit future rental prospects as it can only be advertised as a one bed + study rather than a two bedroom...Any thoughts?
That is a shame...not my cup of tea.
I'm not sure about the legalities but desperate uni students will live in anything thats well priced.
 
I'd love to have the capital to stick an IGA in at Bruce. Belconnen is a long way to go and not many people like going to large shopping malls for just bread and milk.

I'm surprised noone has done it yet....It'll be a good cash based business.
 
I'd love to have the capital to stick an IGA in at Bruce. Belconnen is a long way to go and not many people like going to large shopping malls for just bread and milk.

I'm surprised noone has done it yet....It'll be a good cash based business.

I'm a little surprised this hasn't happened either - might be a council issue? An IGA or little corner store of some description has tthe potiential to make a killing out there, wht with the uni, CIT, the hospital etc.
 
Very important to take note of the above. I've had clients who have had no problems after buying OTP and a couple who have struck hurdles. one was so unlucky that onsales were permitted and someone obviously had to bail out 3-4 weeks prior to completion. They sold under FMV and this affected the valuation as places were identical.

Again this isn't meant to scare you off but just provide food for thought so you can make an informed/educated decision :)


Regards
Steve

Thanks Steve for the heads up. That does sound like a pretty bad situation. I guess that could happen in any OTP development...The only way to address that risk is to not buy OTPs?? I can't imagine any OTP not allowing onsales...
 
i added the best tiles and curtains, the land scaper did the water feature, this person spent an extra, 40k on their unit, so they would be the first to rent it, as it happened, it was the last as the rent was so much heigher than the others, due to the extra's. just somthing to remember,
 
Most times with OTP, the val can't done until the thing is complete - which makes it a bugger, because you lock in a purchase, and there is a risk that the completed product doesn't come up to the value

Cheers,

The Y-man

Actually valuers can easily value units off the plan I did hundreds in the boom in Melbourne.

All the valuer needs is a floor plan and the specifications - a list of the inclusions and finishes etc.

Remember the valuer should be comparing the finished product to sales of second hand units in the area. This is the true test of market value.

For apartments valuers primarily look at rates per square metre.

At 79 sqm (I hope you are not buying the marketing hype and including balconies in that floor area) it is a huge one bedder, much larger than many of the 2 bedders I have inspected in Melbourne ... One bed is typically 50-60sqm.

Yours works out at about $4500 per sqm. - I have no idea if this is expensive or cheap.

As an aside... how easy do you think it will be to rent out the unit without a carpark?

cheers

RightValue
 
Actually valuers can easily value units off the plan I did hundreds in the boom in Melbourne.

All the valuer needs is a floor plan and the specifications - a list of the inclusions and finishes etc.

Remember the valuer should be comparing the finished product to sales of second hand units in the area. This is the true test of market value.

For apartments valuers primarily look at rates per square metre.

At 79 sqm (I hope you are not buying the marketing hype and including balconies in that floor area) it is a huge one bedder, much larger than many of the 2 bedders I have inspected in Melbourne ... One bed is typically 50-60sqm.

Yours works out at about $4500 per sqm. - I have no idea if this is expensive or cheap.

As an aside... how easy do you think it will be to rent out the unit without a carpark?

cheers

RightValue

Thanks RightValue. I didn't think of it like that and so very helpful to know :)

I think I will pay for a private valuation before signing the contract. Even if it holds no weight with the bank it will make me feel better knowing that it is comparable to current market values.

Yes it is quite large :) And the plan states that the 79 square metres is just living space and it will include another 14 square meters for a balcony. So I think it is more comparable to a two bedroom unit in some respects.

The unit has one car park and I have seen other two bedders rented out with just one...

A bit of good news. I had a good look around Bruce yesterday. There was a two bedroom (71 square meters) in another development that was selling for $372K (off the plan too) and 1 carpark! Now my deal is not looking so bad. This development has pretty much sold out its share of two bedders.

Will continue with the DD.
 
Hi all,

Just wanted to say thanks for your advice over the past week. I exchanged contracts yesterday so now full steam ahead with accumulating savings and staying positive :)

Thanks again.
 
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