First IP - just can't make a decision :(

Hi guys.

I am currently looking for my first IP and am quite keen on Coburg and am also considering St Kilda (obviously amongst a few other areas).

Looking at the 450k and under mark.

I've found that the more areas I research, the more indecisive I become. Presently, I'm focusing on the Coburg area and St Kilda and surrounding areas - trying to decide which one to stick with.

I am considering Coburg due to close proximity to the city, transport etc. as well as the Melbourne 2030 initiative plans. Also, low vacancy rates. I feel that this area may have good CG in the years to come.

St Kilda - appealing due to higher rental income (generally from what I've found) and location, but not sure about CG in this area.

CG is one of our main priorities, but good rental income will really help as I am currently a part time student. I plan to use the equity from this IP to then go on to buy second IP in the next couple of years or so. I intend to hold my properties and go on to build a portfolio.

I have really tried to thoroughly research many areas, and for one reason or another, these two are high on the list. Coburg is probably a better option in terms of CG from what I've read - but just unsure on this.

Really ready to buy my first IP, but hitting a wall in terms of which specific area. Both have their pros and cons, but if anyone can please share an opinion, it would really help. I am quite young and inexperienced when it comes to investing, so your opinions (positive or negative) are very valuable to me.

Not nervous at all about purchasing, just nervous that it will end up that I could've made a better decision. Also, any suggestions regarding other areas in Melbourne to consider would be great.
 
Forgot to mention: I'm sure there are many other areas that may produce good CG, but I feel it is in my best interests to stick to relatively "safe" and established areas such as these.

Hope that makes some sort of sense :S

Edited to add: Also thought I should mention that I'm looking for a townhouse in Coburg, and more than likely an apartment in St Kilda (due to financial limitations, not choice).
 
There are plenty of more experienced players on here than me (who may contradict this)but if i was starting out, like you are, and you dont have a big income(ie part time student), then cash flow may be your biggest hurdle. especially when you come to go for number 2.

Look at Net yield, apartments will usually have a higher gross yield but have body corporate fees, or maintenance funds to deal with.

If it all came out pretty even i would go with Coburg. The more land you control the better IMHO.

Oh and the nerves around "could haves", you will learn with your experience and it gets easier each time you jump.
 
Mel22, I don't think you'll go too far wrong either way.

Whatever you get in ST K must have a car park allocated.

If it came down to it, I'd go the townhouse in Coburg.

Cheers,

The Y-man
 
On the balance of choosing between a 2 bedder apartment in St Kilda and a 2 bedder townhouse in Coburg, I'd go the townhouse in Coburg given scarcity value. There would be a finite number of townhouses in Coburg, but as you know, a stack of apartments in St Kilda to choose from.

Also, I believe CG would be stronger in Coburg as I am a huge advocate of the rise in the northern suburbs within the next couple of decades. I practiced what I preached by buying a house last year in Brunswick.

Sticking to my belief in the northern suburbs, have you considered Preston, Preston West, Reservoir and Coburg North? Rental $ may be weaker than Coburg, but you will easily find tenants and if you can do split rooms, the better. There are a lot of mainlanders buying and renting in Coburg, Preston and Preston West in particular so better act quick. I know, because I am Chinese myself and have many mainlander friends. Of course, property could all crash but I firmly don't believe it will.

Can you push your budget to around $550K if need be? Can see if you can get a house in Preston or Preston West. I think $550K is enough for a smallish house in Coburg as well (although you may need to look closer to Bell St). Think anything close to Moreland Road would be really pushing it.
 
Mel,

I agree with Deewha. We've just purchased an IP in Pascoe Vale South, and leased it at 30% more than expected within 48 hours. Very short supply and I belive the CG will be very, very strong (more than an appartment in ST Kilda, IMO).

As others have said, you can't go wrong wither way, but my money is with the northern suburbs.

Also, Y-man has hit on a very important point, if you choose stK, a car park allocation is a must.

Cheers
AV
 
On the balance of choosing between a 2 bedder apartment in St Kilda and a 2 bedder townhouse in Coburg, I'd go the townhouse in Coburg given scarcity value. There would be a finite number of townhouses in Coburg, but as you know, a stack of apartments in St Kilda to choose from.

Also, I believe CG would be stronger in Coburg as I am a huge advocate of the rise in the northern suburbs within the next couple of decades. I practiced what I preached by buying a house last year in Brunswick.

Sticking to my belief in the northern suburbs, have you considered Preston, Preston West, Reservoir and Coburg North? Rental $ may be weaker than Coburg, but you will easily find tenants and if you can do split rooms, the better. There are a lot of mainlanders buying and renting in Coburg, Preston and Preston West in particular so better act quick. I know, because I am Chinese myself and have many mainlander friends. Of course, property could all crash but I firmly don't believe it will.

Can you push your budget to around $550K if need be? Can see if you can get a house in Preston or Preston West. I think $550K is enough for a smallish house in Coburg as well (although you may need to look closer to Bell St). Think anything close to Moreland Road would be really pushing it.

what kind of mainlanders - the ones who make cash offers? i''ll be keen to go for inspection there this weekends.
 
what kind of mainlanders - the ones who make cash offers? i''ll be keen to go for inspection there this weekends.

Yeah, all money from China. Australian property is still one of the best ways to 'get' their cash out of the country.

You would be amazed at some of the auctions that took place last year in suburbs like Coburg and Preston. 3-4 mainlander bidders belting the daylights out of each other at the one property. Funny thing is it almost always starts with the token white couple bidding to a particular price then getting owned and the mainlanders then come in and finishes off. A lot of mainlanders don't muck around when they bid...I've seen the bid incrementals rise at a steady $1K then all of a sudden, some random Shanghainese women goes $20K and takes it. It is amazing!

There is a large Chinese community in Preston and Reservoir, so naturally it would attract a lot of mainlander interest.
 
Thanks for the replies.

I researched myself to death, and am very keen on the North.

Your replies have made me confident that my research wasn't totally off the mark.

Very much appreciated.

Now back to the search for the ideal property. I will most likely come running back for advice/reassurance when I'm ready to make an offer..ha.

My nerves are slowly developing into excitement..thanks again for the replies, they've been a HUGE encouragement.
 
You're doing great, Mel22. Trust your instinct. It won't let you down. You've done the research, which is awesome. Others just ask "where should I buy" and wait for the answer to be forthcoming.
You're instincts have led you to research the areas you have and you already knew which area was best before you even posted :)
Those same instincts will guide you the right deal. You will know it when you see it, then you can come here and get some support before you make a commitment.
 
Oh.... you were looking for that sort of property! :eek: Yes, well I believe the Fawkner Cemetary is much larger than the St Kilda one....

Sorry to hear of your passing...

The Y-man

Ha ha. Yes, but St Kilda is closer to public transport Y-man ;) Never ending decisions it seems!

And thanks for the encouragement Rob, I read your story and found it inspiring..congratulations. I only hope to do so well one day.
 
I'm only new back to investing, and looking at 3 purchases in the next 6 months. One of them is definitely going to be in the Northern Suburbs around Coburg. I haven't reaseached as much as others on this site and I am just as scared as you are, but I'm convinced that the Northern Suburbs are going to start moving.
 
Really ready to buy my first IP, but hitting a wall in terms of which specific area. ... Not nervous at all about purchasing, just nervous that it will end up that I could've made a better decision.
Mel22, the great news is that you don't have to make the *best* decision (if such a thing exists); you just have to choose one which is "good enough", then monitor your investment and optimise its performance. Make up your mind now that you won't feel regretful about your decision, because you can't know today which will be the best decision in 5 or 10 years' time. You can only make a decision based on a solid analysis of currently available information.

The other thing to keep in mind is that you aren't buying the suburb; you're buying a particular property. Perhaps look at properties in both areas, and just analyse each deal and look for the particular deal that you think is a "winner". A quirk such as a potential zoning change, opportunity for dual occupancy, a property heavily discounted for poor aesthetics, etc, are all features of individual properties which could make for a fantastic deal, even if it's in the area which has lower CG overall.
On the balance of choosing between a 2 bedder apartment in St Kilda and a 2 bedder townhouse in Coburg, I'd go the townhouse in Coburg given scarcity value. There would be a finite number of townhouses in Coburg, but as you know, a stack of apartments in St Kilda to choose from.
This seems like very sound reasoning to me. Not only can they build an "almost infinite" number of new units in St Kilda, I find that tenants can be quite fickle and everybody wants to rent in the "newest, trendiest" complex. And guess what - you only wear that mantle for a short while, unfortunately.

Obviously a complex with particular advantages - good parking, fantastically central, very large units, etc - may not be subject to these forces.
You're doing great, Mel22. Trust your instinct. It won't let you down. You've done the research, which is awesome. Others just ask "where should I buy" and wait for the answer to be forthcoming.
You're instincts have led you to research the areas you have and you already knew which area was best before you even posted :)
Those same instincts will guide you the right deal. You will know it when you see it, then you can come here and get some support before you make a commitment.
Oh, that Rob Williams is wise. He's exactly right, Mel22. You've done your research, you seem to have a grasp on what qualities you should be looking for in an investment. Your gut instinct is now not just emotive, but based on all the information you've absorbed, and you should trust it to tell you which property is going to be a winner for you. Good luck!

PS "You must spread some kudos around before giving it to Rob Williams again" ;)
 
"Mel22, the great news is that you don't have to make the *best* decision (if such a thing exists); you just have to choose one which is "good enough", then monitor your investment and optimise its performance."

^ That is some great advice, and I will remind myself of this on a regular basis.

This is the property I'm going to inspect this weekend: http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008178560

I'm not sure if links are to be posted here or not?

I have driven by and taken a look, it is one of the rear units in a block of five (I may be wrong there), and my concern is that it faces quite an old house with a dingy old shed that is rather unappealing. However, my reasoning tells me that this shouldn't be too much of a problem, as I have no intention of selling anytime soon. Hopefully tenants won't be to put off by this? Is this a fairly correct assumption or is this something I need to be more concerned about? Having said that, this is a really lovely street overall, with many nice houses and not too many units.

This townhouse is not the best one out of the five, the front ones having nice peaked roofs and street frontage (obviously). This tends to look a little more like a garage in ways :S It is also a bit too far North for my liking.

I am just wondering how this may affect the value of this particular property in years to come? If it isn't one of the best ones, and is so close to better townhouses, is this going to adversely affect future sale or finding tenants? And to what degree possibly?

Sorry for all these questions - I have looked at and inspected so many, and am just after an opinion on this one so that I may determine if I am going through the right thought process when inspecting a property myself.

I really know nothing about this other than the real basics :(
 
Not only can they build an "almost infinite" number of new units in St Kilda, I find that tenants can be quite fickle and everybody wants to rent in the "newest, trendiest" complex. And guess what - you only wear that mantle for a short while, unfortunately.

Thats crap basically.
I like St kilda and in 12 yrs of investing there, I would bet pounds to peanuts that it would win hands down in any CG growth contest with 90% of nth suburbs. Take a walk round acland st and see the dough being spent on new developments. Unforunately, there is not an infinite amount of new units being built as the startup costs/approvals can take years - ask my old man. There is a new one in the opposite luna park but the bedsitters are 460k. Apart from that there is the ordinary henry kaye stuff on the wrong side of barkly st, and thats about it. You need to be in the right part of st kilda and you will get zero vacancy rates. True there is lots of apartments but there is stacks more renters that want to live there. Buy in a 60's block where you can add value and away you go.
 
This is the property I'm going to inspect this weekend: http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008178560

I'm not sure if links are to be posted here or not?

Yeah, you can post the links but we'll all be rude and go and bid against you :D

Mel22, I would personally much prefer something like this:

http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=52756848&s=vic&tm=1264503285

Mainly because:
1. it'll be cheaper (I bet)
2. you don't feel as bad if you land bad tenants
3. scope for improvement
4. probably suits the larger number of the renting demographic in the area.

Cheers,

The Y-man
 
Y-man: That property is also quite high on the list. My father is a tradesman, and we have quite a large network of friends/relatives that are also in various trades - a reno would be easy and cheap. However, we wouldn't be ready to do this until 2-3 years down the track, and the additional rental income from a more modern property would be handy during this time.

The CG aspect of it though is very appealing. I hope to buy a second IP sooner rather than later (if all goes according to plan), and this is definitely the type of property we will be seeking.


Craigb: "UNIT! for your first!? get a scope on what you want to achive, first. and very simple to do up, compared to a home?? "

^ I'm not quite sure what you're telling me here? Sorry. Could you clarify for me please?


Forumite: going up for auction, agent advised 410k - 450k range so we may very well be priced out.
 
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