Investing in Hastings or Frankston?

[purple1310]

My husband and I are looking into buying our first investment property.
We don't have a huge budget. We can probably spend up to $260,000.
Have found a 2brm unit (approx 30yrs old in a block of 5) in an excellent location of Hastings (near transport, main shopping strip and schools, currently rented out at $230 pw.
Price for the property is approx. $225.000 - $230,000. Hastings has had a reasonably good growth in the last 12 months and with the proposed port for Hastings we believed the area to be a good investment. We are looking to keep the unit for long term. However, being a first time investor, we are very wary of making the wrong decision (Hasting hasn't had the greatest reputation in the past).
We have also been looking in Frankston, but the areas we're able to afford would be more likely to be around Karingal area, with the prices being slightly higher and the rent being about the same as Hastings.
But for long term investment are we better off to get a cheap house on a reasonable size block in Frankston/Karingal area for future subdivision, or take our chance with the unit in Hastings, and perhaps with our next property we can look into a house on a bigger block, given the rent on the unit in Hastings is so good, with potential to increase it to 235- 240 pw in the near future. It's a big decision and a scary one, so we are trying to look at all scenarios.

 

[Francine]

I have no idea but I am
very interested to kno the answer. I think I have asked a similar question re Hastings frankstone and geelong and don't remember getting answers . A friend asked these questions and ended up buying in bendigo which is even further from melb city .
I am interested to hear answers too to this .

 

[meconium]

But for long term investment are we better off to get a cheap house on a reasonable size block in Frankston/Karingal area for future subdivision,

Subdivisible land, preferably with a rentable house on it, always beats other opportunities (eg. units etc) hands down. Although the REIV Jun quarter Frankston median is at $370k, there are always a few instances around the Karingal precinct where desperate agents undersell houses for well below the median. If you are vigilant and very lucky you may be able to grab one of these when they come up. But you need to keep your eyes open and also ring around the local agents (they vary in reliability, to put it politely).

Remember, if you want to subdivide you will need to buy something with a minimum land size of 600sqm. If you are really lucky you may find a situation where you can retain the existing house and build at the back without needing to demolish anything. Voila! Two houses where there was once just one! Its increasingly rare to be able to do that anywhere in capital city Australia, let alone in a beachside suburb with major infrastructure.

I'm doing the above myself BTW. On the lookout for one more before the bank puts a stop to my buying.

 

[adamco]

If The Option Is To Go For Unit

If I Had To Buy A Unit I Would Buy In One Bedroom In The Iner City Suburbs Such As South Yarra ,hawthorn ,city Or Any Other Suburbs Very Close To The City .

 

[meconium]

If I Had To Buy A Unit I Would Buy In One Bedroom In The Iner City Suburbs Such As South Yarra ,hawthorn ,city Or Any Other Suburbs Very Close To The City .

The bigger banks are becoming more wary when lending for inner city units. That should say something. The banks often require purchasers to have a larger deposit because they view innercity units to be riskier. Not a problem if you have a big deposit. If I were single I'd love to live in the innercity. But IMHO the innercity is fully priced and there's not much CG to be had at current prices.

Here are some Frankston links for cheapie houses. I usually try to order them from lowest to highest prices and concentrate on the cheap ones first.

http://www.domain.com.au/Search/buy...earchterm=Frankston&displmap=0&sort=price-asc

 

[meconium]

Here is some info about the Frankston median:

From the REIV (the most reliable source). Th following link gives you the median price for whatever was sold in the last quarter: http://data1.reiv.com.au/trendchart/default.aspx

From what was up for sale every month:
http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp&s=vic&u=frankston

Using the median wisely will ensure that you not pay too much for whatever you want to buy. The basic rule - buy cheap, well below the median. Get it right and this is the suburb that will someday give you the sort of capital gains you desire.

 

[zed_kid]

A 1br unit recently sold for 490k in SY. It was really nice though

 

[meconium]

The latest median figures for Frankston will be available next week. Investors should use this number when deciding how much to pay when buying in Frankston.

The golden rule is "NEVER OVERPAY"

There is still lots of cheap stuff available in Frankston ie. rentable homes on development sized blocks, selling well below the median.

 

[Magic Bullet]

I agree with meconium

There is still lots of cheap stuff available in Frankston
Having lived on the Peninsula for 7 years (in Mt Eliza) before I moved to Northern NSW, I could never understand why Frankston continues to languish. It's bayside, has all the amenities, is 45mins to the CBD and on the doorstep of the glorious peninsula. It's got to take off sooner or later.

I was lucky enough to buy an apartment in St Kilda in '87 just before the prices went up exponentially in that suburb and I remember at the time you could buy an apartment in Elwood around $50,000. I'm not that in touch with Melbourne prices these days but I'll bet they go for 10 times that now.

Cheers
http://www.ozpropertyinvest.com/gls/2048.html

 

[flyinghigh]

The latest median figures for Frankston will be available next week. Investors should use this number when deciding how much to pay when buying in Frankston.

The golden rule is "NEVER OVERPAY"

There is still lots of cheap stuff available in Frankston ie. rentable homes on development sized blocks, selling well below the median.

Hi, I was wondering where this info will be made available? Is it in a newspaper or website?
Thanks.

 

[steve00]

yeppp

personally for LONG TERM investment i say hastings just cause you can pick up a 4 bedder in there not far from town for pretty cheap, once the freeway goes though an the port is done you'll be on a goldmine.

 

[meconium]

Hi, I was wondering where this info will be made available? Is it in a newspaper or website?
Thanks.

The news that came in today is that the latest Melb median was $601,500, according to the REIV. I'm chuffed at this number as I own cheaper end stuff with good redevelopment prospects.

Mark my words - Frankston is a huge mispricing and can only go up from here.

http://www.reiv.com.au/home/inside.a...=165&nav3=1048

 

[newbyinvestor]

While I love the idea of buying below the median and never paying too much for a property I also think that with such a simplistic approach you can miss opportunities.
For example at the moment I am negotiating on an immaculate 3 bedroom house in the Lakewood Estate and the property is the result of an elderly couple who had nothing better to do than spend time and money improving the place.
Now as far as the Frankston median goes I'm going to blow the budget but when I ask myself a few more questions it makes sense to buy the property.
1: First up the place is tenant ready and it will return a fraction under 5%
2: The house is in a great location and I feel confident it won't let me down
with capital growth.
3: I am purchasing the house for a similar price to others which have sold nearby and from the properties I saw none of them had the finishing quality this place has.
4: I want to go as close as I can to a set and forget investment property. I don't want to know about PM's being a pain in the proverbial telling me the tenant has a list of issues etc

 

[meconium]

While I love the idea of buying below the median and never paying too much for a property I also think that with such a simplistic approach you can miss opportunities.
For example at the moment I am negotiating on an immaculate 3 bedroom house in the Lakewood Estate and the property is the result of an elderly couple who had nothing better to do than spend time and money improving the place.
Now as far as the Frankston median goes I'm going to blow the budget but when I ask myself a few more questions it makes sense to buy the property.
1: First up the place is tenant ready and it will return a fraction under 5%
2: The house is in a great location and I feel confident it won't let me down
with capital growth.
3: I am purchasing the house for a similar price to others which have sold nearby and from the properties I saw none of them had the finishing quality this place has.
4: I want to go as close as I can to a set and forget investment property. I don't want to know about PM's being a pain in the proverbial telling me the tenant has a list of issues etc

How much is it selling for? It sounds like a nice house. Whoever buys it from you in a few years time would want to know if it is on a development sized block - this would justify you paying a premium price for it. If it is less than 600sqm (most Frankston blocks are larger than that) then it may not be deemed suitable for development.

Remember, it is the development sized blocks in Frankston that are most in demand. Many of these have perfectly rentable homes. Some of these are selling for barely half the greater Melbourne median price. Hard to go wrong here.

 

[newbyinvestor]

How much is it selling for? It sounds like a nice house. Whoever buys it from you in a few years time would want to know if it is on a development sized block - this would justify you paying a premium price for it. If it is less than 600sqm (most Frankston blocks are larger than that) then it may not be deemed suitable for development.

Remember, it is the development sized blocks in Frankston that are most in demand. Many of these have perfectly rentable homes. Some of these are selling for barely half the greater Melbourne median price. Hard to go wrong here.

The block is 725 sqm and it gets better. The block has a large frontage and would allow 2 dwelllings to have individual driveway access..
BTW as a sidebar, there seems to be a lot of generalization as far as sub dividing goes, particularly about what a bonanza it is.
Just buying blocks anywhere is OK to a point but location is still a factor in how profitable the exercise of subdivision will be.
Just follow subdivided properties in Frankston and we see for example that subdivided properties in desirable locations usually sell quicker and with less discounting than subdivisions which are being carried out for the sake of subdividing on el cheapo blocks.
There are subdivided properties where atleast one of the dwellings ends up being a renter for a few years until the vendor can find a bunny to buy it. It's not always fast money.

 

[meconium]

Your property seems like a gem and justifies a premium to the current Frankston median. Tempted to pick it up myself, given its size etc.

It's not always fast money.

True. But it beats what the banks pay me to keep my cash in term deposits. And there is safety in land. Basically a secure investment with a developable land component. Can't beat that.

 

[newbyinvestor]

Your property seems like a gem and justifies a premium to the current Frankston median. Tempted to pick it up myself, given its size etc.
I decided a few months ago to walk the beat in Frankston and find out how much more I needed to pay for a gem compared to what I would pay for one of the better ex commision places in Frankston Nth and I was blown away by what a small penalty it really is to grab a more desirable location and a dwelling that will earn more rental income. Not to mention the likely outcome of a sub division down the track.


True. But it beats what the banks pay me to keep my cash in term deposits. And there is safety in land. Basically a secure investment with a developable land component. Can't beat that.

Fair enough.