investment in meriton apartments

[giraffez]

Hi all

I'm a newbie here. I'm planning to buy an investment property in hornsby, one of the apartments by Meriton.

Now, I've heard a lot of bad things about Meriton - especially people have been telling me that the Meriton apartments in waitara just on the other side of Hornsby has dropped in value because of "problems" with Meriton workmanship... there are plumbing and noise issues..... So now, I'm a bit hesitant in buying meriton.

My brother in law used to live in a meriton apartment and say the quality is average and there were a bit of problems

1) Is there potential in Hornsby area for renting out? There seems to be heaps of apartments there.
2) Meriton has offered a 5% rental guarantee which works out to be around $480 for a 2 bedroom, 2 bathroom and car space. It has swimming, gym and lifts so strata is looking at the $800 mark. I've been told this figure ($480) is usually marked up to lure people into buying. I've made a few enquiries with the real estate and their gut feel is rental is probably around $430 pw. Should i settle?

 

[The Y-man]

2) Meriton has offered a 5% rental guarantee which works out to be around $480 for a 2 bedroom, 2 bathroom and car space. It has swimming, gym and lifts so strata is looking at the $800 mark. I've been told this figure ($480) is usually marked up to lure people into buying. I've made a few enquiries with the real estate and their gut feel is rental is probably around $430 pw. Should i settle?

1. Check the fine print of the guarantee. i.e., how long for, when can it be revoked etc etc

2. get body corp minutes and financials - check details closely for issues

3. WIll the rent be ratcheded?

Cheers,

The Y-man

 

[grossreal]

hi giraffez
couple of things
1 check those strata fees mr trigg likes to sell of the management rights and the fees start low to get the people in and then they do a very sharp incline.
so checka couple of meritons around and you will find 1800 per quarter is nearer the mark
2.hornsby for me is a battle field and unless you have a hard hat and a very strong heart its not a place for beginers there is alot of units up there and the banks are holding alot of stock
3 quality is what you pay for
if you want quality then this type of builder is not going to deliver and you need to look at the smaller type of builder mr trigg builds to a price and for that price you do get value. now that price is not what you have or are going to pay as mr trigg keeps 51% of his developments and some of that quality or price is held in his units also.
we are not talking about shoddy workmanship its just cut to a price.
last but not least should you settle.
the answer is very simple
is it something that you can sit on for say 10 years.
do you want to buy in hornsby.
will the area grow
is it a place to sink and forget.
I don't know the answers from your side of the fence so i won't try to give advice.
but from my side of the fence
1 no i can't wait 10 years I want growth or potential growth 1st year
2.no I don't invest in hornsby as there is to much there and the growth cycle looks like a heart attack and if it was on a monitor the patent would be dead.
3. for me not for a long while and will be one of the last to move.
4. sink yes forget no.
but ha thats just my view of the area.
and my .002
one little question you said that you are looking at investing in hornsby and then you said should you settle there is a big difference between looking and exchanging and if you have exchanged then my view could change as there are alot of other things that come into play if you have exchanged.
as thats a very different ball game

 

[Raddles]

Hi there
Cherrypro more recently had a thread about an apartment in Hornsby with Meriton which was causing her grief - you may want to check that out.
My brother had a Meriton apartment at Strathfield which he got out of.
The problem with these apartments is they are all very alike - there is no point of difference which when it comes to selling means you are probably limited to the same price others in the building are offering.
My understanding is Meriton controls the body corporate - so you have to go along with what they want - which can be a problem if they are not doing the right thing.
Anytime there is a rental guarantee in the equation - that should ring warning bells. There is obviously an oversupply in Hornsby.
thanks

 

[giraffez]

Thanks all for your suggestions. For a beginner investor, which area in syd do you reckon has growth potential.
Also, would you buy a "brand new apartment" just to rent it out? To me, it doesn't make much sense that i'm working my butt off to support a unit that someone else could live in
If i don't buy now, i won't be able to afford in a few years time at the rate interest rates are rising!

 

[FrankGrimes]

I would steer clear. Hornsby has no shortage of units. If you have you heart set on a unit in Hornsby then consider something cheaper than Meriton (Maybe something 10 years old or so in a smallish block, not a 10 story ghetto), for the price of the Meriton Apartments you can almost get a house in say Asquith, Mount Colah, Berowra etc. Which would offer much better value.

There is nothing wrong with units but you need to be a bit more selective.. Especially in oversupplied areas.

Just my (humble) opinion - Do your own research

 

[alexlee]

Now, I've heard a lot of bad things about Meriton - especially people have been telling me that the Meriton apartments in waitara just on the other side of Hornsby has dropped in value because of "problems" with Meriton workmanship... there are plumbing and noise issues..... So now, I'm a bit hesitant in buying meriton.

So why are you still thinking of buying it? Surely there are other units in hornsby without the (perceived or otherwise) stigma.

1) Is there potential in Hornsby area for renting out? There seems to be heaps of apartments there.
2) Meriton has offered a 5% rental guarantee which works out to be around $480 for a 2 bedroom, 2 bathroom and car space. It has swimming, gym and lifts so strata is looking at the $800 mark. I've been told this figure ($480) is usually marked up to lure people into buying. I've made a few enquiries with the real estate and their gut feel is rental is probably around $430 pw. Should i settle?

Giraffe, let's recap. You're thinking of buying into a building built by someone you've heard bad things about. It has high strata fees, and you know the rental guarantee is at a level higher than the market rent. Potentially it'll cost the guarantor a couple of thousand a year. Why are they doing this? What advantage are they getting?
Alex

 

[FrankGrimes]

Also, would you buy a "brand new apartment" just to rent it out? To me, it doesn't make much sense that i'm working my butt off to support a unit that someone else could live in
If i don't buy now, i won't be able to afford in a few years time at the rate interest rates are rising!

You are buying on the assumption that the unit is going to go up in value over time. Eventually the rent should outstrip the interest costs and will cost you very little. Just buying for the sake of buying is pointless, you are buying for capital growth.

Now you have to ask yourself – how much will this Meriton apartment be worth in 10 years?

 

[alexlee]

Thanks all for your suggestions. For a beginner investor, which area in syd do you reckon has growth potential.
Also, would you buy a "brand new apartment" just to rent it out? To me, it doesn't make much sense that i'm working my butt off to support a unit that someone else could live in
If i don't buy now, i won't be able to afford in a few years time at the rate interest rates are rising!

You do know that in theory, rising interest rates means property won't rise as much, if at all, especially if we have a recession? By your logic, property should have become more and more affordable from 97 to 2004 or so as rates fell.
Alex

 

[giraffez]

True, all valid points. I guess my number 1 is to achieve tax benefits and number 2 is to hold on to some asset before housing becomes unaffordable for first home buyers

 

[giraffez]

So why are you still thinking of buying it? Surely there are other units in hornsby without the (perceived or otherwise) stigma.



Giraffe, let's recap. You're thinking of buying into a building built by someone you've heard bad things about. It has high strata fees, and you know the rental guarantee is at a level higher than the market rent. Potentially it'll cost the guarantor a couple of thousand a year. Why are they doing this? What advantage are they getting?
Alex

Look at newington. Mervac has issues, security is an issue, strata went up exponentially yet price of it has increased quite a bit.

 

[The Y-man]

Look at newington. Mervac has issues, security is an issue, strata went up exponentially yet price of it has increased quite a bit.

In my opinion, Mirvac units are a different kettle of fish from Meriton's lot....

Cheers,

The Y-man

 

[Property Meister]

in my opinion, anything that has a rental guarnatee or needs one is asking for trouble!!

 

[BayView]

True, all valid points. I guess my number 1 is to achieve tax benefits and number 2 is to hold on to some asset before housing becomes unaffordable for first home buyers

You don't need to buy an over-priced apartment to get that.

Look harder, and you'll probably find an existing house, built in the last 10 years, on some subdivideable land, somewhere in Aus.

 

[giraffez]

which areas should i be looking at?

 

[alexlee]

I think the better question would be, which areas would you be willing to buy in? Are there areas and property types that you would NOT buy? Narrow that list down by price and the type of property you want, and you should have a shortlist.

You can't just ask 'what areas should I be looking at'. You need to state your budget, type of property (e.g. would you go for houses? Units? How old is 'too old'? What areas would you NOT invest in? e.g. would you consider Western or SW Sydney? Do you want a trainline? Views?)
Alex

 

[troyhunt]

I used to live in a Meriton apartment, my wife used to work for them and we recently bought one so I reckon I can make a some reasonably qualified comments

Meriton build to a market and have been pretty institutional in shaping the apartment market as it stands today. They build them quickly and they're not the highest quality (compared to someone like Mirvac) but they're usually not priced at the same point either. Having said that, the quality of developments over the last few years has remarkably improved over what they were building 10 or 15 years ago.

Personally I would not be buying new. Low interest finance arrangements and rental guarantees can cloud judgement in terms of the true underlying value of the property. You need to ask yourself what position you'll be in when these wear off (probably a few years from now).

Case in point; when we did eventually buy a Meriton product (18 months ago in Wolli Creek), it was for nearly 30% under what was paid three years earlier when the product was new. My suspicion is that the honeymoon conditions had worn off and the harsh reality had hit then it needed to be offloaded at a price more indicative of its true value (hopefully below!). Timing in terms of the market didn't help the previous owner either.

Long and the short of it; I believe there are some good Meriton opportunities out there but I wouldn't buy new and make sure you're well aware of all the costs (such as high strata fees).

 

[sydneycider]

As a person who has gone against the general advise / perception out there and went ahead with a Meriton purchase 6 yrs ago, I would definitely NOT do it again.

I bought what was supposedly a higher quality development on the waterfront
in Inner West of Sydney and got sucked into the rental guarantee etc.
As they say, we learn from our mistakes and I'll put my hand up and say I have indeed had my education.

There are definitely quality issues and after 6 years I'm still negative in value by 20K or so, thats without taking into account the $10K I've spent on air conditioning problems.

The strata fees have almost doubled in that period and no capital growth.

Rental wise, there has been constant demand which is good, but relatively high turnover of tenants.

Better ways to spend your money that's for sure.

 

[Lucky88]

hornsby

Hey

I work in the Madison building in Hornsby which is a Meriton construction. This place has a lot of medical services eg, dentists etc and the building was supposed to be custom-made to suit disabled people. Well I am not kidding every other week the lift is broken, the automatic garage door is a hit and miss affair and the air con is always on the blink.

I wouldn't invest in anything built by these people as a result. Meanwhile, back to Hornsby in general. One suburb overlooked but definitely on the move is Berowra. It seems a long way away but all the fast trains from/to Newcastle stop there, the station has just been upgraded, Coles has just built a supermarket there (so obviously realises the potential), yet you can still get a townhouse for well under $500,000 in what is a very genteel little suburb with virtually no crime, with the beautiful Hawkesbury just down the way, surrounded by National Parks that can't be built out. The odd house comes up in the low $500,000s as well.

There are three schools, and buses as well. Some top private schools are just down the F3, Parramatta is half an hour a way, the city 1 hour - less in non-peak. Plans for a tunnel from the end of the F3 to the M2. I believe the Real Estate Agents undervalue in this area as they have been around for way too long. No I am not a real estate agent.

 

[giraffez]

Thanks all for your replies. I think you have convinced me. Will look elsewhere. Seems like Meriton has a bad reputation