Investment near the beach

J

jthunder

Hi,

I'm a newby here. Looking to buy an investment property near the beach and I came across this 2-bedroom property in Mentone. I have ended up in Mentone because it just seems to be more affordable than anything closer to the city, like St Kilda, elwood or even Black Rock.
What do you think of this property?
http://www.realestate.com.au/property-unit-vic-mentone-106696097

I spoke to the agent who said it's currently being rented out for $340 per week. I like it because it is modern and doesn't need any work, so it will be ready to get premium rent straight away.

Thanks in advance for your thoughts and advice
 
IMHO, I'd never spend that much on a crappy little unit in Mentone, it's not close enough to the beach and for nearly $500k i'd want alot more weekly rent than that.
 
Thanks Righteous Toss. I actually went to an auction a bit further out and it was unrenovated and smaller and it went for $420k, one closer to the beach went for $535k.
What area would you buy in?
 
At an asking price of $440-$485 and rent of $340pw, that's a price more akin or designed at an owner occupier imo.

That's a gross yield of between 3.6% to 4% assuming those rentals are correct. Is that sufficient?
 
The rental return is OK. I'm hoping for long term capital growth. I just figure beach side suburbs have a better potential for capital growth. I think suburbs like Mentone and Parkdale have good potential they are close to public transport, shops and the beach. The property prices haven’t gone through the roof in those suburbs yet.
 
Considering it's a unit, it is a bit expensive given that it can never be subdivided. I started a thread about cheapies on dual occs in Frankston. I'd appreciate the pros and cons of the links I posted there, if you have the time. I have bank support to buy one more property and anything you can do to help me do my due-diligence would be helpful.

http://www.somersoft.com/forums/showthread.php?t=64674
 
I’m not sure if sub diving and building in Frankston gives as much value as in the inner south east. My theory is that subdivision and building cost would be similar in Frankston as compared to inner south east suburbs. But the sale price in the inner south east would be much higher. The problem is getting the finance to buy a more expensive property in the inner suburbs but the profits will be much higher.
 
My point is this. Obviously prices have shot up over the past 12-16 months. As a result rental yields have fallen as rents haven't had time to increase to more normal yields. Therefore, rents will need some time again, imo, to play catch up before we have another growth spurt, based solely on the numbers.

In this instance, I would agree if it was an unrenovated property and/or had the ability to add value in another way and that comparable renovated properties that were more expensive than the proposed purchase, then this might give a green light.

For the property and the numbers you are proposing, it is, imo, 18 months too late to purchase this one.

Is there a plan B or other property types that you are looking at?
 
18 months ago i went to an auction 100 metres back from mentone beach a unit went for $335k.... was also a 2 bedder.

you only had to walk through a side way to hit the sand... it was nothing flash either, but a decent villa close to water.

personally i think melbourne growth is going to be hard to come by in the short term, and holding costs are too expensive in most suburbs, if you are buying at todays prices.

Also i think the 2 bedroom villa is in great demand due to demographics of single house holds becoming more common, and also the ageing population not wanting to maintain a house...

i reckon villas would have to be one of the best performing types of property in melbourne..... over the last 2-3 years...
 
Haven’t seen this one yet but it looks like it has a lot of units on the block and it’s right on the train line. Not sure how much work will need to be done. The rental return might be better at first but I don’t think the capital growth will be as good. But I might try to pop in the weekend before the auction.
 
jthunder said:
Hi,

I'm a newby here. Looking to buy an investment property near the beach and I came across this 2-bedroom property in Mentone. I have ended up in Mentone because it just seems to be more affordable than anything closer to the city, like St Kilda, elwood or even Black Rock.
What do you think of this property?
http://www.realestate.com.au/property-unit-vic-mentone-106696097

I spoke to the agent who said it's currently being rented out for $340 per week. I like it because it is modern and doesn't need any work, so it will be ready to get premium rent straight away.

Thanks in advance for your thoughts and advice
Click to expand...

We had a 3x2 brand new townhouse in a complex of 4 at the bottom of Warrigal rd near the beach back in 2001/02. Nice.

It was renting for $350 per week even then.

So, I reckon that one you've seen is a bad investment to go for.

If you have to buy there, at least buy something that needs reno-ing and add value somehoew.

I reckon buying near the beach is a good long term idea though.

I'd wait a bit for Mentone; I reckon by the end of this year Melb will have stopped dead in the inner areas - a cuppla rate rises, the erection (election) will sort 'em out.

Have a good look at Highett as well (nearer to Southland and the trainline) - more affordable as a rule. Buy beachside of the h'way though.
 
I started my investment journey in Mentone back in 1997. It was a 2 bed unit beachside of Balcombe Rd. Paid $95k, now worth approx $430k.

This has underpinned my portfolio. With hindsight, was it a good move or not. Would a house in Aspendale have been better. I dont know.

At the time i was starting out. I did not have any mentors but i knew it was a good move over the long term.

In my view, over the long term, you cannot go wrong with Mentone. But buy something beachside of rail AND Balcombe Rd. Its worth the extra $20-$50k.
 
jthunder said:
It's on the Market at $485,000 That sounds a lot better the $500,000. Does that seem like a fair price?
Click to expand...

You need to have gone to the auction to find the true last bid. That's the starting point for negotiations. If you were really serious about this property - you would have gone to the auction to see the level of interest etc.

Seeing as the $430 was the last VB, that might be a price they'll consider - maybe go in there with a $380k unconditional?

(Have you done a building check already?)

The Y-man
 
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