IP in vic, seddon vs frankston / seaford

[Younginvester]

Hi all,

Have just joined this forum in hope of some input from those more experianced in melbournes property market than me.

I am looking at purchasing and investment property in melbourne... To date i have been looking around western melbourne i.e seddon, yarraville, newport, foots.. But have heard things that frankston / seaford area also presents good investment prospects.

I have $100k deposit (growing by the month) salary of 85k pa which is due to steadily increase pa. I have spoken to a few banks and currently i think my upper limit is 600k, 550k more comfortable i think.

So what do ppl think... If i purchased in seddon for example, it would be a victorian / edwardian style house . Which location would i most likely get better rental gains and long term capital gains? I see seddon as a more 'safer' bet given its proximaty to the cbd

Thanks - appreciate any input.

 

[Clinker]

Hi Young Invester,

I love Seddon. The area in demand is between Somerville Rd and Charles St. (note - the southern area of this block is called Yarraville).. Although Pilgram, Hobbs and Hotham are nice, wide and tree lined.

My partner and I nearly bought a property in Seddon last year but for a $620k townhouse the weekly rent was only $450. We ended up purchasing in Newtown (1.5klm from Geelong CBD) for a 3 bedroom house on land for 6.1% yield instead.

Seddon is a very quiet pocket - whilst it's only 7klm to the CBD, there are no thoroughfare roads, so even Victoria, Charles and Pilgrim are quiet in peak hour times. The shopping strip is improving with a few great coffee shops (Seddon Deadly Sins, Le Chiens etc) and there are restaurants popping up which are turning the sleepy village into a trendy little pockets (Tin Pan Ally, Touks, Sabrosa etc). Some shops are still quite old and sleepy but I think gentrification is taking care of that.

Investment wise I am still looking.

There is one recommendation I would make. In Seddon most homes have no garage and no off street parking. If you can purchase a property with a garage and be prepared to own it for the long term, I think you will do well.

Regards, Clinker

 

[Peter Parker]

There's Seaford and there's Seaford.

There's at least five different pockets, but very roughly anything that's walking distance to Seaford Station is much more highly valued than one that's near Kananook Station (especially for units, there's a pocket of houses just back from the highway at the Kananook end that seem OK).

That part of Seaford west of the railway line has lots of small units with low-income pensioners while that part of Seaford east of Kananook Station is more like Frankston North.

Belvedere Estate is another place again. It seems to have a better reputation than the Kananook end of Seaford and is handy to Eastlink and jobs in the industrial area. But not so good for transport or beach.

The common Melburnian obsession with 'good schools' may find Seaford wanting.

 

[Younginvester]

Hi guys,

Thanks for the feedback.

My only concern with frankston / seaford way is initail rental vacancy issues. Could this be an issue more so than in seddon?

Also, yes row access is on my priority list... See how we go.

Thanks

Yi

 

[Clinker]

I'm not too familiar with the Frankston area, although my sister has an IP there and they are happy with a good long term tenant, rental growth etc. You might want to speak with Property Managers in both areas.

Having a quick look at Seddon there are 18 or so rentals currently advertised on domain.. But only a couple of them have a lock-up garage.

 

[Property Meister]

I did a lot of research into frankston a few years ago, and have kept my eye on it,

frankston had really good growth from 07-09

since then it has slowed down like the rest of melbourne

however, one property I looked at a few weeks ago is renting at $260 per week, according to the agent it was $280-$290 6 months earlier, so the rent has dropped about 5-8% on average

 

[Bird Dog]

Just one other "small" aspect of seddon you may also wish to consider is the widening of the western rail link. A substantial amount of properties along the southern side of the rail line have been compulsorily acquired and the traffic through that link will be significant.
Diesel trains have a lower sound wave and therefore the noise can travel further so with the potential of more diesel trains coming through that corridor, who knows the overall impact that could have on sleepy ol Seddon.
A friend of ours lives two streets away and has decided to move rather than extend their house due to several reasons with the rail line being the most significant.

PS: For the record, we also love Seddon and considered buying an IP there a few years back but I'm not sure if I would now.
Footers could be a long term option but just be aware that the re-gentrification of the area is still a number of years off yet and don't believe the agents when they say "what drug problem!!!"..
Bang for you buck is still reasonable and so long as you choose the right location, you could be granted generous CG over the coming years.

cheers

B.D

 

[CHam]

It it were me, there are a couple of other things that I would be taking into consideration first, especially since it will be your first IP -

• Look at the return on your investment and work out how much it will cost you each month - preference would obviously be to find something that is neutral or positive cashflow.
• I wouldn't be spending $550k on your first IP. Look for something cheaper, and keep at least half of your $100k in the bank. A better proposition I think would be to buy 2 cheaper properties which have better returns than, for example, a house for $550k which may only return $450 per week in rent. And maybe do 1 first and see how it all pans out before doing the second. Nothing like theory versus reality when it comes to buying and getting tenants.

The results of these 2 calculations will then most likely dictate where you can buy......

 

[toony]

I did a lot of research into frankston a few years ago, and have kept my eye on it,

frankston had really good growth from 07-09

since then it has slowed down like the rest of melbourne

however, one property I looked at a few weeks ago is renting at $260 per week, according to the agent it was $280-$290 6 months earlier, so the rent has dropped about 5-8% on average

I think thats true. I have a 2 bed unit that was rented at $260, now its rented at $250. I was initially hoping for $290.

 

[Younginvester]

Hi guys, thanks for the input, appreciate it.

Bird dog - can you please specify which area u are referring to as all i could find on dot site was this. http://www.transport.vic.gov.au/projects/pt/rrl. Is this what u are meaning? But yes the what drug problem concerns me and unfortunatly i cannot predict how long it will take to clean up lol considering the rail movement is more southern like newport a better option??

Cham - im not sure i can find a house with nuetral or postive cash flow ??? In that case would an appartment be a better choice but at the cost of possible less cg in he future? I will do the calcs. I guess all im trying to achieve is buy the best investment with money i have available. And i think that close to the cbd is a good safe investment. However i am young lol.

Property master - thanks, might not get to interested then.

If you guys were in my position looking to make a good solid investment for the future what would you do knowing what u know now

Thanks heaps

Yi

 

[toony]

If you guys were in my position looking to make a good solid investment for the future what would you do knowing what u know now.
Thanks heaps
Yi

Me. I would buy a property in South Frankston. Depending on your affordability a house/unit in the Frankston High School zone. But i am pro bayside property.

 

[Clinker]

Hi Young Invester,

Bird Dog is right there has been a row of houses demolished along the rail line at Middle Footscray Station. The houses demolished ran along Buckly Street. It is a little uncertain (to me) how the new rail development will increase noise levels. Right now I have noticed it is slightly noisier from Alexander St and Emma St. Pilgrim is not bad though if you wanted to draw a line somewhere.

If you are going to check out Footscray, Footscray West has some nice little pockets.

Like you, I have been looking around Seddon and Yarraville areas however the yields are just too low for me. I have focused on areas such as Geelong West, Hamlyn Heights and Newtown as an alternative. The suburbs are well respected in the Geelong area and you can pick up a house and land (maybe in need of a cosmetic Reno) for $300k to $400k. This way I borrow less, the yields are 'slightly' better (or not worse than Melb) and the suburbs attract reasonable Tenants being right next to the Geelong CBD and coffee etc.. (Pakington St is cafe district).

Anyway just an idea.

Clinker

 

[jingo]

If you guys were in my position looking to make a good solid investment for the future what would you do knowing what u know now

Thanks heaps

Yi

Hi Younginvestor,

It's never easy working out what, where and when to buy. I am not familiar with the investor demand in Seddon, but, I would imagine, being close to the CBD and Vic Uni, there may be some demand from professionals as well as the student market.

I have IP's in an inner suburb in Melbourne as well as Frankston. Both areas are different, and accordingly the property markets in these areas cannot really be compared. My inner suburban IP's have seen great capital gains, and generally attract professionals who generally (but not always) pay their rent on time. I have had a tenant in a town house that we own in the inner area do a runner, and have had to claim from insurance.

My Frankston Ip's are basic houses. Generally speaking, the tenants have stayed for several years. In one of the Frankston houses, the tenants pay in advance each month. In the other, they pay literally to the day, but the account always balances each financial year. I have a very good pm managing these properties. Growth in my Frankston Ip's has been ok.

Buy whatever you can afford to comfortably service, and keep buying when you can. (Never over extend - slow and steady wins the race).

I like the idea of the Seddon IP..... (for what it's worth).

Regards Jason.

 

[Younginvester]

Guys,

Overwelmed with the responses here - cheers

re the train developments, i think if i stayed south of charles st seddon it would be acceptable proximaty to the trainline to dispurse the noise? thoughts?

Clinker - what pockets in west footers do you consider ok cos last time i was out there i was turned off and was convinced that ballarat road a old gellong road where a PITA. I agree that the yeilds in inner west melbourne are not great which is a little concerning. However i am hoping that the CG in the future will far outwiegh this. I just see old victorian and edwardian homs to be highly desirable compared to rotm homes.

Jingo - thanks for the input and experiance. i guess you can get bad eggs everywhere.

I am a little cautious of doing my nuts in 600k first round, BUT if this is what it takes to attain the most desirable investment property then so be it. Decisions. I was looking at deception bay last night lol gee it is cheap for what you can get, near the water, 4 bedder, pool the works for 320k lol. Bit risky though for my limited knowledge.

Cheers all

YI

 

[aladdin]

I love Seddon. Great village feel with Charles st and the Cafes and so close to the city.

Prices are pretty high though even for a small period house and yes lots with no off street parking.

Kingsville which is close by is good value with lots of people renovating period homes and more chance of off street parking. Bit of a walk to the station though.

Spotswood and some parts of Newport is good too with bigger blocks and most having off street parking. Spotswood village is going through a change with more cafes appearing and the old pub currently being renovated into a high end restaurant. Also Aldi and a small shopping hub is planned for Melbourne road.

 

[Clinker]

Hi Young Invester,

For West Footscray you would stay north of Barkly St and away from the main roads. I am not an expert on the area but if you are looking at Footscray, Footscray West is a little nicer.. Tree lined streets and period homes etc. If you can it may worth a drive around to have a look. Not as hard on the budget either which is always good.

Tend to agree with Jingo - buy whatever you can afford to comfortably service. Every time I have applied for an IP loan, the bank has approved an amount that would be difficult for me to service if the interest rates started to climb. I have always calculated a 10% interest rate and assumed my lifestyle if that happened.

Clinker

Regards Clinks

 

[buzzlightyear]

Best streets imo in Seddon are those on the west side of Gamon Street ie Browning St, Seddon St , Tennyson St, Hamilton St & Bayview Road. Take a drive down there and you will see many period homes (a few unrenovated or in need of an update, nice tree lined streets).

Its relatively close to Seddon train station, probably about 15 min walk

 

[Younginvester]

Thanks,

Im getting cold feet on spending 500k + on my first ip for reasons you guys have outlined above so therefore have been looking in ballarat, bendigo and frankston.

Cheers

Yi

 

[Clinker]

Awesome! Ballarat, Bendigo and Geelong is where I focus. I tend to target properties that young professionals would want to live in.. Therefor suburbs within a 4klm radius of each regional centre is where I aim.

Ballarat = Ballarat Central, Soldiers Hill & Bakery Hill
Bendigo = Kennington, Flora Hill, Quarry Hill
Geelong = Newtown, Geelong West, Manofold Heights, Herne Hill & Hamlyn Heights

I don't have an IP in Herne Hill - but I think it's a great area and I am always keeping and eye on it. It used to be home to a lime/cement factory which is now closed down. There has been plenty of growth there over the last few years but there is still some good value in the area.

Hamlyn Heights is also good value. Right next to Geelong West, you can be close to town and coffee without the price tag. It has boomed a bit over the years so get to know the market there before you buy.

For all of these suburbs I have made day trips out to drive the streets and see for my self. I'm from Geelong initially so that's easy but for Ballarat and Bendigo it was great to do the drive around.