Is Capital growth a con

[newbyinvestor]

I have a BA on the job and he belongs to the 'I should buy as close as possible to the CBD to achieve Capital growth'
Anyhow after looking at a 2 bedroom apartment in Hawthorn he really started the hard sell whilst the sales agent is looking on and I just wonder if the BA is as independant as he claims to be
Thing is this unit seems priced OK at $415,000 however there is a vacant one in the block being offered for $300 per week and this shoots holes in my BA's theory of I will get $350 a week and never need to worry about the place being vacant.
The appartment is 1 of 15 and although in pristine condition the apartments are the smallest 2 bedroom places I have ever seen with no laundry facilities , terrible kitchen layout and no balconies etc.
This block appears to me to be the place tenants come when they have tried everywhere else first . Have I got the jitters or is this accomodation like gold because it's located in Hawthorn?

 

[units4me]

Dump the BA and spend some time doing your own research, you will be much better off.

 

[newbyinvestor]

Dump the BA and spend some time doing your own research, you will be much better off.

Do you think Hawthorn is such a great location that tenants will accept living in an apartment block which is about as inspiring as a prison?

 

[VYBerlinaV8]

And hang around here, especially in the Where To Buy section, and ask some questions. Serious questions can get some surprisingly good responses. I personally have learnt heaps here.

 

[Nathan]

Hi Newby,

The numbers sound herendous.

Id get rid of the BA, as there are much better returs out there.

 

[andrew_de_a]

Post the link of the property

 

[Melbournee]

Sounds like a terrible BA. As others have said dump him!

If you are gutsy enough put his name up here as well- Name and shame

 

[buzzlightyear]

Is it this one?

 

[lizzie]

those figures are terrible.

i just bought myself two inner ring units returning 6.6% after buying costs (stamp duty etc).

hang around here for a while - in the current market there is no rush to buy. take the time to do some reading on your desired areas and never be afraid to ask a question ... someone on here has the answer to anything, even if it's not property related.

 

[Bigtone]

being a bit harsh on the BA without hearing why he is recommending the unit.

maybe the last sale was over $500k in the block

maybe the body corp has $200k in funds it is about to spend on external renovations

lots of reasons apart from rental yield he could be recommending the unit to newby

what were ur instructions to him?

if he is ignoring those fine sack him but if this property meets the instructions u gave then give new instructions if u have changed criteria

 

[mr-ed]

I can hear the BA parroting on about inner city, ...don't worry about cashflow.

And don't tell me, they will manage the property for you, at a nice little 7.7% trailing commission.

I can hear the violin music now.

 

[sash]

Do yourself a favour....go to the other end of town in Werribee....find a 3x1 brick house for 250k and rent it out for $290pw.

That would be six % return...much better than a 3.8% return!

And by the way the capital gain as a % would be pretty close.

 

[bluestorm]

Like the others have said, dump the BA. Those yields are terrible for a unit.
You should easily be able to achieve 5-6%++ for a unit in CBD. Anything less and you are paying too much (or getting too little rent).

Don't know the area, so maybe it has capital growth potential. But then your speculating on growth, rather than investing. Even from what you write, the place does not sounds ideal, and you believe the potential pool of tenants may be less than ideal for this block.

 

[ldriver]

Is it this one?

If it is this one, forget it...that road is a thoroughfare/cut thru between Camberwell and Hawthorn.

if its muir, it might be ok- the yarra river is at the end of the street.

 

[andrew_de_a]

If it is this one, forget it...that road is a thoroughfare/cut thru between Camberwell and Hawthorn.

if its muir, it might be ok- the yarra river is at the end of the street.

Rathmines rd is not a bad road at all, it is nowhere near as busy as Burke, Toorak and Riversdale roads and this apt is located directly across from Rathmines reserve and Harcourt St ( one of Melbournes premier streets)

The problem with this apartment complex is that half the building blew up around 12 months ago as there was a hydroponic set up for marijuana. It was all over the news and would also be in the body Corp docs. The other issue with this complex is that the ministry of housing owns a cpl if units in there.

 

[evand]

Lose the BA. You should be able to get a better deal in the current market.
Why do people pay BA's when they come up with stuff like this.

 

[schweedy]

Being where its at, would it be better/more proffitable to turn it into a shared accomodation unit for students???? Could you fit a washer/dryer into the kitchen area at all to solve your laundry problem. You could get around $200 per week per room, so that might make the figures better.....just an option.

 

[on the move]

Lose the BA. You should be able to get a better deal in the current market.
Why do people pay BA's when they come up with stuff like this.

That's exactly the problem with BAs, you don't know if you pay for genuine service or taken for a ride, as many BAs claim they will Find Houses for you.

 

[skater]

There is no way on earth I would buy something with a yield that bad. Dump the BA and stick around here. Learn how to find stuff yourself.

 

[zed_kid]

That's exactly the problem with BAs, you don't know if you pay for genuine service or taken for a ride, as many BAs claim they will Find Houses for you.

That’s the problem with pretty much all ‘professional’ services though...

Anyway on topic, as others have said try doing the research yourself. You’ll gain experience and the market, particularly in Melbourne, has a lot of time to give you to do this research.