Melbourne apartment IP outlook?

[Zeddy]

Hi guys and gals

My partner is looking at purchasing a property in the Melbourne CBD. She's looking at a 2 br/2 bath/1 carpark apartment of around 70 sqm. It finished construction last year. The asking price at the moment is at the $400k mark.

Numerically the purchase seems to be stacking up in terms of repayments/rents, etc. However we are very concerned at the overall market outlook. Even if we are intending to stay in it for the long term, we are afraid any poor purchases will impact our ability to invest in future. We are concerned that she might be paying too much to buy into a falling market.

Can the soothsayers on the board peer into their crystal balls and help us out with some predictions?

 

[andrew_de_a]

where is it located?

 

[Zeddy]

where is it located?

It's on a small street just off Flinders Street, Melbourne.

 

[murtagh]

By "finished construction last year" do you mean it's part of the tower(s) next to the train overpass?

 

[Zeddy]

My partner has corrected me - construction was completed in 2006.

Yes, it is near the train overpass.

 

[boomtown]

What is it currently rented at?


(Never believe an REA when they say its rented below market).

 

[House_Keeper]

However we are very concerned at the overall market outlook. Even if we are intending to stay in it for the long term, we are afraid any poor purchases will impact our ability to invest in future. We are concerned that she might be paying too much to buy into a falling market.

Why are you so worried? What makes you think this is a 'falling' market?

As far as I can tell, rents are still going up in melb. cbd, and there is strong buying demand from Asians and first home buyers below 500k.

I don't quite understand why you are so worried considering the current market.

Unless there is a lot of construction going on, and thousands of apartments are hitting the market soon, I don't believe there is much to be concerned about.

Cheers,

 

[Rob Williams]

I agree with House Keeper. I'm looking at some apartment opportunities over there. Wouldn't be doing that if I thought there were issues with that particular market.

 

[The Y-man]

My partner has corrected me - construction was completed in 2006.

Yes, it is near the train overpass.

As in the ones you can look straight into from the train, because it goes past your balcony?

Cheers,

The Y-man

 

[buzzlightyear]

As in the ones you can look straight into from the train, because it goes past your balcony?

Cheers,

The Y-man

Just side tracking from the thread, who would buy those apartments on NorthBank? The thunder of the trains coming past every minute or so. Plus, the building is ugly IMO.

 

[Rob Williams]

As in the ones you can look straight into from the train, because it goes past your balcony?

Cheers,

The Y-man

Like the REA adverts say ... "Close to Transport"

 

[Jamie_D]

Just side tracking from the thread, who would buy those apartments on NorthBank? The thunder of the trains coming past every minute or so. Plus, the building is ugly IMO.

I'm assisting a couple of clients in this development with finance

O/S clients bought in 2007
1 bed 1 bath no car - $340k
Val'd last week at $300k
Trains were the prob

however,
same level
2 bed 2 bath 1 car - $510k
val'd late last yr at $510k

I deal with a lot of high density properties in Melb and there are some great bargains out there ATM

Rents are high and vendors are willing to negotiate

rent returns are around 6%

let me know if you require further help

 

[Zeddy]

I guess we were concerned with D&G people around us... it's hard to do this sometimes when the people close to you have a knee jerk "but the economy is so bad" reaction.

Thanks for the input guys. The original deal fell through, so we're back on the market looking.

 

[Zeddy]

Like the REA adverts say ... "Close to Transport"

And "light filled" means the afternoon sun turns it into an oven.

 

[crc_error]

Like the REA adverts say ... "Close to Transport"

hahaha thats a good one!

funny at the crap which sprouts out of agents mouths.

 

[crc_error]

I deal with a lot of high density properties in Melb and there are some great bargains out there ATM

Rents are high and vendors are willing to negotiate

rent returns are around 6%

I would not touch CBD properties.. especially with train lines in front of it!

You would be better buying in Albert park, or south melbourne etc..

 

[tubs]

Just side tracking from the thread, who would buy those apartments on NorthBank? The thunder of the trains coming past every minute or so. Plus, the building is ugly IMO.

It'd be just like the Blues Brothers!

Seriously though, there still seems to be a lot of construction in Melbourne at the moment, and you can google current apartment projects for Melbourne and you'll find that there's still a lot of room for growth.

Growth happens because demand outstrips supply.

Apartment projects keep going up all the time, so supply can easily keep pace with demand. Far better (IMHO) to purchase in suburbs where people want to live, but no more dwellings are being put up (or relatively few in comparison).

 

[Zeddy]

Tubs, the appeal is that at the moment the rental yield is very high in the city. Some of the properties we have seen have a rental yield in excess of 6% and require very low cash inputs once the purchase has gone through.

 

[Sabitor_84]

Tubs, the appeal is that at the moment the rental yield is very high in the city. Some of the properties we have seen have a rental yield in excess of 6% and require very low cash inputs once the purchase has gone through.

Low Inputs? What about body corp fees?? I have never looked into apartments myself but i have heard they can be very high in some instances.

Cheers,

Matt

 

[crc_error]

Low Inputs? What about body corp fees?? I have never looked into apartments myself but i have heard they can be very high in some instances.

Cheers,

Matt

yeh, especially ones with pools, gyms, lifts etc..