Melbourne apartments - who wants in?

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From: Dave


Hey there all,

Sorry about the topic - had to think of something short and sweet. *grins*

This is the first time I've posted this sort of topic, but I thought it couldn't hurt.

I've recently purchased two off the plan apartments in a booming Melbourne inner city location. Those of you who know me may know the apartments/location I'm talking about.

Well, the development is more than half sold and due to commence construction next month. There are no others apartment developments like it in the area at present, so I can see demand for them to be good.

If I can get a small group of genuine, qualified investors together to buy some or all of the remaining 10 or so apartments, we'll all receive a substantial discount off the already reasonable prices for the area. at the moment, the asking prices range between $3800 - $4300 per square metre.

The development is by a reputable developer, recognised for high quality projects, and isn't relying on a certain % of pre-sales before construction can commence.

90% of those sold so far have been to investors. What's in it for me? Of course there's something, and I want to be open about this. I love the growth potential here and want to buy more - possibly two more. The more buying power I get behind me, the better price I buy them for and so could any other investors.

The developer has o.k'd the use of deposit bonds as well as 5% deposit to qualified investors.

I will be looking to buy anyway here in the next few weeks. However, if anyone else is thinking about it, please email me for details and maybe we can all get a much better deal.

Cheers everyone

Dave

 

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Reply: 1
From: Tom Siviou


Dave, im with you. i posted an idea, an Investors group, and now i see your posting. I'm happy to run with you, this is exaactly the idea i was talking about. I've asked all who contact me to now contact you.

 

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Reply: 1.1
From: Dave


Hi everyone,

Thanks to everyone who emailed me regarding this post. I was a little sceptical about the sort of responses I would get, but I'm now glad I made the post.

I have received a great amount of emails from some here who have expressed interest in joining me in a buyers syndicate. The response was far better than I expected.

As explained, my goal is to simply buy my next two apartments here at a discount. And, for the first time, I have had to arrange some type of buyers group to ensure this happens. For the record, I am NOT a developer and I am not related to or affiliated with one.

I have attempted to provide those of you who are interested with as much info as you've requested. After each of you have done your homework, and the numbers stack up for you, please contact me asap. I myself am looking to make my next offer within TWO weeks. It now looks as though I can reasonably expect to have enough buyers with me to buy the rest of the remaining apartments.

For any of you who have not contacted me but are interested, please email me. My email address on the weekend is digidave7@hotmail.com. My main email address is checked on weekdays only.

Once again, thanks to all who have contacted me, and I look forward to hearing whether you want to join in with me. For the rest of you, thanks for allowing me to stick my head out and publicly post my idea....I haven't received one negative message or email for it - thanks to you all for allowing me to look outside the square and move my PI strategy forward.

Cheers

Dave

 

[Michael Yardney]

Reply: 2
From: Michael Yardney


Dave
I think your concept of a buyers group and buying in bulk is excellent and works well. I know it from the personal experience of putting together groups of co- developers and helping them buy their properties wholesale by enabling them to become the developers.
My concern with what you propose is that you are intending to buy multiple apartments in the same project.
Do you not think it would be better to diversify...not to other states but to other areas of the Melbourne property market. While the area you are interested in is currently HOT, you may find that if something happens to the building or the area, you could be better off with a wider spread of your investment properties. I know most lenders would also agree.
Anyway... good luck with your little syndicate
Michael Yardney
Metropole Properties

 

[IanF]

Reply: 1.1.1
From: Ian Findlay


Hi Dave,

I'm surprised that you thought you might bet a bad reaction. Its a perfectly
legitimate post.
Just a shame that I can't join you in your venture.

Though I did have similar ideas about buying something at the Gold Coast!
Say buying something at $150k (including costs) with 9 others.
This would give 5 weeks each, on perhaps a week rotating basis. Our
syndicate could decide to holiday let for the summer 6 months and each
member have 2-3 weeks for holidays each year. With 50% tax deductability (6
months holiday let - perhaps more if a friendly CPA could find a way to
include all but the 2-3 weeks holiday for example a $5 fee each week used
thus producing income), the interest payments of $700 (7%) per year would
reduce to just about $380 per year. 2-3 weeks holiday for $380, sounds good!

There would be othere costs such as management, body corp, rates etc but
these would be minimal as they would be tax deductable and also shared out
10 ways.

Just an idea? Anyone interested?

Ian

 

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Reply: 2.1
From: Tom Siviou


Michael,

we are talking about bricks and mortar. dont get carried away with diversification theories that are perfectly applicable to stocks, but not so with property. Bank managers are not real people. they are clerks dictated to by the bank's economists who understand money markets, not property generally. Why would anyone take advice from a bank manager, or anyone else who you havent specifically chosen as an independant expert and paid him for his advice.

Diversification is a big issue with stocks because of the various industries companies operate in, retail, wholesale , industrial, manufacturing, food, cosmetics, furniture, clothing. People buy all of these things, and when they spend up on one it limits their ability to buy another, so you want a spread. property is a sector in itself and a shield against against more volatile investments such as stocks. And its fantastic when it runs hot as it is now and very secure when its stable. So why wouldnt you want to get as much as possible of a hot performer if the history of growth is there and there is still room to move up, thats what you want.

With property, you are not going to get the value wiped out overnight, unless you are buying very top end prestige, and lets face it, investors shouldnt be buying that type of property. A property investment is not dependant on consumer spending habits on consumables, or a board of directors, or a group of executives. There is very little downside risk in low to middle level properties today, $150-450k. I think interest rates would need to move to above 12% before the affordability factor became an issue for forced sales. Thats not happening in the short term. the trend is downwards. And I think most investors could comfortably hold their ips at interest rates of 10-12%. By the way, most of your bank's would have used a rate of 2% higher to qualifty you for your loans, and given they've come down, if you bought 12 months ago for example, you probably have a 4% margin just in that. Now really is the best time to buy. it always is now.

 

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Reply: 1.1.2
From: Annie Morison


Dave hi,

I'm only new to this game and am currently tossing the idea of buying my first home to live in or buying an investment property. Whilst the first home owner's grant is good, your idea sounds good too. Not sure if this is only for investors or can be used for live in scenarios? I'd certainly be interested in finding out more.

Cheers
Annie