Melbourne City Apartment - Need Help :)

I

investftw

Hi guys, I have been reading these forums for sometime now and im totally new to property investing and so bare with me while i pick ur brains :)

Ive notice not many posts about city apartments for investment, from what i can see it has great rental returns and great to move in urself while still renting out the other room if you love the city life and work in the city. Now i am aware of that land/house will return better capital gains however im taking into account of myself moving in within the near future, so my plan is to either buy it and move in using the FHOG while sharing with another person OR buy it without the FHOG and rent it out to 2 people for approx $400 a week

what do u guys think of this? i think its a pretty good price considering the size which is 70m2, just worried what other costs will be like body corporate, land tax water tax etc
http://www.realestate.com.au/cgi-bi...r=&cc=&c=80585663&s=vic&snf=ras&tm=1216800138

Im seriously considering it, is this a good investment? what are the pros? cons? what does the future hold for city apartments? are they worth it? does the value usually increase?

any help would be greatly appreciated!! thanks guys :) oh and im 23 years old
 
70m is a good size for a 1 bed. Its very small for a 2 bed.

I dont know the Melbourne market but the price seems quite attractive. You need to do some hard core due diligence on the body corporate side - how much money do they have set aside for problems (called sinking fund), how much do they charge per quarter, do they have major maintenance coming up.

Maybe give the president of the Body Corporate a call and have a quiet chat with them and see whats up.

Many people wont want to live there because it doesnt have a balcony - but students and people that dont want to pay very much rent may be quite happy with it.

Do the windows open? Do you have separate air conditioning unit? Sometimes in these old buildings you share your air with your neighbour and thats not very nice if they are a heavy smoker.
 
Your link is broken.

Anyway, some things to consider

1. yes, be very afraid of BC costs (not just in the CBD, but for any development that has one or more of: lifts, shops, beautiful foyers, gyms, pool/spa, tennis courts, concierge, etc.)
2. you may not get more than 60% LVR loans - as they are not zoned residential (they would be a CBD Zone)

Land tax would be next to zip - no land component.

Cheers,

The Y-man
 
hello,

i have been working recently in one of the popular lane's of Melbourne

if you hate noise then be very careful, the city is mayhem in relation to building works, businesses opening and closing, rubbish pickups etc,

you have cafe's opening and closely all the time

thanks
myla
 
investftw said:
Hi guys, I have been reading these forums for sometime now and im totally new to property investing and so bare with me while i pick ur brains :)

Ive notice not many posts about city apartments for investment, from what i can see it has great rental returns and great to move in urself while still renting out the other room if you love the city life and work in the city. Now i am aware of that land/house will return better capital gains however im taking into account of myself moving in within the near future, so my plan is to either buy it and move in using the FHOG while sharing with another person OR buy it without the FHOG and rent it out to 2 people for approx $400 a week

what do u guys think of this? i think its a pretty good price considering the size which is 70m2, just worried what other costs will be like body corporate, land tax water tax etc
http://www.realestate.com.au/cgi-bi...r=&cc=&c=80585663&s=vic&snf=ras&tm=1216800138

Im seriously considering it, is this a good investment? what are the pros? cons? what does the future hold for city apartments? are they worth it? does the value usually increase?

any help would be greatly appreciated!! thanks guys :) oh and im 23 years old
Click to expand...

Easy: where is the carpark, no carpark no buy.

Carpark for city apartments is like 'land' for a suburban investment property, it creates scarcity.
 
thanks for ur reply guys, the reason why this one interested me was because of the 70ms for around 230k, usually for that price only 50ms apartments are available

i know carpark would be a great addition but its hard to find an apartment with a carpark on my budget of around 200k, as i said i wish to move in sooner or later and a car park wouldnt be essential for me even tho i can rent it out

would u guys suggest i buy this as a personal property and use the FHOG while sharing with 1 person OR invest and rent it out to 2 tenants then move in at a later stage, if i did it this way wouldnt i be able to claim all the interest i pay on my mortgage at tax time? so its like borrowing money for free? or am i wrong?

p.s im currently living with my parents, so i can move out if i want to and i wanna enjoy the independant lifestyle ASAP but then if i invest in it and rent it out ill probably be able to pay off the mortgage much much quicker, AHHH im so stuck, wat to dooooo :(
 
sorry i didnt meant i knew my budge, i meant im not really willing to spend on a property more than 250k as my first investment, i do not want to be tied down that much financially as im still young and still wanting to travel the world when i can :p
 
Take note of what the Y-Man said.. you may only be able to get a 60% lvr.

If your budget is tight, and you do not have a big deposit then it is very hard to buy an inner city apartment as lenders treat them as a higher risk.

I suggest go speak to a broker, tell them your situation work out how much you can afford and go from their.
 
Wrong approach.

A place that costs 350k and returns more in rent than it costs each month in mortgage payments is far less a financial burden than a place that costs 200k and returns only a quarter of its holding costs each month.

I think you are fixated on sticker price without looking at other hidden costs in the purchase. You need to learn about financing structures and expected rate of returns before you purchase.

Remember - you can always buy in the burbs, rent it out and rent yourself a city pad.
 
what does LVR stand for? sorry im all new to this :( u mean u can only borrow 60% of the property price for the mortgage?

i think i can get $400 a week for renting out the 2 bedder.
If i bought a 350k apartment i dont think it would be much higher, maybe $500-550 a week? so to be honest generally speaking a 200k city apartment would have a better yield % than a 350k apartment i think

but i agree i need to learn more and probably seek some professional advice, who do you think i should see first? mortgage broker? real estate agent? financial planner?

i have about 40k depost atm

but thanks for everyone who have given input and had to put up with my ignorance lol :p
 
investftw said:
what does LVR stand for? sorry im all new to this :( u mean u can only borrow 60% of the property price for the mortgage?

i think i can get $400 a week for renting out the 2 bedder.
If i bought a 350k apartment i dont think it would be much higher, maybe $500-550 a week? so to be honest generally speaking a 200k city apartment would have a better yield % than a 350k apartment i think

but i agree i need to learn more and probably seek some professional advice, who do you think i should see first? mortgage broker? real estate agent? financial planner?

i have about 40k depost atm

but thanks for everyone who have given input and had to put up with my ignorance lol :p
Click to expand...

I think you should spend about 2 months reading every single thread on this board. You dont need to buy something this month. You do need to educate yourself so you are in a good position to make the right decision 2 - 3 months from now. The property market will not go anywhere in the next 90 days. Of course dont use that as an excuse to not do anything after that time.
 
Have you read the book - More Wealth from Residential Property by Jan Somers? It a good read.

To put a dollar value on a carpark in the CBD this is what I did.. I was looking at a unit that had 2 carparks, the second carpark I could rent out for $45/wk. So what capital would I need to get a return like this? 45 x 52 / 0.08 = $29,250. Assuming 8% return these days with fixed interest/poor stockmaret and property.

But in your case the difference between 1 carpark and no carpark is more. You'd seriously be reducing the number of potential tenants. At a guess I'd say no carpark reduces the price by 50k.
 
Hi,

I brought a Melbourne inner city apartment a bit over six months ago as a PPOR with the intention of later turning it in to an IP. I had no problem getting a 80% LVR (I'm pretty sure that it was considered residential). I've been happy with the investment having seen very strong rental growth.

At face value the yield seems awesome, but be very careful on the body corp fees as they can really hit your yield hard. I pay close to $100 per week (ouch). How did you work out that you could get $400 per week?

70 sqm doesn't seem that bad given the price, but a lot of that area is wasted by a long hall. What are the views like? One of the best selling points of an inner city apartment is an awesome view. I'm assuming that you don't get a great one from this apartment (or it would cost more).
 
vbplease said:
To put a dollar value on a carpark in the CBD this is what I did.. I was looking at a unit that had 2 carparks, the second carpark I could rent out for $45/wk. So what capital would I need to get a return like this? 45 x 52 / 0.08 = $29,250. Assuming 8% return these days with fixed interest/poor stockmaret and property.

But in your case the difference between 1 carpark and no carpark is more. You'd seriously be reducing the number of potential tenants. At a guess I'd say no carpark reduces the price by 50k.
Click to expand...

I'm not convinced that a car park in the city is as important as it is for other property. A tenant would be very close to the train station and have ready access to trams. So while a car park is nice, I'm a bit skeptical that it will add that much to the rent.
 
a car park would be a great bonus but as i said before im looking for a lower entry point, i just wont be able to afford a huge mortgage given i only get paid like 50k a year.

the reason why i quoted 400 a week is because ive looked on the internet and most 2 bedrooms apartments are around 400 a week, most are about 50ms, and i thinkn its a great location as its across the road to flinders street station

i agree the view sucks and there is no view but thats something i can live with as well as no balcony, since i wanna live in it sooner or later its just a matter of whether to move in and rent out the other bedroom now or rent out both bedrooms and still live with my parents

obviously financially the second option would be much better as it would be an IP rather than a PPOR and the tax benefits would be better i think cos i can claim the interest on mortgage

Clem ur body corporate fees is like 5k a year based on what you have said...thats crazy, what kind of apartment do you live in, it must be a huge building, i assumed the average is usually 1-2k a year
 
Clem said:
I'm not convinced that a car park in the city is as important as it is for other property. A tenant would be very close to the train station and have ready access to trams. So while a car park is nice, I'm a bit skeptical that it will add that much to the rent.
Click to expand...

Do you have any numbers to back that up or is it just a guess?
 
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