Melton (VIC) buy or not to buy?

[Wunderbar]

A different perspective from the anti Melton brigade.....

60% capital gain since 2006 ...... and currently 9.2% gross rent yield on our IP's in Melton. Yep ... really crap place to invest according to the anti Melton-ites... Give me this sort of return anytime .....

Mystery

So overall you make approximately 2% net yield, which is.....4k per year......keep bragging

Imagine if you bought in a good suburb like Carlton in 2006. My property there went up from when I bought it in 2005 by 60% at the very least. Even if I made only 10% I make 10x more than what you do on a piece of land in Melton. At the end of the day the amount of $$ on your balance sheet matters, not %.

 

[Kinnon Bell]

And how much did you property in Carlton cost you Wunderbar?

 

[myoung]

Wunderbar, true on the balance sheet. But growth being equal, much easier to hold 3 x Melton properties yield 6-8% from day 1 worth $750k than 1 carlton property worth $750K yielding 3-4%. If both grow @ %60 over 4 years i would take the higher yield any day.

 

[sash]

Very simplisitic.....you might have bought in Carlton for say 550k and it is worth 800k today.

If they bought the same amount of property in Melton 550k worth about 4 houses then. The return would be about the same.

The only difference is that your Carton property would have cost you between $40-60K to hold whilst Melton would have cost about $10k.

So overall you make approximately 2% net yield, which is.....4k per year......keep bragging

Imagine if you bought in a good suburb like Carlton in 2006. My property there went up from when I bought it in 2005 by 60% at the very least. Even if I made only 10% I make 10x more than what you do on a piece of land in Melton. At the end of the day the amount of $$ on your balance sheet matters, not %.

 

[zed_kid]

Very simplisitic.....you might have bought in Carlton for say 550k and it is worth 800k today.

If they bought the same amount of property in Melton 550k worth about 4 houses then. The return would be about the same.

The only difference is that your Carton property would have cost you between $40-60K to hold whilst Melton would have cost about $10k.

Sweet burn!

On topic, why buy in Melton when you can still buy in Werribee a 3/1/1 house on 600sqm for 300k?

 

[sash]

Already have one in Werribee and one in Hoppers Xing

This is despite the naysayers saying the West of Melbourne is no good.

They should look at where immigrants are heading.....

Sweet burn!

On topic, why buy in Melton when you can still buy in Werribee a 3/1/1 house on 600sqm for 300k?

 

[Wunderbar]

Actually the Carlton property is positively geared as well, 9% based on original purchase price. So it actually cost me nothing to hold it, and my net yield of 2% equates to a lot more than 4k....

And I am pretty sure people do not buy 4 houses in the same area all at approximately the same time. It is a lot more difficult to manage 4 properties than just 1

 

[Melbournian]

Already have one in Werribee and one in Hoppers Xing

This is despite the naysayers saying the West of Melbourne is no good.

They should look at where immigrants are heading.....

yup - western suburbs fastest growing population in Australia

 

[zed_kid]

yup - western suburbs fastest growing population in Australia

+1 have properties in west Footscray and point cook, looking at Werribee at the moment... west gate traffic is a pain though

 

[Wunderbar]

So if I follow the migrants - that means that I should be purchasing in places like Springvale and Clayton? Lots of migrants there from the 1970s....what a great place they both have become...(note: sarcasm)

 

[zed_kid]

So if I follow the migrants - that means that I should be purchasing in places like Springvale and Clayton? Lots of migrants there from the 1970s....what a great place they both have become...(note: sarcasm)

Mate the doucheness that’s coming out of you at the moment is painful. Your strategy is obviously inner city blue chip, that’s great, we get it. Other people have other strategies, deal with it.

Edit: what type of people (ethnic background) settled Carlton in the early days? But yeah following immigrants is bad because they all smell, right?

 

[Melbournian]

So if I follow the migrants - that means that I should be purchasing in places like Springvale and Clayton? Lots of migrants there from the 1970s....what a great place they both have become...(note: sarcasm)

i think the best way to put it is quality immigrants. The 3 main Asian groups consists of Mainland chinese, Indonesian and Indians buying in the point cook area

Mainland chinese even the middle income ones who come here to buy property are considered to very wealthy compared to the average australian. the super rich won't even bother about the rest and just buy in toorak, brighton or their favourite stomping ground (balwyn). Indonesians (mainly chinese indonesians) buy there coz of cultural reasons - they believe that once you settle down you need a house as opposed to a apartment therefore many are 2 income working professionals. Indians - can't comment as i don't know this group that well.

 

[Wunderbar]

Oh that's not true. I would actually purchase in those outer areas you are fond of talking about - but only as a developer where I can buy it for $10 per acre and sell it to first-home buyers et al for $500 per sqm. Otherwise it makes no sense

 

[Melbournian]

+1 have properties in west Footscray and point cook, looking at Werribee at the moment... west gate traffic is a pain though

i dig point cook, williams landing etc. For werribee - the **** farms up there..stigma not really a go for me unfortunately.

 

[zed_kid]

i dig point cook, williams landing etc. For werribee - the **** farms up there..stigma not really a go for me unfortunately.

Hahaha, yeah the **** farm stigma is huge. Does anyone actually know where the **** farm is there? Also Werribee is like insanely massive you can be half way to Geelong and still be in Werribee. Melbournian, have you been to Werribee? The town centre is quiet nice, and if they build that marina the place is set for gentrification... as an investment opportunity, I like it.

 

[Wunderbar]

i think the best way to put it is quality immigrants.

Agreed. That drives prices. I don't think refugees migrating to an area will cause it to go up, since they have no money to spend anyway, and a negative stigma attaches to the area.

If you notice, places like Richmond have only gone up in recent years not because migrants are moving in - quite the opposite. The vietnamese who used to settle there are moving out, and local generation Xers are coming in - and as a result Richmond has gone up massively in the past 5-10 years.

 

[myoung]

Oh that's not true. I would actually purchase in those outer areas you are fond of talking about - but only as a developer where I can buy it for $10 per acre and sell it to first-home buyers et al for $500 per sqm. Otherwise it makes no sense

It is coming across like you only invest based on "where you would live" type emotional assessment, whether intended or not.

It makes a lot of sense for people who dont necessarily have a high income to invest in higher yielding areas to make it easier to manage holding costs. The whole that is a crap suburb and therefore a bad investment outlook some people hold(not necessarily saying you do, but it comes across that way) is naive and based on emotion and snobbery not financial analysis.

I live in a fairly expensive inner/middle eastern suburb but chose to invest in the lower end, doesn't stop me buying more due to cashflow shortages of lower yielding areas. There are + and - to any investment strategy or any decision in life for that matter.
Eg Carlton - good area, higher entry price, higher holding costs, higher stamp duty to enter, higher risk if vacancy occurs. Less hassle, one property to manage.
Eg Melton - average to lower area, lower entry point, lower holding costs, lower stamp duty(if buying 3 houses for $750K vs 1 for $750K) lower risk to income -ie spread across three properties, easier to liquidate without selling all - lower end more buyers etc.

So when you dismiss an area or investment based on the area alone, expect it to be challenged on here, cause a lot of folks on here invest based on financial criteria not preconceived judgements

 

[zed_kid]

The vietnamese who used to settle there are moving out, and local generation Xers are coming in - and as a result Richmond has gone up massively in the past 5-10 years.

Show me something that hasn’t gone up massively in the last 5-10 years, even Frangers is killing it, and no I don’t want to hear about docklands and other junk like that. I do agree with you that Richmond is on the up and up, I think it’s a flow on effect from south yarra, I say that Abbottsford is next inline.

 

[Wunderbar]

It is coming across like you only invest based on "where you would live" type emotional assessment, whether intended or not.

But don't people live in houses because that's where they want to live? Isn't that the fundamental first criteria? Second is price of course.

 

[sash]

Lets put it this way....I invest in places you don't such as Werribee, Springvale, Melton South, Frangers, etc.........

Lets also say as a result.....these places have made me a small fortune....just in Melbourne alone it has returned $375k on $455k in less than 5 years. The equity position has tripled on about 5 years.

Would you like to share successes outside of your Carlton purchase?

But don't people live in houses because that's where they want to live? Isn't that the fundamental first criteria? Second is price of course.