Need opinions on Allure@DeeWhy

[bobbyt]

Hi,

I am looking to buy an IP in Sydney for under <600K. Good, steady rental returns are top priority, followed by growth

What do you think of this:
- Brand New block of 111 appts selling off the plan right now in DeeWhy, expected completion in early/mid 2013
- Price for 2 bed + 2 bath + 1 car is 560K to 580K
- Expected Rent $500-$550
- Council + Water - 1500 per annum
- Strata - $3000 - $3300 per annum
- If I buy before construction starts, wont have to pay any stamp duty (construction due to start very soon)

It is located just off Pittwater Rd, 2-10 Mooramba Rd, Dee Why - though not on the beach side (It's just across the road from DeeWhy Grand shopping centre).

Site - beachsideliving.com.au

Looking forward to some advice from the many experts here!

Thanks...

 

[vaughan]

Hi,

I am looking to buy an IP in Sydney for under <600K. Good, steady rental returns are top priority, followed by growth

What do you think of this:
- Brand New block of 111 appts selling off the plan right now in DeeWhy...

Good, steady rental returns are top priority... ZERO rent return from late 2011 until mid 2013 is pretty steady.

Rather than ask an opinion, work out your costs and returns for the next 5 years. Decide yourself what the CG will be in 5 years: your guess is as good as anybody else's but basing it on the current CG for the past 12 months may be a good start. For costs, income and cg do best and worst case scenarios.

I don't think that negative gearing can be applied to OTP before the property is completed. Others may confirm this.

 

[Propertunity]

- Brand New block

I'm not a fan of brand new. Most of the CG in the first few years goes to the developer's bottom line profit.

of 111 appts

Yikes!! Too many in one block. All it takes is a few desperate sellers in the building and you've automatically reset the value of your apartment (valuers use 'comparable sales'). Also nothing unique about yours compared with anyone else's - this applies to renting out as well as future selling.

selling off the plan

Do a search in the forum here on "OTP" of "off the plan". Lots of horror stories and only a few good stories.

- Price for 2 bed + 2 bath + 1 car is 560K to 580K
- Expected Rent $500-$550

Not even a 'standard' 5% - not so flash.

- Council + Water - 1500 per annum

OK

- Strata - $3000 - $3300 per annum

Quite high - probably due to lifts etc.

- If I buy before construction starts, wont have to pay any stamp duty (construction due to start very soon)

Meh. It is only a $18K saving. Compared with all the loses you're about to make, it is not a good trade off IMO.

OK, so it is easier to criticise than it is to create. So what advice would I give you? Read here: http://www.somersoft.com/forums/showpost.php?p=803049&postcount=28

 

[C-mac]

Agree with Propertunity

Hi there,

As an investor myself and also a resident of Dee Why (I live off of Fisher Road), I have some opinions on the suburb in terms of investment potential.

My investment 'life' strategy is this:
- I never live in a PPOR that I own; I'm a renter-investor. I think it's smarter and maximises leverage.
- Dee Why can get some excellent gains in parts (in the 6% vacinity) buy you have to look. As Propertunity mentioned; buying off the plan is not a good idea (I liken it to buying a brand new car - the moment you drive it out the showroom you lose $5K in value).
- Instead; look at old-school 3-floor walkups with low strata overheads and close to Pittwater road. Yes, even the 'bad' side of Pittwater road (the non-beach side); areas close to here have excellent rent return
- In this flat market you can pick up 2bdr old-school units (unrenovated) for less than $400K; and still command $450pw rent; already a good start

You sound like a new/young investor much like myself. I'm been working on a blog that might interest you. I love Somersoft forum but I wanted to start a blog for young aspirational investors (like myself - I'm under 30, have a portfolio of three properties, and looking to grow!). Please drop by and if you like it, follow it, so that when I post new blog articles I write, you can get them automatically. The URL is:

http://propertyspectator.blogspot.com/

 

[CHam]

According to the graph that Allure have provided on their website the median weekly rent for Dee Why is about $475 for 2 bedroom apartments currently. A 2 bedroom unit @ $540k purchase would give you a return of about 4.57% on this (hard to predict where rental rates will be at completion).

They will have good depreciation and possibly good capital growth but the holding costs will still be high.

 

[Cloudedhouse]

Not being sarcastic or anything, but can I ask...Why, Dee 'Why'?

I'm pretty familiar with the Northern Beaches. I lived in suburb close to DY. I came very close to buying a unit in DY there when I was 18.

However Im not so impressed with DY as a place to invest atm (In saying that I'd consider a house there). IMO too many units, plenty of them new... If I were to buy on the Northern Beaches atm I'd be heading to freshwater, harbord or queenscliff. I personally think it's a better CG outlook.

If I were to buy a unit on the Northern Beaches.. I'd go for something in a small block of four or so with the view to buy the entire complex. (Can you tell I like land and like being in control? haha)

However personally Im buying in the Western Suburbs and regional centres currently with a longer term view of having my 'good ol' Aussie battler tenants' help me buy a home on the Northern Beaches.

Much to the dismay of a lot of people I know Im definately not insular penninsular in my property buying habits. ** Try as much as you can to remember that investing is primarily a numbers game.

 

[pennyk]

Hi,

I am looking to buy an IP in Sydney for under <600K. Good, steady rental returns are top priority, followed by growth

What do you think of this:
- Brand New block of 111 appts selling off the plan right now in DeeWhy, expected completion in early/mid 2013
- Price for 2 bed + 2 bath + 1 car is 560K to 580K
- Expected Rent $500-$550

...

Is this your first IP?

I agree with the concerns Propertunity had.. too many apartments in the block, too much risk with OTP properties at the moment, and the rental return is not great from what you've quoted above. From CHam's post, its also likely that the marketing company is over-estimating rental returns, so you are looking at a fairly weak return on an expensive asset.

Also, assuming this is for a first IP, I would probably spend quite a bit less than 600K. I think its better to consider buying 2x 300K properties, when you are in the early stages of investing, to manage the risk.

 

[Aaron_C]

The most significant risk with OTP (in addition to what Propertunity and pennyk have said) is whether a bank valuer will value the property at what you paid for it. Many people have been burned when bank valuations on OTP have fallen short, which means that they can't settle and lose their 10% deposit.

Usually this has a cataclysmic effect on the entire development, because if one valuer is doing that, you can be sure that all the others are too. So you get lots of defaults in the building, and lots of desperate sellers. It's best avoided as your first investment because you don't want your first experience to be a bad one.

 

[beachside]

As others have noted:

Avoid OTP, you don't know what the end result will be. There has been some very ordinary stuff built in the last 10 years. I can only think of one block which was a credit to the builders and it was not sold off the plan - they did not need the money and it was the first block of units they had built - previously town houses. 10 years later and it still looks as good.

Better to buy something older that has been "run in" and its faults emerged.

Older (face Brick) has limited maintenance compared to a lot of new light weight blocks which are rendered and look crap after a few years when the render starts to crack or fall off - a lot of remedial work being done on buildings only 10 years old or less. (plus hassles with claims against builders). Just watch out for concrete spalling in older blocks, mainly balconies and where magnasite is used on slabs under carpet and lino tiles on the interior.

Too many high density blocks in the area, particularly along Pittwater Rd. Go for a walk up 3 storey block of up to 20, preferably less and closer to the beach.

I know the block you refer to but have not been tempted to even check it out - just another big block! Why would you want to buy it - nothing special in location.

 

[cadence]

You can buy 2 townhouses in the west in your price range ...

If you want a 2br unit, I'd pick somewhere like Waterloo / Zetland over Dee Why.

Some 2br townhouses in Aartamon have been sold at early $600ks.

IMO, there will be greater demand for properties closer to the CBD than the beach (more jobs in CBD and people working longer hours than ever - a job is a necessity for most ... being closer to the beach is more of a luxury)