Off the Plan in St Kilda

To the y man I was just trying to state my logic for purchasing in that area with my comment in regards to low occupancy rates. No need to be sarcastic

I wasn't been sarcastic - I was being pedantic - I think you mean Vacancy Rates?

In my (admittedly limited) understanding:

Occupancy rates = percentage of time the unit is occupied.

Low Occupancy = High vacancy = very bad for investment properties

Cheers,

The Y-man
 
Ok Y- Man you got me yes I meant Low "Vacancy Rates" No Problem!

Don't worry - you'll develop a thick skin soon from everyone jumping onto the slightest terminology mix up :)

Just wait until you get loaning and borrowing mixed up! You won't hear the end of it for about 20 posts..... :D

Cheers,

The Y-man
 
Hi Raygun,

I'm new to this forum, but I've been advised buying new & especially off the plan is generally not as financially good as buying an older property.

I've been told this is because you can value-add to an older property whereas there's no scope to improve a new one (ie reno's extensions, facelifts).

Also, as others have already said, you're paying a premium price to the developer etc...don't believe what they're saying about a bargain!

Also, there are a lot of overheads (gym, lift, carpark hoists) in new apartment buildings...higher body corps etc.

Also, older buildings seem to appreciate (on the whole) faster than new ones. (Please feel free to correct me here as I'm no specialist by any means, just what I have read).

Might be a bit late to add much, but I believe the primary reason for slower initial growth in some new properties is because of that developer "profit". (Been there, done that - little to no growth for 3 yrs) Unless you have a developer who's about to go under and needs a quick sale! :p

As a lesser influence, new properties depreciate quicker than old properties. Although the tax man allows depreciation in a straight line, I believe the diminishing value method is a more accurate description of what happens in the "real world." Which is why there may not be much difference in rental demand b/w say, a 5yo vs 8yo property, but can be a lot of difference in demand b/w a new and 3yo property!

I wouldn't say that new places as a rule have higher body corp; in fact, an older place requiring external maintenance may be higher! I would say that a place with a pool, lift, gym, etc will have higher BC than a place without, regardless of age.

And with renovations, one would just need to be careful not to overcapitalise - and end up spending more buying and doing up an old place than simply purchasing a new place! ;)

Also, newer apartments are attractive to renters, but quickly lose their appeal once an even newer block comes on the market. Then you're faced with competing with the other owners in your block for tenants...not good if it's a large block ie over 30 apartments.

I think you'd be better of buying an older property for that amount. It will have some scarcity value to it as it's not going to be exactly the same as 20 others in your block.

*snip*

Agree with the scarcity factor; but again, this isn't always a new vs old argument. So maybe a bit of Captain Obvious in that lot, but hopefully helps, FWIW.
 
Ok so to resurect this old thread. Ive taken the plunge here and I have purchased. We will see in a couple of years what happens. Im confident Im goin to be ok with this project, the location is excellent and St Kilda does not have a huge amount of new stock coming on the market.
 
I won't buy OTP again

I bought my first place this way and it was pretty dreadful. The builder did a shoddy job (my intercom NEVER worked) and the body corporate was so big and had so many non-residents on it (it was a large development near the city) that it couldn't get a thing done. For me, the capital growth was threatened by the bad maintenance of the place. I could see it was falling apart and got out before it turned into a complete ghetto and I couldn't sell.
I won't take that risk again.

I agree with PP that an older place in East St Kilda might be a better buy (much of East St Kilda is now trendier than St Kilda proper in my humble opinion). I wouldn't buy a tiny 2 bedder myself, either. Harder to let, I would imagine.
 
Yeah thanks for the info!! Yep its too late like I said I will post in a few years and we will see! The Developers reputuation is at stake I dont think it will work out like your experience but then again I wont know until its finished!! Ahh the joys of buying off the plan.
 
Just an update on this purchase. It didnt work out.. VCAT ordered a change to the plan as the second bedroom didn't have access to natural light so they turned it into a 1 bedroom plus study (the living area was made slightly larger) and only offered a 20K discount. As this was a material change to the plan I was able to rescind on the contract. The loss of the second bedroom just didnt make the numbers stack up.Basically a very expensive 1 bedder!! Off the plan is fraught with danger as Ive just found out, do all your research very carefully. This whole thing was a waste of time..but you learn from your mistakes.
 
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