OTP - Queens Rd Melbourne

G

Grant85

Recently I have been considering an off the plan apartment as my first property purchase. I am an Australian, working in the middle east, and am scheduled to return to my job in Melbourne in February 2013.

I have been looking at the Monarc Apartments on Queens Rd Melbourne, opposite Albert Park. The particular apartment is a 1bed + study, 1 bath, with a car park on the ground floor, 56sqm, 21sqm patio. It is North facing, and the neighbouring building is 12m away, and 7 stories. The developer is asking $490k, fixed.

The estimated completion is "mid-late 2013" which fits in pretty well with my return, and I would plan on living in the apartment at least initially, with the intention of holding it long term, and later renting it out as my needs change.

The appeal to me is getting into the market, as I have the 10% deposit, though as I am now a non resident for tax purposes, I would require a 20% deposit for an established property, plus extra stamp duty. While the extra 10% wouldn't take me too long to save, I would prefer to put that towards my outstanding loan which I took for my education. I am able to afford the extra debt as I have quite a well paying job (online calculators quote my borrowing capacity to be approx. $840k), though I obviously don't have the deposit saved to do this.

Some of the questions I have are:
Does the price seem reasonable?
If anyone is familiar with the project, what is your opinion of it?
Overall opinion of otp developments in this area?
Do buyers make money off these kind of developments? or is that rare?
Can someone point me in the direction of information as to how much stamp duty I would actually be liable for?


Any other constructive comments or tips would be much appreciated, as I am keen to make the right decision here and have my bases covered as best I can before I take the plunge!

Thanks in advance
 
Honestly I'm not really a fan of that location. You won't get great rentals there compared to an equivalent apartment within the CBD itself, because the location is a bit isolated from everything else.

Having said that, the size of the apartment is pretty standard nowadays but I think it's a bit too small to get a good return even though the price is ok.
 
If your education loan is interest free (HELP/HECS) and you are a non resident for tax purposes (ie they can't deduct it from your salary)...why in the world would you pay the loan back? haha
 
Unfortunately my chosen career meant I didn't qualify for any form of fee help or HECS, though it did get me a good job. So I have a loan, and the interest to go with it!
 
Grant85 said:
The developer is asking $490k, fixed.
Click to expand...

Express interest, ask lots of quesitons - then walk away. They may suddenly become flexible on price (unless the thing is really selling well)


Grant85 said:
Overall opinion of otp developments in this area?
Click to expand...

Quite a few happening in the general vicinity. Also quite a few that have been built recently - so supply is not exaclty on the rare side.

Unless you get something facing the lake (which I bet costs 600% more) - you'll most likely be looking straight inot another apartment or an office - which is pretty much on par for the area.

Great place to get if you're into Formula One by the way.... :D


Grant85 said:
Do buyers make money off these kind of developments? or is that rare?
Click to expand...

Many variables - market conditions, delays, incorrect costing forecast...etc etc.

Grant85 said:
Can someone point me in the direction of information as to how much stamp duty I would actually be liable for?
Click to expand...



http://www.sro.vic.gov.au/sro/SROnav.nsf/Home+Page/SRO~Home+Page?open




Grant85 said:
Any other constructive comments or tips would be much appreciated, as I am keen to make the right decision here and have my bases covered as best I can before I take the plunge!
Click to expand...

Ask from whoever is flogging this to you:

1. Previous projects by the developer (you can see if their buildings/values have held up or have turned into dumps)

2. the contracted builder (fly by nighter or a big listed company?)

3. Facilities and projected OC costs (take the figure and double it...)

4. Copy of the contract (it should be a sizeable book - not your "ordinary" sales contract) - for you to go over every word in... check for escape clauses, conditions, what the developer is allowed to do etc


Then make sure youhave a comfortable margin in getting a loan for it - get an idea of the LVR (could be 80% or even less - as it is likely not to be Res A zoning), and have a big plan B in case on completion, the valuation doesn't come up to the contract price (could be 80% of what you agreed to pay for) and/or your serviceability at the time of settlement looks "bad" (i.e. you are between jobs - so technically unemployed etc)

The Y-man
 
Stamp duty calculator...
http://www.barefootinvestor.com/financial-calculators/stamp-duty-calculator/

I guess the risk with a high rise apartment complex is that if one apartment in the complex sells at a low price for whatever reason it can set the bench mark for the entire building. What kind of sucker will be paying $495,000 for an apartment when the one next door just sold for $450,000? Even if that apartment was sold cheaply because the seller was in a hurry to sell etc, etc.

Apartments typically don't have much capital growth because they don't have much of a claim to the land. Land is where you get your CG. That makes apartments better as an income property (high depreciation tax concessions, higher rents) than a home or unit. I think income properties are a better investment further down the track (after you have a few negatively geared capital growth properties and you need the income for cash flow). Apartments have had CG in Melbourne over the past few years but some think this is because of a bubble and you don't normally see that type of thing.

If property markets were to crash (as some people are predicting) I think it would be apartment complexes and the new outer mortgage belt areas that would suffer first.

IMO an apartment in a block of 4, a unit or a house would be a safer investment. But obviously that kind of investment will cost you much more in the same area.

These types of places can also charge high body corp fees if there is a pool/gym/security in the building.
 
Oh and also if there was a way you could find out what type of people are buying in the building, investors or owner occupiers?

Renters tend to devalue your apartment, they can be loud, messy, careless etc. I recommend buying in a building with a high proportion of owner occupiers.
 
Thanks for the reply Y-man.

I have been asking every question I can think of, I want to have as good an idea of what I am buying as possible.

The developer is Evolve Developments, which is apparently half owned by Ron Walker. They have completed a few projects around Melbourne from what I can tell, and according to their website have 5 on the go at the moment.

Contracted builder - good point - not sure, I'll find out.

Facilities - resident's lounge and gym, OC fees approx $5k a year.

The contract is on it's way to a conveyancer that has done quite a bit of work for family, and apparently sees a lot of these contracts. I have read through it, and the main point I saw was the dimensions can change by 5% without compensation.

Then make sure youhave a comfortable margin in getting a loan for it - get an idea of the LVR (could be 80% or even less - as it is likely not to be Res A zoning), and have a big plan B in case on completion, the valuation doesn't come up to the contract price (could be 80% of what you agreed to pay for) and/or your serviceability at the time of settlement looks "bad" (i.e. you are between jobs - so technically unemployed etc)
Click to expand...

I haven't heard of this, does it mean that depending on the zoning of the land, a bank may only be prepared to lend 80% of the value?

As for the job thing, the only way that I will be without a good paying job in Australia at the time is if the company goes bust, and I don't believe it is at all likely.

Also for the stamp duty calculations, as the building is yet to commence, the duty is payable on the land value only? Is it as simple as Land value/number of apartments is the taxable amount?

Thanks again
 
Blair,
I have checked those kind of calculators, but do they not apply to established properties? What is the value of the stamp duty saving for buying off the plan?
Thanks
 
If you're looking for a CBD apartment, buy a true Melbourne apartment in a nice building. Examples would be regency towers at 265 Exhibition Street. It's not new, but the apartments are bigger and clean, plus body corporate is cheaper.
 
Grant85 said:
Also for the stamp duty calculations, as the building is yet to commence, the duty is payable on the land value only? Is it as simple as Land value/number of apartments is the taxable amount?

Thanks again
Click to expand...

Yep - one of the big selling points of OTP - "(next to) No stamp duty"

The Y-man
 
Grant85 said:
I haven't heard of this, does it mean that depending on the zoning of the land, a bank may only be prepared to lend 80% of the value?
Click to expand...

Don't know if things have changed, but I think last time we looked at this sort of thing (which admittedly was a long time ago)

1. Queens Rd is a funny extension of Postcode 3000 and may come under CBD zoning (which seems to scare lenders)

2. The building may be classified "mixed use" if it has businesses (eg restaruants etc) on the ground floor

Hope one of the mortgage brokers here can confirm for you.

The Y-man
 
Wunderbar,
I wouldn't say I'm looking for a CBD apartment. I like the area from Port Melbourne across to South Melbourne/St. Kilda Rd, and down to about Fitzroy St in St. Kilda.

As for the no stamp duty thing, in my case it's around $20k that I wouldn't have to come up with up front. Yes, I will be paying for it in some other ways, but when you are trying to break into the market it's significant.
Thanks!
 
Wunderbar said:
Why are people so obsessed with this aspect? It's just a marketing ploy, you're paying for the stamp duty in the margin
Click to expand...

Correct - they jack up the price accordingly. Same with the "you'll get great depreciation" thing - yeah, it depreciates steeply for a reason... ! :)

The Y-man
 
lol pay more and get more depreciation!

Honestly Grant85 if you can find a Port Melbourne/St Kilda equivalent it'll be a better buy I reckon. I find that there are too many apartments in Melbourne CBD and a glut of similarly sized and similarly located properties is never a good thing. Just look at the performance of Southbank apartments in the past 10 years - hopeless!
 
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