Point Cook, VIC

[neofite]

Hi All,

My husband and I are beginners at purchasing properties. I am currently
looking for an owner occupied property with a view of living in it for a
couple of years and then having it as an investment property. The reason
for this is to step into the property market with a outlook of moving into
our desired property in 3-5 years.

Most houses on the eastern and northern suburbs are out of our price range
at the moment. Hence, we are looking at Point Cook as an affordable suburb.

I have a couple of questions to all property pro's out there:

1. Is Point Cook a good area to be buying into? I have heard of a new
infrastructures such as the Williams Landing shopping center and the train
station that will open up the suburb. However, demand in Point Cook at the
moment in low whereas supply is high - hence capital growth is kept low.
Since we are looking to have this property as an investment 5 years down
the track, is this a good area to look at?

2. What investment strategy should we implement? Reading about property
investment strategies did not help as I could not find a strategy where a
property is bought, lived in for 3 years, renovated and then rented/sold.
Is this a common and viable strategy?

Thank you very much for any advice provided.

 

[jrc77]

I am currently
looking for an owner occupied property with a view of living in it for a
couple of years and then having it as an investment property.

Make sure you structure the loans correctly so that when you convert it to an IP as much interest as possible is tax deductable. To do this:

a. Borrow as much of the purchase price that you can (work out if you will be paying mortgage insurance or not with your base borrowing and then maybe take it up to highest loan you can)

b. Get loan to be interest only with an offset account. Pay the minimum interest repayments into the loan account and put all spare money into the offset account. Try to at least put into the offset account the difference between what you would have been paying and the interest only amount.

When you want to buy your new PPOR in the future you can simply withdraw the cash from the offset account as the deposit for the new house. Once you rent out the first place, all interest on the first loan will then deductable.

Regards,

Jason

 

[MrHyde]

I currently have two IPs in Point Cook that I bought in the last 6 months. They have already shown good growth. I don't expect that to continue in the short term due to the increased supply.

Point Cook itself has grown a lot and has pockets that are considered better than others. When buying my properties, I stayed away from Sneydes Rd and further South as being too far from Point Cook Town Centre and the freeway. There is lots of land available that side and that will keep property prices low for the short-medium term.

The market in Point Cook has slowed in the last two months as well. Saying that, I have not noticed any price drops, just price stabilising from when I purchased 6 months ago. I can recommend a very good real estate agent in Point Cook who was very helpful in our search. He managed to understand what we wanted and only forwarded us property that we would be interested in. Our second IP was bought from him and it was never even advertised (even on their own website). PM me and I can forward his details to you.

The rental market is also very competitive at the moment. On last check, there were over 200 houses available for rent and a 3.8% vacancy rate. That will affect whether we can increase our rents when lease renewal is due.

Saying all this, I do think Point Cook is a good place to invest for the long term, hence our purchases. I don't think the Williams Landing railway station will make much difference as it would still be too far to walk... could be ok to drive to, but most people will drive to Laverton as that is Zone 1 compared to Williams Landing (zone 2). I think the long term prospects of Williams Landing are also very good due to the planned railway station and town centre. However, every release so far has been too small plot sizes and way over priced (IMO). I think Williams Landing will show growth once it is complete and established. Unfortunately, I can't afford the holding costs to buy now and wait that period of time. The rental yield in Williams Landing is very bad at the moment due to not having any amenities near by. The other thing about Williams Landing is the lack of any schools. The kids have to go to schools in Truganina or Point Cook as there will be none in Williams Landing.

You may be interested in Williams Landing as you want a PPOR and as such, could ride out the time it would take to establish Williams Landing.

I don't like the other nearby suburbs of Truganina or Tarneit as being too far. The new railway station at Tarneit is a V/Line station going to Werribee, so city going is still a pain. Who knows, in a few years, they won't be considered too far anymore.

Edit: Just wanted to add a comment on your proposed strategy.
Point Cook is a fairly new suburb. Most of the old houses are only 6-7 years old. As such, if you live in them for 3 years and then rent out, there really should be no need for renovations.... maybe just a new coat of paint.

 

[forumite]

1. Is Point Cook a good area to be buying into? I have heard of a new
infrastructures such as the Williams Landing shopping center and the train
station that will open up the suburb. However, demand in Point Cook at the
moment in low whereas supply is high - hence capital growth is kept low.
Since we are looking to have this property as an investment 5 years down
the track, is this a good area to look at?

Despite the negative things other members on this forum had said about Point Cook (such as it is a place of douchebags and single mums), I have been to Point Cook many times, having lived closeby in Altona and I like the place. It is very tidy, the Point Cook Shopping Centre is nice and I think there are many professionals living there (I don't agree with the view of others in this forum that this is a low socioeconomic suburb).

IMHO, Point Cook will only get better and will be good for property investment.

Best regards
forumite

 

[neofite]

Hi Jason, MrHyde and forumite,

Thank you very much for your replies/suggestions. They have been very informative and helpful.

Jason,
Fantastic points! Our strategy is exactly in line with the two suggestions you have given.

MrHyde,
You are right in that prices of properties in Point Cook are stabilising. However, we are currently in a situation where the vendor would not budge from his/her asking price. We did the calculations and worked out what the price would be for the property based on a 20% price growth from last year (as reflected in the Point Cook house median prices of last years and this years). The vendor, however, is an investor and is asking for twice the median house price growth. Do you, as with me, think that this is an overestimation?

The property is close to the Point Cook Town Center (we are staying away from Sneydes road). I would appreciate the contact details of your real estate agent, the one you say is very good.

I agree with you in that Williams Landing is a good prospective area but that prices are just too high for a small piece of land. Hence, we will not be looking into that area for now.


forumite,
I think you are right in that Point Cook is a nice, developing area with a lot of potential. We know a lot of people there who work in white collar jobs. I think, at the moment, the only thing that people think twice about it is the West Gate Freeway being the only way into the city. Any suggestions on quicker routes (with the least distance)?

 

[chb]

I live in Williams Landing and it's good location wise. I would say it has the best location as it is close to the train station(laverton) and close to the freeway.

The only thing different is that Point Cook has that suburb feel to it which is great. Other than that and the cleaner/tidier neighbourhood I would say around Truganina isn't too bad

 

[Indifference]

forumite,
I think you are right in that Point Cook is a nice, developing area with a lot of potential. We know a lot of people there who work in white collar jobs. I think, at the moment, the only thing that people think twice about it is the West Gate Freeway being the only way into the city. Any suggestions on quicker routes (with the least distance)?

Yes, Yes and Yes...

I just moved from Point Cook to the US... I owned a house (in Sanctuary Lakes) and lived there for 3 yrs with my family. I don't class myself as low-socio-economic, nor any of my friends whom live/own there (most of whom are white collar professionals with commensurate remuneration...)

My only real gripe was, yes, the West Gate Freeway. BUT, the Monash in the SE is NO better. Alternatives don't really exist as the only other way is through Footscray and around the docks...not faster, just a change of scenery.

Point cook is a great family area and you can buy a really good house without the ridiculous price tags expected in the SE or E Melb suburbs. I have given up listening to the PC knockers and I really don't care that the old Cheltenham Salt works was there, and all the stories of landfill... Please, most estates are built on landfill these days!

Having actually lived there and having moved from living in an upmarket executive 3Bd apartment on St Kilda Rd, postcode 3000, I didn't regret the decision at all... but, then again, I am not one of the doom & gloomers

 

[Ms Jade]

However, we are currently in a situation where the vendor would not budge from his/her asking price. We did the calculations and worked out what the price would be for the property based on a 20% price growth from last year (as reflected in the Point Cook house median prices of last years and this years). The vendor, however, is an investor and is asking for twice the median house price growth. Do you, as with me, think that this is an overestimation?

If the house is too expensive compared with comparable properties i'd say walk away right now. That said, median house price growth is not based on each house increasing but what happened to sell in the suburb over the last year. I imagine that more new homes have sold & that the price of new homes has gone up, thus increasing the median price. This should act to raise prices of existing stock but perhaps not straight away & not by 20%.
By twice the median growth, are you saying that the house was bought for 40% less a year ago??

if you've been looking around at what things are actually selling for you should have a good idea how much a house is worth. Now is certainly NOT the time to pay top dollar for anything - especially when there is so much stock.

 

[supplydemand]

why south of sneydeys rd is not equally good to north?

i think houses on the south of sneyde rd has more suburb feel than those tiny townhouses next to pc town center.

comparing vacant land prices (genuine private sales, not buying from agent's landbank), south and north carry similar prices, but the question is can you find one with a general size south of sneydes?

travelling west on sneydes land prices should drop a little, due to fact that the more west it get the closer it is to hacketts and princess, it sounds like a F1 strip at night.

 

[supplydemand]

Hi Jason, MrHyde and forumite,

Thank you very much for your replies/suggestions. They have been very informative and helpful.

Jason,
Fantastic points! Our strategy is exactly in line with the two suggestions you have given.

MrHyde,
You are right in that prices of properties in Point Cook are stabilising. However, we are currently in a situation where the vendor would not budge from his/her asking price. We did the calculations and worked out what the price would be for the property based on a 20% price growth from last year (as reflected in the Point Cook house median prices of last years and this years). The vendor, however, is an investor and is asking for twice the median house price growth. Do you, as with me, think that this is an overestimation?

The property is close to the Point Cook Town Center (we are staying away from Sneydes road). I would appreciate the contact details of your real estate agent, the one you say is very good.

I agree with you in that Williams Landing is a good prospective area but that prices are just too high for a small piece of land. Hence, we will not be looking into that area for now.


forumite,
I think you are right in that Point Cook is a nice, developing area with a lot of potential. We know a lot of people there who work in white collar jobs. I think, at the moment, the only thing that people think twice about it is the West Gate Freeway being the only way into the city. Any suggestions on quicker routes (with the least distance)?

walk away if prices is not right, there is plenty going around at the moment, land prices has stalled over the past 2 months.

guess what, you can only live in it happily only if you like the house.... and the sacrifice you made to acquire that house. if you think the price is a ripped off, it will always be a ripped off when you are living in there.

 

[MrHyde]

It depends on what you define by "good". The quality of houses and the feel of the area is similar both north and south. And by north, I don't mean the town houses, but estates like Boardwalk.

The main reason I don't like south of Sneydes is due to distance from freeway, train station and town center. It is an arbitrary line that I drew when looking for what I considered to be a good investment location. I do think the market agrees with me as the prices of houses in the estates south of Sneydes (Alamanda, Featherbrook, 30/30, etc) are more than 10% cheaper than prices north of Sneydes.

At the end of the day, it comes back to what you are looking for in the property and what you are happy with. For a PPOR or a FHB, I would consider buying in those estates as it is cheaper, which would mean less bad debt for me. For an IP, I ruled those areas out.

why south of sneydeys rd is not equally good to north?

i think houses on the south of sneyde rd has more suburb feel than those tiny townhouses next to pc town center.

comparing vacant land prices (genuine private sales, not buying from agent's landbank), south and north carry similar prices, but the question is can you find one with a general size south of sneydes?

travelling west on sneydes land prices should drop a little, due to fact that the more west it get the closer it is to hacketts and princess, it sounds like a F1 strip at night.

 

[neofite]

Make sure you structure the loans correctly so that when you convert it to an IP as much interest as possible is tax deductable. To do this:

a. Borrow as much of the purchase price that you can (work out if you will be paying mortgage insurance or not with your base borrowing and then maybe take it up to highest loan you can)

b. Get loan to be interest only with an offset account. Pay the minimum interest repayments into the loan account and put all spare money into the offset account. Try to at least put into the offset account the difference between what you would have been paying and the interest only amount.

When you want to buy your new PPOR in the future you can simply withdraw the cash from the offset account as the deposit for the new house. Once you rent out the first place, all interest on the first loan will then deductable.

Regards,

Jason

Jason,
Got a few questions regarding structuring our loan correctly:

1. We have to pay 20% of the value of the house to avoid LMI. This means that we will own 20% of the house. Is this a good idea if we will be having this property as an investment house in 5 years (if we own 20%, that will not be tax deductable when the property becomes an investment property)?

2. Say if we decide to pay LMI (i.e. borrow > 80% of the value of the property). Will the cost of LMI exceed the interest rate cost of the % of loan we borrow above 80%?

Thank you.

 

[Deltaberry]

A year ago we had the big debate about Point Cook vs inner city. Anyway I casually flicked through Property Investment magazine today at Borders - didn't really read any of it but thought I'd check out their data on rising house prices.

I took a peak at PC, which rose 9% over the 12 months compared with Carlton which rose 32% over the same period. Ah if only we can bring those threads back out as several members wanted to somehow discredit me by having me scan my payslip in to prove I earned a certain amount or something like that... Anyway my next buys aren't in Australia so doesn't really matter...

 

[forumite]

Hi Jason, MrHyde and forumite,
forumite,
I think you are right in that Point Cook is a nice, developing area with a lot of potential. We know a lot of people there who work in white collar jobs. I think, at the moment, the only thing that people think twice about it is the West Gate Freeway being the only way into the city. Any suggestions on quicker routes (with the least distance)?

I live in Altona and walk to Westona Train Station every morning (6 minutes walk) to take train into the City. Hence, I am not bothered by the West Gate Freeway. I guess for those living at Point Cook, there will be a problem as Laverton station is always packed with people and you need to drive there early to get a carparking spot.

I have lived in Carnegie in the east before and I know the train load is much worse - the trains are often packed like sardines by the time they reach Carnegie station and I often cannot even squeeze in. I am not sure about the road traffic in the southeast but I don't think they are any better compared to the west. Princes Highway in the east has much more traffic than Princes Highway in the west even during non-peak hours.

If you are getting to the northern part of Melbourne e.g. Parkville, this may be a shorter route compared to the Westgate Bridge. I have tried it during weekends and not weekdays so I cannot speak of the traffic conditions on weekday peak hours.

Princes Highway > Somerville Rd > Hyde St (Yarraville) > Hopkin St (Footscray) > Dynon Rd > Lloyd St (under a train bridge) > Arden St (North Melbourne) > Grattan St (Parkvilled)

I suppose the future Westlink will provide an alternative route to the City.

forumite

 

[letitbe]

Build or Sell?

I bought a land in Point cook, the land is settled in December and looking to build a house as IP soon.

The total loan will be about 400k. With the rent price about 400 pw, is it a feasible investment?

The other attractive option is to sell the land, I've seen the price is going up for each release and not many lands are available.

Thanks all

 

[komstak]

The rental market is also very competitive at the moment. On last check, there were over 200 houses available for rent and a 3.8% vacancy rate. That will affect whether we can increase our rents when lease renewal is due.

Domain search showed 173 properties for rent. Pretty high vacancy rate. You need to be careful not to increase your rent too much.

 

[letitbe]

Domain search showed 173 properties for rent. Pretty high vacancy rate. You need to be careful not to increase your rent too much.

What is the ideal vacancy rate then? It's a new area with pretty good facilities except public transport. I'm Hoping the vacancy will be down in the next one or two years after all lands sold out, is it a too high expectation?

 

[Melbournian]

A year ago we had the big debate about Point Cook vs inner city. Anyway I casually flicked through Property Investment magazine today at Borders - didn't really read any of it but thought I'd check out their data on rising house prices.

I took a peak at PC, which rose 9% over the 12 months compared with Carlton which rose 32% over the same period. Ah if only we can bring those threads back out as several members wanted to somehow discredit me by having me scan my payslip in to prove I earned a certain amount or something like that... Anyway my next buys aren't in Australia so doesn't really matter...

just out of curiosity how much were you or are you earning?

 

[Melbournian]

I bought a land in Point cook, the land is settled in December and looking to build a house as IP soon.

The total loan will be about 400k. With the rent price about 400 pw, is it a feasible investment?

The other attractive option is to sell the land, I've seen the price is going up for each release and not many lands are available.

Thanks all

My land settles and is titled in Oct/nov this year. I hope to build like a prefab house which can be done cheaply.

But selling the land is also good too. I think it has gone up slightly if i can sell it hopefully it would be good then.

 

[MrJK]

My friend recently bought in Alamanda PC. Brand new house, 29 sq, 520 sq m, Metricon build. Asking price was $535-570k, finally settled $508k (originally offered $500k).
This happened 2 weeks back. So, bargains are out there!

I was hoping to buy something similar in Tarneit. What would be the ideal pricing for the same?