Property under 50sqm

[smurf79]

Hi all, just a question regarding smaller studio apartments as my step daughter is potentially looking at one as a PPOR.

Would you consider buying a 34sqm property if it was in a desirable harbour front suburb?

It's hard to compare stats as there don't seem to be many sales to compare to in the suburb we are looking at.

I am reluctant because I thought there may be issues for future buyers finding it hard to get finance to purchase such a small property. So it may impact future capital gains, but thought I would turn to the experts on this forum for advice. We will ofcourse be doing further research but more wondering if we just walk away now.

What could the possible pros & cons be?

 

[Peter_Tersteeg]

For the reasons you've already outlined, I'd be walking away from it.

From a lending perspective it's difficult to finance an apartment under 50sqm but reasonable achievable. Below 40sqm is almost impossible, the best case scenario is you could borrow 80% against it, but other lenders (of which there aren't many willing to even touch it) would be 60%.

Very, very few people are willing to live in something this small. This will heavily influence the resale value of the property.

If lenders are reluctant to fund against something, there's probably a very good reason for it. You'd be wise to follow their example.

 

[Brady]

I am reluctant because I thought there may be issues for future buyers finding it hard to get finance to purchase such a small property. So it may impact future capital gains, but thought I would turn to the experts on this forum for advice. We will ofcourse be doing further research but more wondering if we just walk away now.

Think you know the answer and have come to try and find reasons to buy.

 

[smurf79]

Thanks for the replies.

Your right, I wouldn't have even given this a second look for one of our own investments, but my step-daughter was advised by a different family member that it would be a suitable place to buy because of location & that it was "no biggie" to get finance with a 20% deposit. I thought based on that we should possibly look into it further incase we were missing something!

I will definately be advising her to buy a minimum of 1 bedder.

 

[alicudi]

Hi

For investment reasons I would say give it a pass. Having said that we purchased one in Box Hill, Victoria a couple of months ago for the following reasons which may be applicable in your circumstances:

1) We paid 50% ($110,000) of what it previously sold for back when it was new in 2007 ($230,000).

2) To rent a similar student apartment for the next 6 years as my niece is going to do a phd would have been very similar in costs to purchasing one out right and we would have been left with nothing to show for our money in the end.

This way even if the property has no capital gains in six years we still get something back, should it go up in price at all well that is a bonus. May be we will just rent it out after it is no longer needed.

Regards,

alicudi

 

[smurf79]

Thanks alicudi. She actually has a budget to buy up to around $1m as a max so it's important to make some capital gains (atleast keep up with the general market) along the way as presumably she will want to upsize at some point. That being said, lifestyle and location are also important so even with a budget of $1m its tough finding the right place as they are just selling so quickly.

 

[TMNT]

damn, ive stayed in some hotel rooms that are 35sqm, thats tiny

if its for ppor , then do what ever makes you happy

if its for investment......run forrest run!!!

20% deposit i think you might even struggle for finance, maybe a broker could confirm

 

[Peter_Tersteeg]

20% deposit i think you might even struggle for finance, maybe a broker could confirm

A very long time ago (pre GFC) I financed a 22sqm apartment with the CBA at 80% LVR, another one at 70% with the NAB. I'm not sure what's available in today's market, but that's where I'd start looking.

I've heard of a few lenders willing to fund below 40sqm at 60%. You'd be doing well to find much else.

If the potential budget is up to $1M, you'd be insane to go for an apartment this small. There are plenty of opportunities almost everywhere that make more sense.

 

[windyzz]

Thanks alicudi. She actually has a budget to buy up to around $1m as a max so it's important to make some capital gains (atleast keep up with the general market) along the way as presumably she will want to upsize at some point. That being said, lifestyle and location are also important so even with a budget of $1m its tough finding the right place as they are just selling so quickly.

I wouldn't be buying a studio under 40sqm for anywhere close to 1 mill.... That'll be mad! I know a friend who bought 20 sqm studio in Edgecliffe for 150k few years ago, there are no capital gain whatsoever....

If you're budget is 1 mill, you can look at buying 2 or 3 bedrooms apartment in inner west (marrickville, erskensville, dulwich hill), eastern suburb (maroubra, Randwick, etc), lower north shore (Neutral bay, mosman, Lane cove, etc)...

 

[alicudi]

Hi

I am not familiar with the Sydney property market but I am sort of shocked that you are looking at under 50sqm with a $1m budget.

With that sort of budget look for something larger with at least 2 bedrooms and most certainly stay away from any dedicated student type accommodation with $1m to spend if you come across any.

Regards,

alicudi

 

[smurf79]

Sorry, I should have been clearer. The 34sqm apartment is in McMahons Point and is under $500k & she was looking at that because finding a 2 bedroom that will go for under $1m is tricky. Shes also looking in Manly, but things are selling so quickly, if you don't get an offer in after the first open you miss out. Apartments listed for "over $750k" have been going for over 900k. One listed for over 950k went for $1.2m. So the studio was just a cheaper option she was considering.

 

[EN710]

Hi all, just a question regarding smaller studio apartments as my step daughter is potentially looking at one as a PPOR.

Would you consider buying a 34sqm property if it was in a desirable harbour front suburb?

No.

...a budget of $1m

Double no. $1M for 34sqm. Where is this?

What is it on the harbour that she can't get anywhere else?

 

[smurf79]

The 34sqm is under 500k. Not at the top end of her budget.