Purchasing an apartment- new to property

Hi All,
I'm preparing to purchase an apartment in Melbourne. This will be my first property. Depending on where I can afford to buy I may/may not live in it. Preferably I will be living in it. I was looking at some student accommodation in Carlton, but after reading someone elses post, I'm not so sure about it. Basically I can afford to buy a place for 250-300k. My plan is to use the equity in the property to purchase another and I want to be able to get a decent amount of rent to be able to cover costs. Am I on the right track?:confused:

Can anyone give any advice/share experiences in what to watch out for in apartment buying? (in terms of the building itself, hidden costs etc)

Any articles, websites or books would be really helpful too.

Cheers and thanks to anyone that posts some advice, fingers crossed.
 
Hi A123! I don't have much experience with apartments though when I was looking for an apartment in Carlton I did learn that banks may not lend money for properties that are under 50m2 and for $250-$300k I would say you'd be hard pressed to find an apartment that size. If you do, let me know! ;)
 
Hi A123! I don't have much experience with apartments though when I was looking for an apartment in Carlton I did learn that banks may not lend money for properties that are under 50m2 and for $250-$300k I would say you'd be hard pressed to find an apartment that size. If you do, let me know! ;)

donners is partially correct - rather banks tend to see properties <50m2 has a higher risk and will only lend 70% (i.e you must have 30% dep). Many student accomodation units also have next to nil CG.
 
Hi apartment 123,

Agree with The Donners on all points.

I think you'd be lucky to find a studio for 250-300. I think studios suck if you're planning on building equity in this property to borrow against & purchase again.

1br would be a better choice for equity growth, but I think you may need to save a bit more :)

Look at what Michael Yardney says on capital growth, but also read up on others. He has a website & newsletter you can subscribe to (just google his name)...think there are others on here advocating capital growth strategies but can't think of them right now :)

Few quick pointers I have received in the past for apartments:

Look for blocks with less than 15 or so apartments in them (scarcity value & also you're not competing against (eg) 5 others for rental market at the same time)

don't look at anything under 50m2

Make sure they're strata NOT stratum/company title (so you actually own the flat & not just shares in the company, usually other owners make up the 'company')

Avoid main rds

Always get OSP

Try to look within 10-12kms major city ie Melb

Try to avoid buildings with lifts, pools etc as they cost way too much in body corp fees

Good luck :)
 
I recorded a seminar on multi-letting properties a year or so ago. It's a bit dated now and also relates to SA law but you might get something out of it.

If you go to www.adprop.com.au and enter your email address it will be sent to you automatically.

Hope that helps. X
 
Students apartments seem in some way similar to owning serviced apartments. Possibly decent rental returns (depending on costs) but so many restrictions that there is almost no capital growth.

I'm not sure what is possible to find in the sub-300 market in inner areas. Maybe inner west?
 
Hi, thanks for your reply-

i've recently found 2 apartments that im tossing up-

one is about 47sqm, the other 50sqm. As for re-sale (if i needed it), the smaller one to me is way better as the street is neat and there are not that many apartment blocks in the area as opposed to the other which is has quite a few.

they would all tick the boxes you mentioned before- im just struggling ot find what potential risks there would be for an apartment less than 50sqm. do you know of any risks?

cheers
 
Hi A123,

Risks, as other have mentioned...
-getting finance
-being limited to student accom
-not great CG so if you want to use equity from it for next IP, it may take a long time to build up
-limited pool of renters who want to live in such a small space.

Have you looked around Murrumbeena or Ormond? There are still some cheapies there.

Good luck,
M&M
 
Apartment123,
Due to the size of student apartments, most banks will not lend more than 70%.
CBA use to lend up to 70% but new regulations have been implemented and they will no longer lend to student accomodations.
Any apartment under 50 sqm, you will have trouble getting finance.
Also make sure you find out all costs before you commit to buy.
Body corporate is normally between 3k to 5k every year, you then pay 1k for council rate, another $500 for water rates...be sure to accomodate for all expenses...
Carlton last year has on average increased 30%, unless you can cover yourself fully (meaning having positive cash flow) I'd rather buy a place with a bit more land.
 
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