Purchasing in VIC - Frankston Area

[JIT]

The median price in Frankston increased 19 per cent from $246,500 to $295,000, in Rowville it increased 21 per cent from $355,000 to $428,000 and in Reservoir the median price increased 24 per cent from $311,250 to $387,000. The combination of high turnover and price growth reflects the high levels of demand for homes in these suburbs. A reason for this market activity can be linked to the affordability factor that these suburbs offer as they all have a median price below the Melbourne metropolitan median.

Allthough I generally don't put much weight on these sorts of stats. or do this sort of analysis with my own residential purchases...if you look at the latest median figures from the REIV, you get a slightly different story.

For Frankston, from Dec '06 to Dec '07, the median has gone from $252,125 to $303,000 - ie. a 20.2% increase.

For Reservoir, over the same time period, the median has gone from $292,500 to $411,500 - ie. a 40.8%.

That's almost exactly double the Frankston increase!

I don't know what the median rental increases have been like in Frankston vs. Reservoir over this time period, but my recent purchase in Reservoir was bought with a lease in place at $190 per week (below the 'market value' of closer to $240 per week rent at the time)...the existing lease has lapsed and the new lease will now be at $290 per week! This is in the space of 3 months !

Both are reasonable suburbs to invest in nonetheless.

Just that Reservoir is 10-14 km from the CBD, compared to the 50km or so to Frankston.

The beauty of inner Melbourne in the last couple of years has been the boom in property values AND rental values...virtually at the same time.

Those who were looking for 'value' (ala keithj) by some arbitrary measure of property being neutrally or positively geared at the time of purchase, have missed out big time.

Anyway, this is slightly off topic, but just thought I'd post this seeing as you were comparing Frankston to Reservoir.

 

[JIT]

Hi guys, i'm looking for my first investment and was thinking of a two bedroom unit somewhere close to the frankston shopping/train station area.

Do you think it would be a worth while investment? i'm looking at hanging on to it for long term.

Hi Bombtrack,

If you buy too close to the tracks, you could be left with a bomb - sorry couldn't help it!

(I just drove by Frankston scuzz central station recently)

 

[Harris]

Anyway, this is slightly off topic, but just thought I'd post this seeing as you were comparing Frankston to Reservoir.

Wasnt going to compare apples with oranges. Reservoir is just on the boundary of being 15 kms from melbourne and Frankston is 40kms -

I was talking about the activity level and subsequent effect on property values.


I compared Frankston with other outer suburbs and not Reservoir !

In outer melbourne suburbs, I believe only Frankston showed the highest growth and the reason was that amongst the outer suburbs, Frankston had the highest activity levels. That was the only point I made which was re-enforced by REIV article.

Harris

 

[JIT]

I compared Frankston with other outer suburbs and not Reservoir !

Yes, that's true, I was referring to the article.

A moron at REIV playing with stats.

I also take every chance to plug Reservoir .

ADD: The quite significant difference in distances we've quoted here will depend on your starting point, ie. Elizabeth St. or St. Kilda Rd. (I use Elizabeth St.).

 

[toony]

ADD: The quite significant difference in distances we've quoted here will depend on your starting point, ie. Elizabeth St. or St. Kilda Rd. (I use Elizabeth St.).

Elizabeth St. to St. Kilda Rd is not 10 kms. Reservoir is not bayside.

 

[JIT]

Elizabeth St. to St. Kilda Rd is not 10 kms.

ADD: And whether you look at the shortest OR simplest route.

Play around with this :

http://www.visitvictoria.com/displa...0000B41D-D36D-1A88-8B4680C476A9047C/vvt.vhtml

 

[Bradsdad]

Elizabeth St. to St. Kilda Rd is not 10 kms. Reservoir is not bayside.

I agree fully. It's nowhere near 10km. I headed into the city during Peak hour yesterday and it seemed more like 75KM

 

[Toni]

I quite like central frankston if it is not directly on the train lines. I believe long term, when developement in the city starts to take shape, there could be some zoning changes there and even if there are not, it's too close to the action to be a bad start.

My only suggestion and I could be wrong here to, is to stay away from the factory side, but who knows that could become sought after to.

Toni

 

[DAAJ]

Hello,

I am thinking about selling my investment property frankston but not sure what to do i know that their is great potential in frankston especially with eastlink and the marina.But with interest rates rising not confident that prices will keep rising.Would you sell now if you bought a couple of years ago?

Dom

 

[toony]

If i lived in Brisbane - i would sell. I had (its been good the last 18 mnths) enough trouble with my rentals in Frankston and i live 10 kms away.

But i dont believe in investing interstate. I want to drive by and see the properties.

 

[JIT]

If i lived in Brisbane - i would sell. I had (its been good the last 18 mnths) enough trouble with my rentals in Frankston and i live 10 kms away.

But i dont believe in investing interstate. I want to drive by and see the properties.

Do you mean problems with tenants?

 

[poperr]

Why do you need to be in distance from your properties? I have worked overseas for the past 15 years and have never seen any of my properties. They all seem to be going OK with reasonable PM...

 

[jingo]

If i lived in Brisbane - i would sell. I had (its been good the last 18 mnths) enough trouble with my rentals in Frankston and i live 10 kms away.

But i dont believe in investing interstate. I want to drive by and see the properties.

Toony, do you mind expanding on your troubles with your IP's in Frankston? From what I read you are an advocate for Frankston, and I would be interested to hear of any 'problems'/'difficulties' you may have encountered.

I have two IP's in the area, so I am interested to learn of your experiences.

Regards Jason.

 

[Harris]

I had trouble with first lot of tenants in my Cairns property that I bought in 2003( site un-seen). It went up by 35% in 12 months so my partner thought we should sell it due to the issues with first lot of tenants, and the fact that we have already seen most of the cap growth.

I made sure that our landlords insurance would cover for any unforeseen circumstances and didnt sell.

Fast forward to 2008 and it has gone up by over 280% as did the prop in rocky.

When things are looking a bit shaky, there are some issues with tenants, interest rate rise on the horizon , the first thing that comes to the mind is to nip the evil in the bud and sell the "dog".

What we dont realise that after we factor in all the costs to sell and the initial buying costs and compare it with holding costs whilst making sure that landlord insurance is in place, the decision to hold pays dividends long term than the decision to sell.

I have 12 lots of tenants in my Frankston prop and whilst there are issues, none of them are un-manageable. If they damaged the prop, I have insurance.. if they did a runner, then insurance will cover that too. For little ongoing hassles, I have a handy man who goes around and fixes almost anything and only charges me $28/ hour.

Broken stove..? No problem.. He finds me one costing $120 from a second hand store. He does painting, patching up, plastering, fencing, plumbing etc and is my first point of contact.

Anyway, I am focussed on my long term picture and determined to see the lean patch through.

Leaving for a Work "Boot-camp" for a week and wont be around to post. Will post some more thoughts on return.

Harris

 

[BayView]

Hello,

I am thinking about selling my investment property frankston but not sure what to do i know that their is great potential in frankston especially with eastlink and the marina.But with interest rates rising not confident that prices will keep rising.Would you sell now if you bought a couple of years ago?

Dom

Why are you thinking of selling in Frangers?

We have had an IP there since 2004. If you've only just bought in the last 2 years, you've got in at a good time; stay on for the ride!

We are from Dromana, and have relatives in Frangers North, Langwarrin, and my wife and I both worked in Frangers for a few years.

We recognised it's potential 4 years ago.

While the area is still going mad, I expect the long-term growth there to be great.

It is still affordable mostly, near the beach, great infrastructure with shopping, beach, schools, Uni, Tafe, train, proximity to CBD, transport, etc.

 

[DAAJ]

Hi L.A

My Property is a student accommodation it has 8 bedrooms 2 kitchens, lounge, dining and common room only problem 1 tenant!I have lowered the rent by $30 per week.($80 per room) I have thought of renting it to a large family but it is straight across from Monash uni so may not be suitable. 1 day on market and have 2 offers over $400k.I may reconsider selling.So issue is rent return on mortgage repayments.But may be a tax benefit, but i don't earn much.

Cheers
Dom

 

[Toni]

Dom your property is a little differant to the average home down here. Have you tried letting the rooms out to employed persons, as well as uni students.

I used to run my home on Sycamore Road this way and was rarely short of a lodger. Also I think when people see low lodging costs, they may presume poorer living conditions. I was charging $110 + $20 expenses per week and never had much trouble filling the rooms.

The other deterrent maybe the number of rooms available for lodging. Most people have enough trouble living with one or two strangers, but 7 or 8 could create fear in alot of peoples minds.

Has it ever been successfully run as a lodging property or has it always had vacancy problems?

Toni

 

[long88]

Just a question to those people who are interested to answer...

i am looking for frankton atm the moment, in particular frankston south.

is this a correct time to buy ? (or would there be such a thing as a correct time ?)

i have seen prices on average frankston have gone up to around 310k, karingal is catching up to about 290k, and south frankton is 380k to 400k mark (all talking about 3 bedder), and in the golden triangle area (hill area, seperated by morooduc highway).

i am thinking how if south is around 400k now, could it more in the future ? (CG ??) or should just buy in the average frankston, and will be seeing a greater return ? (90k more of mortage).

obviously this is for investment, and will like to hold it for long time (approx 10 years).

any suggestion ?

thx

 

[DAAJ]

Hi Toni,

I have only had uni students in the property but i am forced to attract different tenants.How would i go about renting it out to unemployed people Toni?And no its never been run as a lodging property.I would like to keep it as it is an unusually large property with those 8 bedrooms but i would have thought property managers could have advised or informed me of a better way to fill it.

Dom

 

[Toni]

Dom, I advertised in the local paper and compiled a "house rules" document which they signed before entering the property basically confirming that they were lodgers and if they didn't adhere to the rules of the house they would be asked to leave.

The rules were numerous, but they protected me and my property. The only other problem I faced was finding an insurance company that would cover it, which fortunately I did.

The problem with this set up is that you really need to be residing in the same suburb to make it work and unfortunately when there is a problem you have to get involved.

Your set-up is a little easier, given that the Real Estate Agency handles it all for you. Maybe you could ask them if they would consider advertising outside of the university to also include employed persons.

I definately would not suggest puting unemployed people in your home. Some unemployed people are unemployed for a reason, i.e. drugs, mental illness etc. and I don't know that I would want the drama of that. One bad person in your home can send all the other good ones packing...

Toni