Reaching new heights - Inner Melbourne

Tell me about it!

I just purchased a 2 bedroom apartment in Toorak. Initial estimate $380k+. This was revised to $420k+ two weeks before auction. I bought it for $592k.

That is amazing... Could you pls share some details of the property? I'm about to start looking for a 2 bed unit IP in this and surrounding areas in the very near future.
 
Tell me about it!

I just purchased a 2 bedroom apartment in Toorak. Initial estimate $380k+. This was revised to $420k+ two weeks before auction. I bought it for $592k.

....and you still bought it!!!!??? Spose you can't go too far wrong in Toorak??
 
....and you still bought it!!!!??? Spose you can't go too far wrong in Toorak??

Yes, a little crazy. I was expecting around the 570-577k mark but there was some very strong opposition on the day (and therefore, there should always be very strong competition for it, driving capital growth – my theory anyway).

This unit has very high scarcity value.

  • Top floor, best in boutique block of seven,
  • Perfect aspect, loads of natural light,
  • Tree lined wide streets,
  • Stroll to #8 tram and Toorak village shops and cafes, just the right distance from Chapel Street and the city
  • Maximum amenity
  • 270 degree views over all the houses nearby,
  • Surrounded by million dollar +++ homes (potential for them to downsize and stay in the area),
  • Very high notional land value (I’m purchasing more land + ‘wow’ than depreciating building),
  • Parking on title,
  • Very original (but great condition) oversized 2 bedroom apartment,
  • Circa 1956, fireplace, usable balcony, logical floor plan, good storage space,
  • End of quiet court on elevation.

I certainly can’t imagine many apartments like this in the area.

When I look back in 20/30/40 years time and I’m sure I’ll be very happy with the decision. This unit (and area) has had high low volatile growth since day 1 and I can't see that changing in a hurry. I paid 4% over what I thought was fair market price (which is hard to determine in this particular area). If I had to pay $41,600 for it in the 70’s when the fair market price was $40,000 and still had it today I’m sure I wouldn’t care now.

Certainly adds some diversification to my portfolio of 40km+ SE suburb properties!! I'm a long way from Cranbourne now Toto!
 
Tell me about it!

I just purchased a 2 bedroom apartment in Toorak. Initial estimate $380k+. This was revised to $420k+ two weeks before auction. I bought it for $592k.

Great news david......did you have any help or did you go it alone.
 
How's this for underquoting?

Bordering the 'inner' suburbs, a 2 br worn down weatherboard in Niddrie (next to Essendon), quoted at $290k plus, sold for ... I kid you not ... $395k!

Vendor must have been rapt!
 
Well I have a great one....
McKinnon - Melbourne South Eastern suburb
Totally unrenovated 1920 California Bungalow - quoted $525 + sale price at auction - sold $803 and a bit.
That is crazy you would need to spend $200k + to bring it up to scratch.

Having said that - if you sold the property after renovation you wouldn't have over capitalised if done properly.

Carumble
 
That is amazing... Could you pls share some details of the property? I'm about to start looking for a 2 bed unit IP in this and surrounding areas in the very near future.

Whoooaa.... time to put my 2BR Prahran apartment on the market :D

Cheers,

The Y-man
 
So for those in the know, what do you really think is going on in Melbourne?

Are the agents deliberatley under quoting to create a little freenzy in the market?

Are they trying to make themselves look good?

Or is the market really hotting up?

The figures[listed and sale] that have been posted here are really quite amazing.

cheers yadreamin
 
Just taking the vendor's perspective for a moment though - if I want to sell a property by auction in these areas, do I get my agent to list my "realistic price" (close to my reserve)? If I do, will the potential buyers automatically assume an underquote (by a biiiiiig margin)?

Cheers,

The Y-man
 
DavidMC,

Sounds like a great apartment to live in, thanks for sharing.

Is it for a PPOR? Is it walking distance to a train station?

Also, just curious what sort of body corporate fees you'd be hit with for a block like this?

You said you overpaid by 4%, but that's really 6% if you used a BA, right?

I'm sure, as you say, time will make this a small price, but, not sure how long you will be waiting...

GSJ
 
Last edited:
Yes, a little crazy. I was expecting around the 570-577k mark but there was some very strong opposition on the day (and therefore, there should always be very strong competition for it, driving capital growth – my theory anyway).

This unit has very high scarcity value.

  • Top floor, best in boutique block of seven,
  • Perfect aspect, loads of natural light,
  • Tree lined wide streets,
  • Stroll to #8 tram and Toorak village shops and cafes, just the right distance from Chapel Street and the city
  • Maximum amenity
  • 270 degree views over all the houses nearby,
  • Surrounded by million dollar +++ homes (potential for them to downsize and stay in the area),
  • Very high notional land value (I’m purchasing more land + ‘wow’ than depreciating building),
  • Parking on title,
  • Very original (but great condition) oversized 2 bedroom apartment,
  • Circa 1956, fireplace, usable balcony, logical floor plan, good storage space,
  • End of quiet court on elevation.

I certainly can’t imagine many apartments like this in the area.

When I look back in 20/30/40 years time and I’m sure I’ll be very happy with the decision. This unit (and area) has had high low volatile growth since day 1 and I can't see that changing in a hurry. I paid 4% over what I thought was fair market price (which is hard to determine in this particular area). If I had to pay $41,600 for it in the 70’s when the fair market price was $40,000 and still had it today I’m sure I wouldn’t care now.

Certainly adds some diversification to my portfolio of 40km+ SE suburb properties!! I'm a long way from Cranbourne now Toto!

Congratulations DavidMc,

Sounds like a very well researched property. I'm sure it will appreciate very well in years to come.

Just from the responses so far, it really does seem as though the market is on the move in the inner suburbs in Melbourne. Hopefully it can continue for a little while yet!! (I have properties in North Melbourne, although I want another one, so maybe it could just stall until I buy it and then shoot up to the stars - Yeah, as if!!!)
 
Well I have a great one....
McKinnon - Melbourne South Eastern suburb
Totally unrenovated 1920 California Bungalow - quoted $525 + sale price at auction - sold $803 and a bit.
That is crazy you would need to spend $200k + to bring it up to scratch.

Having said that - if you sold the property after renovation you wouldn't have over capitalised if done properly.

Carumble

Yeah, definitely crazy. Like my example of a 55% increase, 380k+ to 592k.
 
Yeah, definitely crazy. Like my example of a 55% increase, 380k+ to 592k.

DavidMc well done and sounds like a good one for long term, however i cant help thinking you must have overpaid @ 56% above asking price!!!

nearly 600k for 2 bd apartment?

what kind of yield are you expecting?

i know inner melbourne is going crazy but geez
 
I found it myself but I still used the services of the Wakelins to evaluate the property and assist in it's purchase (i.e. bidding at auction).

Hi DavidMc,

How did you find the Wakelin's service? I am thinking of using them for my next purchase. I went to see them at the start of the year, and decided to purchase one on my own in North Melbourne (simply because the property that suited my requirements came up, and so I didn't waste time - just bought it - with the appropriate building inspection checks though!).

Did the Wakelin's give you advice on whether the property you had just purchased would stack up, in their opinion, to be a good investment? (Sounds like from the list of credentials you mentioned above, they gave it the thumbs up, or else they may have talked you out of buying it).

Do you think it was worthwhile having them bid for you at the auction, or, in hindsight, do you think you could have done it on your own? Did they advise you of their thoughts on the value of the property, and also have some insight as to why it would have been advertised at such a low price?

Look forward to reading your response.
Regards Jason.
 
DavidMC,

Sounds like a great apartment to live in, thanks for sharing.

Is it for a PPOR? Is it walking distance to a train station?

Also, just curious what sort of body corporate fees you'd be hit with for a block like this?

You said you overpaid by 4%, but that's really 6% if you used a BA, right?

I'm sure, as you say, time will make this a small price, but, not sure how long you will be waiting...

GSJ

It will be a PPOR for a while, but it will be an investment for the majority of the time I own it (which will be forever). No, unfortunately it's about 1.2kms to the train station (there is another one nearby but I think it's at most 100m closer). Not really walking distance.

Unsure about body corporate, but I know rates are around $600 pa which is certainly much cheaper than any of my other properties. I can't imagine the BC would be too bad consider there is no lifts and just a small communal laundry.

My way of thinking doesn't see it as 6%. I have to pay mortgage insurance as well whereas some do not, does that mean I've overpaid 8%? To me it's like saying if I used a solicitor that charged $5k instead of one that charges $750 is that overpaying on the property? Perhaps it's overpaying on the solicitor but in my mind the property was still $592k.

I paid:

+2% for LMI to provide me with the ability to leverage to 95-97%, this enabled me higher market exposure, allowed me to have a higher cash buffer and increased my IRR by a *huge* amount.

+4% over for the house, perhaps. Some say an auction is the best way to determine market value. I mean, who really knows? The commbank property value guide says units in Toorak increased in value by 18% in the last 3 months and the data is 'statistically reliable'. I have no idea (or care) if it's true but in my mind 4% is nothing in the big scheme of things and the market could have easily have moved that much in something as short as 3 months. This is what I had to pay on the day to secure a top rate asset and a lovely place I'll be able to call home and enjoy for a few years. Theoretically I can sell it tomorrow for 1k less to one of the other four very strong bidders. I just noticed this place online (http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2006372442#) which sold for $572k and I think mine is much nicer (more than 4% nicer). This one is on a main road, is part of a larger complex and has tandem parking). Makes mine seem less crazy.

+the buyers agent fee for hours of legwork (I value my weekends highly), getting better terms on the auction (I used a much smaller deposit), verification I've purchased a high growth property, usage of their solicitor to check all the contracts, having an experienced BA who buys 4 properties every weekend bidding at auction for me which potentially saved me thousands (maybe/maybe not). I don't feel this is part of the 'property price', it forms part of the purchasing costs. These different services surrounding the purchase of an investment that I would have to expend (in time and effort or in dollars if you outsource it all).

+a few hundred on property reports

+a few hours attending local auctions, getting a feel for the market, money on petrol, hours on Excel at home, etc.

I guess it's all just how you crunch the numbers and how you categorise your expenses.

As far as future growth, as long as it's does 3% pa avg I'll be in the red (I'm capitalising everything). I obviously feel it will do much better than this and from my research this area always has.

10% growth on this property (whether that takes 6 months or 3 years) is another property for me.
 
DavidMc well done and sounds like a good one for long term, however i cant help thinking you must have overpaid @ 56% above asking price!!!

It was massively under quoted. It's not an asking price either, it's just a bullsh*t quote lie to lure in buyers. It's just like stuff for sale on eBay, it's not really $1, look at the 'completed sales' in the advanced search to see what they actually sell for. There were two there who were just blown out of the water in the first 2 minutes of bidding as they obviously thought it would go for something in the high 4's. You basically have to ignore those prices and simply know the market and know what it's worth. You don't seriously think those things are accurate, do you? As I mentioned it sold for about $20k or 4% more than what the Wakelins and I guessed. I wasn't the only one at the auction, there were 5 other strong bidders.

what kind of yield are you expecting?

Something low. They say around $425 pw. Around 3.7% What kind of growth am I expecting? Something high and consistent.

i know inner melbourne is going crazy but geez

What can I say, it is...
 
I forgot to mention I used the Residex individual property report and it put it at 594 - 599k. I thought it was way off at the time but it was pretty darn close! I can't imagine how those things would do such a 'skewy' area like Toorak accurately but it sure did this time.

The APM one was way off, it said something in the mid 700's.
 
Back
Top