Reaching new heights - Inner Melbourne
- Thread starter jingo
- Start date
Overall, for me, they were satisfactory. I have very high standards. I've had other friends who have had amazing experiences with them.
Spot on.
This question is very hard to answer. You never really know which way an auction can go and how their experience can assist you. Unfortunately you cannot run 100 auction scenarios with both of us bidding and then analyse the results. What I do know is that in this market and in this price range it would be very easy for me to overpay what their fee was and that someone who buys 20 properties per month would be better at it than me.
They did help me push myself by providing a their seal of approval on the place. Who knows, maybe I would have stopped short if they weren't there, my hunt would have entered it's 8th month AND I *may* have had to pay $620k for the same thing in 3 months time if the market keeps going the way it has (not that there'd be another one of those for a while).
No results came back when I purchased past sales data, the property had never been sold and the entire block is tightly held.
thanks for replying davidmc, i think i've also seen this apartment online. it looks very nice.
running a few numbers
purchase price $592000
BA $10000 approx
Stamp $ 31180
LMI $13000 approx
other in costs $ 2000 say
total about $648,000
expected rent 425pw x 50 = $21,250pa
gross yield = 3.3%
your weekly shortfall after tax is probably gonna be big; depending on salary etc etc but i think in the region of $250 per week for this baby.
say holding costs of about 1k per month.
its a lot
but i think you will get very good growth with this one but at a cash flow disadvantage.
please feel free to tear my figures apart
***
from my own experience in inner west melbourne and on average, i'm seeing only marginal increases on asking prices say 3 or 6 months ago but people are just paying silly money for good properties.
ah yes i have the buyers remorse and sick feeling of missing out on a properties that i probably could have made 50-100k on in 6months in this current situation.
you should contact the reiv and complain about underquoting if you think this is what happened. on the whole i think this is happening to some extent but is not the reason for this perceived spurt its supply/demand issue and people realising there is (or was) value in melly
running a few numbers
purchase price $592000
BA $10000 approx
Stamp $ 31180
LMI $13000 approx
other in costs $ 2000 say
total about $648,000
expected rent 425pw x 50 = $21,250pa
gross yield = 3.3%
your weekly shortfall after tax is probably gonna be big; depending on salary etc etc but i think in the region of $250 per week for this baby.
say holding costs of about 1k per month.
its a lot
but i think you will get very good growth with this one but at a cash flow disadvantage.
please feel free to tear my figures apart
***
from my own experience in inner west melbourne and on average, i'm seeing only marginal increases on asking prices say 3 or 6 months ago but people are just paying silly money for good properties.
ah yes i have the buyers remorse and sick feeling of missing out on a properties that i probably could have made 50-100k on in 6months in this current situation.
you should contact the reiv and complain about underquoting if you think this is what happened. on the whole i think this is happening to some extent but is not the reason for this perceived spurt its supply/demand issue and people realising there is (or was) value in melly
Those figures seems pretty accurate. I came to around $15k pa negative cashflow after I added in other expenses like rates and that. It'll be a PPOR so for $350pw (I have a housemate who'll be paying some rent too) I'll be living in Toorak and enjoying the CG on a prime ~$600k property. I have friends and family living in Casey paying more than that for their $300k properties.
Yes. I mentioned in another thread that it's my view that the very good properties will always command a premium in almost any market, so even though you will pay a little more to secure it in the first place you'll get higher valuations or sale prices when the time comes.
I know how you feel. This is what was going through my head during the auction and why I decided just to go for it. I guess the lesson is just to buy when you can.
Apart from a moral victory I'm unsure what complaining will do. I'll still do it though (after it's all settled).
Yeah, that's what I think to. I've got a lot of confidence in Melbourne right now. All of the fundamentals are strong and for some reason it's the fourth most expensive capital - it's usually the second.
Yes. I mentioned in another thread that it's my view that the very good properties will always command a premium in almost any market, so even though you will pay a little more to secure it in the first place you'll get higher valuations or sale prices when the time comes.
I know how you feel. This is what was going through my head during the auction and why I decided just to go for it. I guess the lesson is just to buy when you can.
Apart from a moral victory I'm unsure what complaining will do. I'll still do it though (after it's all settled).
Yeah, that's what I think to. I've got a lot of confidence in Melbourne right now. All of the fundamentals are strong and for some reason it's the fourth most expensive capital - it's usually the second.
Last edited:
Excellent question! Pity I can't remember... I think it was low 5's. I just accepted the underquoting as part of the game, and that's another reason why I had the BA's as I didn't want to be like the many others going into auctions with completely unrealistic price expectations.
I later asked them 'did it exceed your expectations?' They said 'yes, we thought it would have went in the high 4's'. Obviously they are covering their ***.
I later asked them 'did it exceed your expectations?' They said 'yes, we thought it would have went in the high 4's'. Obviously they are covering their ***.
$508k maybe??? ($420k+ means a quoted range of $420k-$462k which means reserve must be $508.2k or less).
If that's the case, and $420k+ was the actual final published quote and not just the one at the beginning, then that would not be underquoting.
If it passed in for >$508.2k that would be underquoting.
Selling price is irrelevant.
cheers and congratulations!
Yes, that's post tax. I pay a large amount of tax.
You're all welcome. I hope my little explanation of what I've been up to and what went through my head will benefit you in the future. I 'look forward to looking back'.
$508k maybe??? ($420k+ means a quoted range of $420k-$462k which means reserve must be $508.2k or less).
If that's the case, and $420k+ was the actual final published quote and not just the one at the beginning, then that would not be underquoting.
If it passed in for >$508.2k that would be underquoting.
Selling price is irrelevant.
cheers and congratulations!
Yeah, that could be right. Ah well, there you go! Thank you for the congratulations.
Don't forget this will be my home for a little while. $350pw to live in and own a lovely property in the high growth area of Toorak using 107% effective finance is not expensive in my books.
Thanks again DavidMc,
Your information has helped a lot. I have saved the list of 'selection criteria' for your apartment in my property research file. This is a fantastic list.
I have been very wary of buying apartments, and it helps to know what criteria others (especially the Wakelins) use in their selection process.
Look forward to hearing how its grown. Will you let us know when you get it revalued??
Regards Jason.
I forgot to mention I won't be paying any cash. I'll be using debt.
Body Corporates
Thanks for your replies David.
Interesting that you don't know about the BC fees. For me when I'm looking at apartments that is the first thing I ask. After that, I usually call the BC manager and try and get more info (S32 usually just has a form 3, if you're lucky it may have BC minutes). Ideally I like to look at the most recent minutes +/- financials if I can get it - but it's not always possible. The BC (how good/competent they are as a group of owners, any conflicts, owners in arrears, past problems, future plans etc...) usually makes or breaks the deal for me with apartments. I've found form 3's which look great, but on looking at minutes and discussing further with the BC manager, have got a completely different picture of the apartment. Also, I've seen some ridiculous BC fees for small apartment blocks in eastern suburbs with no lifts/pools/gyms. They really eat away at your returns. Body corporates and their associated potential problems are very important to be aware of for any apartment purchase, in my view.
GSJ
Thanks for your replies David.
Interesting that you don't know about the BC fees. For me when I'm looking at apartments that is the first thing I ask. After that, I usually call the BC manager and try and get more info (S32 usually just has a form 3, if you're lucky it may have BC minutes). Ideally I like to look at the most recent minutes +/- financials if I can get it - but it's not always possible. The BC (how good/competent they are as a group of owners, any conflicts, owners in arrears, past problems, future plans etc...) usually makes or breaks the deal for me with apartments. I've found form 3's which look great, but on looking at minutes and discussing further with the BC manager, have got a completely different picture of the apartment. Also, I've seen some ridiculous BC fees for small apartment blocks in eastern suburbs with no lifts/pools/gyms. They really eat away at your returns. Body corporates and their associated potential problems are very important to be aware of for any apartment purchase, in my view.
GSJ
Just another body corporate anecdote. I looked at a 2-bed apartment in Melbourne's eastern suburbs (great position in a blue chip suburb, with enormous value add potential) recently that had passed in at auction. On further investigation of the body corp, looking at minutes for the previous 5 years! - I found that one owner was the Department of Human Services. This body corp, had been putting off or not completing important and outstanding maintenance issues for 5 years, and I suspect, having DHS as one owner may have contributed to this...
GSJ
GSJ
yesterdays results
I tend to think its more a function of the market rather than under quoting.
Went to an auction yesterday in Northcote. The reason i went is that I thought the owners were being too optimistic in their asking price expectations. It was a renovated single fronted victorian only 2 bedrooms. Small place - 5 meters wide. Nice renovation but nothing outstanding. The reno was done 10 years ago.
The asking price prior to auction was 550k plus. i thought wow 600 k for a 2 bedder renovated would be a great result. !2 mos ago the market for this type of property was probably 480-520 k.
Anyway bidding begun - soon got to 615 k which i thought was great and the auctioneer said the property was on the market. 15 minutes later it sold for 715,000 dollars - yes almost 3/4 of a million for a tiny 2 bedder. So the asking price was 550k plus - reserve 615 (all kosher sofar) but sold for close to 165k above the qtd price (100k above reserve). Due to the hot market.
Pretty exciting stuff in inner city melbourne atm
Cheers
Aussie
I tend to think its more a function of the market rather than under quoting.
Went to an auction yesterday in Northcote. The reason i went is that I thought the owners were being too optimistic in their asking price expectations. It was a renovated single fronted victorian only 2 bedrooms. Small place - 5 meters wide. Nice renovation but nothing outstanding. The reno was done 10 years ago.
The asking price prior to auction was 550k plus. i thought wow 600 k for a 2 bedder renovated would be a great result. !2 mos ago the market for this type of property was probably 480-520 k.
Anyway bidding begun - soon got to 615 k which i thought was great and the auctioneer said the property was on the market. 15 minutes later it sold for 715,000 dollars - yes almost 3/4 of a million for a tiny 2 bedder. So the asking price was 550k plus - reserve 615 (all kosher sofar) but sold for close to 165k above the qtd price (100k above reserve). Due to the hot market.
Pretty exciting stuff in inner city melbourne atm
Cheers
Aussie
Last edited:
I agree with you Aussierogue. The market is moving quiet quickly in inner Melbourne at the moment. I think the agents are basing their quoted price along the lines of where they think the property is placed, but people bidding at auctions are pushing prices well beyond the estimated price guide. Just to add to this train of thought, I had a bank valuation of a townhouse I own in North Melbourne. I was talking to a REA about their expected price guide for such a property, and their estimates were well below the bank valuation. I found this very unusual, because usually its the other way round! Your description of the auction above is quiet amazing. I wonder how long it will be before these 2 bedroom properties reach the million $ mark. Not long at this rate!!
Regards Jason.
Last edited:
Hi Traveller,
I'd be interested to know which area you are looking in at the moment? Is it more than 10kms outside the city because if it is this may have some bearing on the prices remaining fairly stagnant.
Regards Jason.
Similar threads
