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.