studio apartments?

[bern]

Hi
I'm new to this forum and a newy to PI.

I'm just wondering what peoples thoughts or experiences are on studio apartments. I know some lenders wont loan under a certain sq m, but I'm wondering if they have as much growth potential as say a 2 bedder. Or do I just steer clear. I 've been looking around the inner sydney suburbs.They appear to have a good rental return, but is there little CG in the long term?

The other option I've been looking at is down the south coast of Sydney around Nowra, where I can get a house for the same price. Any thoughts?

Cheers bern

 

[TheCamel]

bern, I guess the question is:

what are you aiming for ?
do you want cashflow, or growth, or something else ?

Why do you want to buy something.. and why have you picked for instance, Nowra ?

 

[bern]

Well there's a couple of things. Firstly I'm wanting to build up wealth for financial independance in the long term and secondly I'm wanting to build capital as I am currently renting in Sydney and cannot afford to buy, but wish to purchase a PPOR in Sydney in the next few years, so I'm trying to find a way to fast track that process.

I have a house that I did live for 3 years in the blue mts, it is currently rented out and I don't forsee myself moving back into it. I have a fair amount of equity in that property and want to use it to my advantage, both in the short and long term.

I was looking at Nowra as it is still cheap and as an infrastucture town that services the surrounding areas it is developing.all the areas north of it have sky rocketted and it's close to the coast. House seem to rent out quickly and the rental returns are quite good.

I can't get my head around the idea of investing interstate at this stage...wanting to invest close enough to home, maybe after a few more properties and experience I'll be ready to fly further afield.

Hope that answers your questions .Happy for any advice.

Bern

 

[TheCamel]

Seeing you have an existing IP, I'd speak to a mortgage broker first of all, to find out exactly what my capacity was.

you mention Nowra. What is the rental vacancy like in the area.. what sort of market is there.. ?
What i'm trying to get at is, what if there is an abundance of family homes, but the rental market is mainly singles or couples, or even holiday rentals as opposed to full time rental ?
What sort of population growth does the area have, and what is the historical capital growth like ?

With the studio apartment you mentioned, it may be good in terms of cashflow, butif you want long term capital growth, i'd shy away from it because:

It's exactly the same as every other studio in the complex.
you can't do anything to it really, to increase the value
it has little to no land value to appreciate
probably has minimal resale potential most of the time
(imo) It's not something i'd want to live in, so i wouldn't buy it


In the grand scheme of things, your SANF is up to you, but buying interstate isn't _so_ scary really.
I just put down an offer sight unseen for one.. it's a big step for me, i'll admit.. but i think i'm glad i did it.

 

[bern]

Thanks for that TheCamel.

Yeah I have spoken to my mortgage broker and around the 200 - 210k is what they'll lend me. I have a bit of savings but not a big income so can cover deposit without LMI, and don't want to purchase anything higher at this stage as I'm not confident I can service it.

 

[tiger]

I can't get my head around the idea of investing interstate at this stage...wanting to invest close enough to home, maybe after a few more properties and experience I'll be ready to fly further afield.

Why not?
I'm looking interstate for my first ever purchase and you have experience with real estate at least. I think your limiting yourself by just looking at Sydney.
In my opinion getting your head around investing interstate is beneficial. In fact theres not much to get your head around... just lower prices
Depends what you want I guess... I just think Sydney is a joke and I know that investing in Victoria is going to get me something ALOT better than I could ever get in Sydney for double the cost.

$220k could get you an awesome house in Victoria and probably something decent in other states too (I've only researched Vic for my needs).
You cant get a house in Sydney for that price. Perhaps something in Mt Druitt or Macquarie Fields but by the sounds of things, thats not where you want to invest.

Personally I wouldn't touch a studio apartment unless it had harbour views, in which case it woudnt cost 220k.

220k will get you something in Nowra but i reckon that long term growth for Nowra isn't going to be anywhere near as fast or big as something interstate where you could get much closer to a CBD with 220k.

I'm no pro, in fact dont even have my first home yet, but I've been researching like there's no tomorrow.. and there's just no damn way I'd throw 220k into Sydney over another state.
Why would I want a shoebox when I can get a 3bdr home on 600sq+ ?
Unless you want an apartment of course..

Check out Frankston, Vic. With your budget you could get something there and comments on this forum and elsewhere are all leaning towards the belief that its only a matter of time before Frankston really takes off.

 

[TheCamel]

i'd also look at Melton, VIC.

210K ? how much equity do you have in the existing property ?

 

[Cherry Pro]

Hi Bern

Welcome to the forum ! Am sure you'll learn loads but just lurking around these threads.

I wouldn't touch a studio in Sydney and tend to agree with Tiger and Camel...
VIC, QLD and SA currently offer some good buying opportunities.... for
the kind of money you have .... I would look at a freestanding home interstate or maybe in Syd West but you need to feel comfortable with your purchase.

Get the latest copy of the API to get a feel of the states and research
and research more before you jump in.

Good luck !

 

[bern]

thanks for the advice. I have 200k equity in my place. Feel like I've been researching like crazy, reading property books + API etc, and with the more I learn the less I realise I know.At times it's overwhelming!

 

[TheCamel]

so you've got 200K in equity, an you can borrow around 200K ?

That gives you a purchase price of closer to 400k at 50% LVR...

 

[bern]

No, because my income isn't enough to service a larger loan so they'll only loan me a little more than I'm asking + I'm not comfortable with borrowing much more than that at the moment.