Thoughts on Finbar apartments

[Apex]

Hi all,

Just after some opinions on the Finbar developments happening around the city. A young couple in my family is planning on buying a 2x1 OTP apartment in the Ecco development (approx 530k I think it was) as a first investment property. I must admit it is very appealing as it is close to Beaufort St strip, public transport and the city. But, I also think it is over-valued and highly risky.

 

[boods99]

Hi all,

Just after some opinions on the Finbar developments happening around the city. A young couple in my family is planning on buying a 2x1 OTP apartment in the Ecco development (approx 530k I think it was) as a first investment property. I must admit it is very appealing as it is close to Beaufort St strip, public transport and the city. But, I also think it is over-valued and highly risky.

Hi Apex,
Perhaps you could share with us all the reasons why you believe it is over-valued and highly risky?
Generally, Finbar produce some pretty good product. We have had a similar sized comparable property just around the corner from the Ecco site independantly valued with similar values.

Boods

 

[sanj]

Finbar have good and bad sides imo

Good is that you know what you are going to get. Bad is that you know what you are going to get.

Their designs are good, liveable spaces but boring as all hell due to their insistence on copy and paste architecture. ALl their developments are instantly recognisable and the insides of a lot of apartments nearly identical. Because of that the values are often held back imo.

If im selling my say Infinity apartment in east perth, im competing not just with other Infinity owners but owner of One28, Times2, Royale, Soho and a whole lot of others within walking distance that are nearly identical.

THey do though run a tight operation and generally, apart from a **** up during construction of Reflections, complete as they should etc.

 

[Ausprop]

no way in heck i would ever sign up to one of those contracts - they are a cash unconditional offer to take delivery of an apartment at a time of their choosing, probably 2 years or so away. It's just too far into the future to make such a bold gamble.

 

[Apex]

Thanks all for the input so far. Your questions and opinions only encourage me to think harder about all the facts.

boods, I'm not an expert in property so I can only base what I say on my research so far, so maybe you can change my opinions as further down the track I might look into purchasing OTP myself - they sure market their products well!

I've seen similar apartments in East Perth, in the city itself going for less than 530k, which I thought was strange given the location, hence my feeling they are overvalued. Yes I said feeling, no hard facts so I may be wrong there.

When I said highly risky, I probably should have explained more this couple's plan. They are gambling on capital growth within 12-24 months of settlement (due to Perth waterfront development), out of which they plan to draw out equity to buy another apartment for their PPOR in East Perth. The risks I see to them are
-Expectation of high enough growth to purchase another apartment
-Potential for oversupply in future due to more developments in and around city = lower resale value if holding short term
-If population growth decreases, overall rental demand decreases, lower rents to service loan (they are counting on the rents to cover most of the loan repayments)

I am conservative so I take extra caution before putting my hard-earned money into anything, so these are the what-if scenarios I thought about and what might happen if they occurred.

sanj, if you don't mind my asking, when did you buy your apartment and has it increased in value since you bought it? What would you say is the vacancy rate at any point in time in one of these buildings?

Ausprop, what does cash unconditional offer mean?

 

[Ausprop]

Ausprop, what does cash unconditional offer mean?

unless things have changed, you sign the offer and that's it, you own it (some day, when they get around to building it and you come up with the cash). Even if you get a finance approval it isn't worth much becasue anything could change before settlement

if they like a 'gamble' as you say, why not go to the casino and stick their deposit on black? It's similar odds and saves waiting 2 or more years to see what happens. If their luck comes in they could be ready to buy and enjoy something immediately.

 

[westminster]

Thanks all for the input so far. Your questions and opinions only encourage me to think harder about all the facts.

boods, I'm not an expert in property so I can only base what I say on my research so far, so maybe you can change my opinions as further down the track I might look into purchasing OTP myself - they sure market their products well!

I've seen similar apartments in East Perth, in the city itself going for less than 530k, which I thought was strange given the location, hence my feeling they are overvalued. Yes I said feeling, no hard facts so I may be wrong there.

When I said highly risky, I probably should have explained more this couple's plan. They are gambling on capital growth within 12-24 months of settlement (due to Perth waterfront development), out of which they plan to draw out equity to buy another apartment for their PPOR in East Perth. The risks I see to them are
-Expectation of high enough growth to purchase another apartment
-Potential for oversupply in future due to more developments in and around city = lower resale value if holding short term
-If population growth decreases, overall rental demand decreases, lower rents to service loan (they are counting on the rents to cover most of the loan repayments)

I am conservative so I take extra caution before putting my hard-earned money into anything, so these are the what-if scenarios I thought about and what might happen if they occurred.

sanj, if you don't mind my asking, when did you buy your apartment and has it increased in value since you bought it? What would you say is the vacancy rate at any point in time in one of these buildings?

Ausprop, what does cash unconditional offer mean?

I agree that this could be a risky assumption and end in tears.

Years ago there were a lot of people who were able to do this but in the past couple of years I don't think so.

Having said that, it does appear that Perth is on the rise, but if they do their homework and assess how many new apartments will be made available there could well be a glut which will affect pricing.

The other risk that I have heard on here about larger OTP developments is strata levies growing out of control. I would stick with as small as possible development to keep levies down

 

[Apex]

I agree that this could be a risky assumption and end in tears.

That is what I fear - I know it is their choice, but I would hate to see this happen.

Years ago there were a lot of people who were able to do this but in the past couple of years I don't think so.

Exactly that. They'd heard of a friend who was able to do it and so they are also following suit in the hope the same will happen for them. What were the market conditions like back then that favoured people who were able to do so?

 

[John_]

This is worse then JV that some mobs in perth are offering having done research on a few companies with these arm chair and JV i wouldn't touch it with a 10ft pole.

So many things can go wrong plus recently i asked one of these mobs to provide some past/present customers testimonials and to talk to them they made up two testimonial letters after further research these people that wrote the testimonials have links to the company.

Just buy something that is ready or is about to be ready