Unit or house

[rando]

Hi everyone one quick question please,

A lot of people say Brisbane may be the next boom, would you suggest buying units as close to the city as close as possible ie within 3km radius, versus house a bit out say 6 or 7km? As it's quite impossible to get a house within affordable price within 5km..

Also if units, would you buy second hand right in cbd, or new ones off the plan around cbd, like hamilton, westend, kelvin grove, fortitude valley, Bowen hills etc?

Would appreciate your opinions. Thanks heaps in advance!

Cheers

 

[D.T.]

Unit if:
A) you're building it, or
B) buying a whole block of units

Otherwise house.

 

[Hysteria]

A house that is zoned for units ....depending on budget.

I would buy second hand over new for apartments. You might get a second hand product that is similar to new but pay that premium for the new shiny model.

 

[LeoT]

Hi everyone one quick question please,

A lot of people say Brisbane may be the next boom, would you suggest buying units as close to the city as close as possible ie within 3km radius, versus house a bit out say 6 or 7km? As it's quite impossible to get a house within affordable price within 5km..

house , 10-12km from CBD. Not new , something you can add value to.

Also if units, would you buy second hand right in cbd, or new ones off the plan around cbd, like hamilton, westend, kelvin grove, fortitude valley, Bowen hills etc?

no, no and no. But if you really hate capital growth then OTP unit in CBD is your
Winner.

 

[rando]

Thanks guys for helping a super rookie (pointing to myself)

I had a look at houses on sale within 10km from the brisbane cbd but most of them are asking 600-700k+ and a lot of work to do.. My budget is about $70-80k including all buying cost (thats what I've saved up in the bank) I can borrow 90% without mortgage insurance. Quite interested in the subdivision stuff but don't know where to start eg how to look for one with potential of doing so. And guess not knowing brisbane market enough (I'm from Gold Coast.. Close enough but..) gives me the fear of buying wrong location/price..

I know generally units don't perform as well as houses in capital growth, but I mentioned units as recently a real estate agent that I know of for a while mentioned some units off the plan in Newstead.. There was one that's 525k for 2 bedrooms,2baths,1 carpark, which is about 100k cheaper than rest of 2bedders in the same building, as it's north west facing the city, and slightly (8-10m2) smaller than the others. My thought was it's one of the cheapest in the building so maybe easier to sell with a bit of capital gain? Or are they already so overly overpriced the first place this is not going to happen..?

When there is a boom in a capital city, let's say in Sydney right now, wouldn't price of the units go up quite significantly, given there is really no houses within the cbd? And how are off the plan units performing right now in Sydney or Melbourne?

I am a real rookie in this so Thanks heaps for your help!

 

[travelbug]

When comparing units and houses you need to look at yield also. Remember you have to pay any shortfalls in costs each week.

Calculate the weekly costs for a unit VS a house bought at the same price.
Rates, strata, insurance etc.

Sometimes strata costs are huge and will be prohibitive if you aren't on a huge wage.


Google Off the Plan or search this forum. There is lots of information.

site:somersoft.com "off the plan"

 

[PHP]

I know generally units don't perform as well as houses in capital growth,

In some areas, you'll be surprised as how units outperformed houses. It basically comes down to supply and demand I would say. If an area, for example, favours units over houses and there's scarce amount of units in this particular area, you'll see a surge in prices pretty quickly.

Regarding OTP purchases.. please read a few more threads about this topic. Here's one to get you started: http://somersoft.com/forums/showthread.php?t=100924&highlight=buying+OTP

Cheers!

 

[LeoT]

Thanks guys for helping a super rookie (pointing to myself)


recently a real estate agent that I know of for a while mentioned some units off the plan in Newstead.. There was one that's 525k for 2 bedrooms,2baths,1 carpark, which is about 100k cheaper than rest of 2bedders in the same building, as it's north west facing the city, and slightly (8-10m2) smaller than the others. My thought was it's one of the cheapest in the building so maybe easier to sell with a bit of capital gain? Or are they already so overly overpriced the first place this is not going to happen..?

Crazy IMHO, when a house you could get for a little more.

With the units, ask yourself:

1. How many units in the building? many units means fight for tenants, if 1 stupid person sells at a low price, your unit is directly affected on reval.
2. How much is strata?
3. No room to add value as its new.
4. supply vs demand?

I know others will disagree, but from my experience, the best growth with units is buying in smaller boutique buildings, limited supply, low strata, room to add some value.


When there is a boom in a capital city, let's say in Sydney right now, wouldn't price of the units go up quite significantly, given there is really no houses within the cbd?
NO, Its all about supply and demand. There tends to be a massive oversupply of units in the CBD being built so you need to be careful. Also, buying in a major complex with hundreds of units is never a good idea. I don't care what others may say. 9/10 times its simply a poorer investment choice.
QUOTE]

 

[tobe]

whats your plan?

Units are great set and forget investments. the yeild is better than houses generally, and there is less maintenance and repairs in general.

They can be easier to lease, (in general the rent is lower than a house, therefore more potential tenants can afford a unit over a house) and the historic capital growth is comparable to houses.

Unfortunately they dont usually have any subdivision potential.

Why dont you start out telling us what your goas are, where you are in the journey so far etc.

A unit bought undermarket and then cosmetically renovated can produce some good capital growth (as can houses). It can be a great way to start investing, or it can be a great way to continue investing if you need the higher cashflow to help offset other properties, or a lower income etc.

 

[TMNT]

affordable is subjective

if you could buy a $20m property for $10 mill tomorrow, would you buy it?

 

[rando]

Thanks guys for the many valid points!!

I guess, if there were both houses and units right in the cbd or the same proximity to cbd, then houses would usually be a better investment choice. However, it does not seem to be the case in brisbane capital city, where most of the houses available on the market start at maybe 5-7km from the cbd, whereas the units are usually right in the cbd, or say within 2km radius. So rather than units v.s. houses, I think it's also a comparison between proximity to cbd v.s. houses. I agree it all comes down to demand and supply - whether people would prefer living in new or newish apartments close to work, v.s. a bigger space further away from all the actions

 

[rando]

When comparing units and houses you need to look at yield also. Remember you have to pay any shortfalls in costs each week.

Calculate the weekly costs for a unit VS a house bought at the same price.
Rates, strata, insurance etc.

Sometimes strata costs are huge and will be prohibitive if you aren't on a huge wage.


Google Off the Plan or search this forum. There is lots of information.

site:somersoft.com "off the plan"

In some areas, you'll be surprised as how units outperformed houses. It basically comes down to supply and demand I would say. If an area, for example, favours units over houses and there's scarce amount of units in this particular area, you'll see a surge in prices pretty quickly.

Regarding OTP purchases.. please read a few more threads about this topic. Here's one to get you started: http://somersoft.com/forums/showthread.php?t=100924&highlight=buying+OTP

Cheers!

Thanks travelbug and PHP. I guess a unit would usually bring more gross yield than a house because of a cheaper purchase price at the beginning, but this is also countered by strata costs.

quite hard to compare a weekly costs for a unit v.s. a house at the same price in Brisbane as units are usually cheaper - unless we compare a unit in the cbd v.s. a house about 15km from Brisbane - in that case from my observation (and I hope I am somewhat in the ballpark) a 525k house would generate bt $450-525/week v.s a new 525k unit in cbd may generate between $550-600/k unfurnished. But strata for this particular off he plan unit I am looking at in Newstead (2,2,1) - the body corp is $90 per week which I agree is quite prohibitive - but I am hoping this can be balanced out by a cheaper rate and insurance cost, and a higher depreciation value and less of maintenance compared to a house.

I think it'll work out to be something like $25/week positive after every expense, depreciation, tax deduction etc - which is only slightly positive gearing, but I am hoping by buying the cheaper 2 bedroom unit in the building there is better chance of capital growth?

In terms of scarcity of the units in the area - I've read that there's a lot of developments happening in brisbane, and there is a risk of oversupply esp at westend.. I guess in Newstead because most of the remaining land was purchased by the same big developer, will this problem be somewhat be mitigated? as I don't think the developer would want to oversupply stocks in the same area if they can avoid that?

Thanks!!

 

[C-mac]

My two cents (and I admit, I only have a little IP experience in the Brisbane market - I don't know it as well as a local), but I'd look for the cheapest houses as close to CBD and transport nodes as you can fond, that is also in a non flood zone (or, if it is, must be highly elevated/on big stilts).

 

[rando]

Thanks guys for helping a super rookie (pointing to myself)


recently a real estate agent that I know of for a while mentioned some units off the plan in Newstead.. There was one that's 525k for 2 bedrooms,2baths,1 carpark, which is about 100k cheaper than rest of 2bedders in the same building, as it's north west facing the city, and slightly (8-10m2) smaller than the others. My thought was it's one of the cheapest in the building so maybe easier to sell with a bit of capital gain? Or are they already so overly overpriced the first place this is not going to happen..?

Crazy IMHO, when a house you could get for a little more.

With the units, ask yourself:

1. How many units in the building? many units means fight for tenants, if 1 stupid person sells at a low price, your unit is directly affected on reval.
2. How much is strata?
3. No room to add value as its new.
4. supply vs demand?

I know others will disagree, but from my experience, the best growth with units is buying in smaller boutique buildings, limited supply, low strata, room to add some value.


When there is a boom in a capital city, let's say in Sydney right now, wouldn't price of the units go up quite significantly, given there is really no houses within the cbd?
NO, Its all about supply and demand. There tends to be a massive oversupply of units in the CBD being built so you need to be careful. Also, buying in a major complex with hundreds of units is never a good idea. I don't care what others may say. 9/10 times its simply a poorer investment choice.
QUOTE]

Thanks LeoT.

I did a bit of research for the questions you mentioned:

1. there's about 250 units in the apartment I am looking at (complete date about late 2016), and there are about 3 or 4 other buildings by other developers in the vicinity (complete dates also about late 2016, but probably a few months behind). but most of the rest of the 10 hectare land was purchased by the same developer. Around the gasworks area there are also other slightly or much older apartments, as well as 2 other buildings at the waterfront by the same developer (but these overlook the water and have a much higher sale price in the millions targeting at the higher end of people.)
2. body corporate differs between apartments, some are at just $60/week, the one I am looking at in particular is $90/week (first year b/c estimated to increase by 4% per annum)
3.true, but I guess you get some back from depreciation?
4. supply is as above, plus possibly a couple of other apartments that I may not know of in the next 3-5 years, and some more from the main developer in the next 10 years. in terms of demand, the population growth was about 207 residents per annum but forecast to increase by 700 new residents per annum (13500 by 2030) given the urban renewal program in the area and Also due to the newstead employment node just around the corner, big companies like Energex, Green Square, BOQ, HQ are bringing in 250,000m2 of proposed office space on top of 440,000m2 of current office space.

I understand having hundreds of new units in the same area is a worry of oversupply, what if this is countered by the increase in demand from the new residents as well as new employment opportunities - that you don't get from a suburb say 15km away?

... ok I admit, the more research I did, the more confused I have become!

 

[rando]

whats your plan?

Units are great set and forget investments. the yeild is better than houses generally, and there is less maintenance and repairs in general.

They can be easier to lease, (in general the rent is lower than a house, therefore more potential tenants can afford a unit over a house) and the historic capital growth is comparable to houses.

Unfortunately they dont usually have any subdivision potential.

Why dont you start out telling us what your goas are, where you are in the journey so far etc.

A unit bought undermarket and then cosmetically renovated can produce some good capital growth (as can houses). It can be a great way to start investing, or it can be a great way to continue investing if you need the higher cashflow to help offset other properties, or a lower income etc.

Thanks tobe

My goals are: having some passive income, reaching financial freedom earlier as well as saving some tax if possible along the way. (with a right plan/structure as there's no point saving 35c by wasting $1 )

I've bought a couple of properties, including my principal residential property. started out by looking for a property for my parents as they will be moving here from NZ in the next couple of years, and given there potentially may be a boom in the near future we were trying to buy a property before the boom, which we did. then I thought to myself - maybe there's room for me to invest in a couple more properties in this market, hoping to ride the tide, well, at least not buried in one if I am to purchase a house to upsize in the future once we have kids.

Started out on Gold Coast, went to quite a few open homes and some auctions, had some near offers, but missed out in the end. Then feel quite a few of the new listings are overpriced after doing research on onthehouse, realestate.com sold price etc.

Got a real estate agent friend, who has been very helpful to us. He suggested us to have a look at units in Newstead in Brisbane which we did. read some magazines, quite a few people mentioned brisbane is probably between 5-7 o'clock in the property cycle, thus our interest grew. As our REA friend is based on GC, so I thought it'll be great if I could seek more opinions on somersoft about units v.s houses in brissie.

In my opinion, Gross rental yield seems to be higher with units in Brisbane, but most of it is then slashed by the body corp fees. If we were to purchase this unit, which is new, yeah we hope there's less for maintenance and repair..

I think the rent in Newstead (epsecially for the new units) is quite high, with RTA weekly apartment rental (two bed) about $490 per week, and on the market new/near new ones $640 per week (catchment - which may have included teneriffe which is a higher end suburb..) But I think being so close to the employment node and also having a higher average income in Newstead compared to the average of the rest of the brisbane suburbs may justify the higher rent? I don't know..

There is quite a lot of information about new infrastructure, new employment opportunities etc in Newstead, when I start searching the suburb. But I am not sure whether it's because Newstead has the potentials, or just that if I search any suburb, I will also get similar results from the people/developers promoting the suburb?

By thinking about buying the cheaper 2 bed unit in the same building I am hoping to "buy under the market value" - although there would be reasons why this unit is cheaper than the rest of them - i.e. smaller size by about 5-10m2, not facing the river but the city, lower level, next to the lift/stairs. but with a $100,000 cheaper price tag. I don't know, what do you guys think?

Thanks heaps!!!

 

[rando]

affordable is subjective

if you could buy a $20m property for $10 mill tomorrow, would you buy it?

Thanks TMNT. True, if I could buy a $20m property for $10m, I would.. if I could afford it..

But even with 95% borrowing I'd need 500k deposit which I don't have. I may try borrowing from friends/family - but maybe not - as I don't wanna lose them (don't want them to go like .. "Rando's coming to borrow again, Shut the door!! close the blinds!! hide!!")

so probably still wouldn't (but probably would go "damn!" for the rest of my life)

 

[LeoT]

Thanks LeoT.

I did a bit of research for the questions you mentioned:

1. there's about 250 units in the apartment I am looking at (complete date about late 2016. Strike 1

and there are about 3 or 4 other buildings by other developers in the vicinity (complete dates also about late 2016, but probably a few months behind). Strike 2.



2. body corporate ... the one I am looking at in particular is $90/week (first year b/c estimated to increase by 4% per annum) Strike 3 run for your life!



... ok I admit, the more research I did, the more confused I have become! Shouldn't be confused now mate. Its as clear as day.

 

[LeoT]

My two cents (and I admit, I only have a little IP experience in the Brisbane market - I don't know it as well as a local), but I'd look for the cheapest houses as close to CBD and transport nodes as you can fond, that is also in a non flood zone (or, if it is, must be highly elevated/on big stilts).

This is good advice. I like this fella already.