What to buy in Melbourne

[lolber9000]

I would appreciate the thoughts of you all about my property investment situation.

I am interested in buying a property:
- I will be going overseas for 2 years for work in January 2014.
- I do not have a job now (resigned) and will get a job overseas.
- I have about 300k aud in cash savings.
- Projected income - 100k+ (either overseas)

Do you think I should purchase a place 'off the plan' for completion in 2016 and then come back when it is done and move in during 2016? I would like to pay a deposit now (5 to 10%) and then move in during 2016 when I pay the balance? I am thinking of getting a CBD Melbourne or Richmond apartment (obviously it needs to be one with a long build time)?

I am concerned about the projected glut of apartments in Melbourne that has been predicted over the next two years, but by the same token I am also concerned about the price of Melbourne continuing to tear higher and then having to pay significantly more in 2016. I know that a house with land would be better for capital appreciation but I will be unable to get a loan right now because I do not have a job right now.

Any thoughts? What would you guys do?

THANKS

 

[grand dad]

Despite being much maligned, there is some incredible subdivisible value to be found in Frankston, Frankston North and even in Seaford.

For around $300,000 you can easily get an old brick house on a subdivisible ie. dual occ block in Frankston. Sit on it for a few years - land appreciates - and then either redevelop or sell as is.

Capital gain is virtually guaranteed if you buy cheaply enough.

 

[lolber9000]

Thanks Grand Dad. Frankston does have some cheap places that look ready for demo. The stories about city apartment capital appreciation in Melbourne don't sound too enticing.

 

[Jake Milne]

Personally, property as an investment only makes sense with two factors:

1. Negative Gearing
2. Leverage

In your situation you'd have neither.

At $300,000 I'd suggest that you could experience better returns with shares, managed funds or other assets rather than buying something in cash and getting a 4-5% yield return + ~4% capital growth (so roughly 8% gross ROI)...

Probably best to set out some goals and work out what you want to achieve. Have a chat with a financial planner.


If you're happy buying a home OTP now and living in it when you return then this is probably a viable option but just be really careful with what you purchase and how much you pay.


As far as the "glut" is concerned just stay away from the CBD and other house & land pro-development areas and you'll be fine.

 

[imbi3]

One thing about OTP, you have to be reasonably confident that finance wont be an issue when it comes time to settle

 

[Redwood]

One thing about OTP, you have to be reasonably confident that finance wont be an issue when it comes time to settle

Agree, do you diligence obtain an independent valuation at time of purchase and depending on the suburb and time to completion you should be covered

 

[dubjohnston]

You will be classified as a non-resident for tax purposes. Make sure you take that into consideration with any calculations.