Will you choose Parramatta for property investment?

if you must go for OTP, then I would target smaller developments such as townhouses , with lower BC fees, and less risk of developer overbuilding in the area. That will protect your capital more, give you some land for CG potential, and the lower BC will be better for your CF. Need to make sure that its well located, especially near transport options. That will be a driver for easier rentals as well as higher $ rental.

Acutally, I have noticed recently even with Townhouse, the strata fees are very high. I really don't know why but they could charge up to $1000 per quarter for something like gardening etc, and it has no lifts or gyms etc.

I think in short future all those BC fees for units and townhouses will be north of $1000 per quarter. It is hard to find really cheap BC fees.
 
There are one bed OTP apartments I seen in Leichardt recently selling for 460k. OP should check that out if you're just keen on OTP...
 
Thanks for the incredibly useful, constructive replies.

since you asked - i'm fairly comfortable saying this will be a bad investment. Let's do the numbers. Let's say you want to make 20% gains within 3 years; a modest return.

If you're saying rents are estimated to be 650 /wk you'll probably end up with around 480/wk after strata and management fees etc. Your repayments will be closer to 850/wk so you're losing 370/wk or nearly 20k a year.

Within 3 years your 850k apartment has now cost you over 900k, let's say 930k including stamp duty.

To start being worth your while this apartment has to be worth over $1.2m and even that is merely an average return.

Sounds like a terrible idea to me
 
since you asked - i'm fairly comfortable saying this will be a bad investment. Let's do the numbers. Let's say you want to make 20% gains within 3 years; a modest return.

If you're saying rents are estimated to be 650 /wk you'll probably end up with around 480/wk after strata and management fees etc. Your repayments will be closer to 850/wk so you're losing 370/wk or nearly 20k a year.

Within 3 years your 850k apartment has now cost you over 900k, let's say 930k including stamp duty.

To start being worth your while this apartment has to be worth over $1.2m and even that is merely an average return.

Sounds like a terrible idea to me

Hi Sanj,

is this in regards to the new OTP apartment unit in general, or just in Parramatta, NSW 2150 ?
 
Hi Sanj,

is this in regards to the new OTP apartment unit in general, or just in Parramatta, NSW 2150 ?

Hi JohnHenry.. it really depend on the return that you're getting.

If you can buy an OTP for 800k where it can give you ~800/week rental income with low strata, then i don't see any issue buying it.
The problem is... I don' think such OTP property exist anymore
 
Hi JohnHenry.. it really depend on the return that you're getting.

If you can buy an OTP for 800k where it can give you ~800/week rental income with low strata, then i don't see any issue buying it.

You don't see any issue buying an OTP unit at what must surely be close to the top of the market?
 
You don't see any issue buying an OTP unit at what must surely be close to the top of the market?
Nono... sorry i must have misinterpreted my comment... What I'm trying to say is if you can find an OTP apartment that can give you 5-5.2% rental yield with the price not too far from established property.... I don't see any problem

But as i said, i dont think such property exist anymore.
 
Nono... sorry i must have misinterpreted my comment... What I'm trying to say is if you can find an OTP apartment that can give you 5-5.2% rental yield with the price not too far from established property.... I don't see any problem

But as i said, i dont think such property exist anymore.

So you'd be happy to buy that , if you can get that return , despite the general consensus that Sydney is close to its peak and there are concerns about an oversupply of docklands proportions ? :confused:

Remember , after the last boom peaked in Sydney in 2003 , much of Sydney went sideways for around ten years and many OTP units bought in docklands have subsequentally resold for less that their initial purchase price ....:(

Cliff
 
So you'd be happy to buy that , if you can get that return , despite the general consensus that Sydney is close to its peak and there are concerns about an oversupply of docklands proportions ? :confused:

Remember , after the last boom peaked in Sydney in 2003 , much of Sydney went sideways for around ten years and many OTP units bought in docklands have subsequentally resold for less that their initial purchase price ....:(

Cliff

ummm No not in Parramatta no way.
Over supply does not occur in all of Sydney. It will occur in some part of Sydney. And as I said.. if you can get OTP for almost the same price of the established one Why not ?

Ok I know this is not a realistic example, but say the median of a 2 bed apartment in a particular suburb is 600k, and if there're new development in that area marketed at around 620-650k for 2 bed with potential rent of 650 per week..... Why not ?
 
Nothing wrong with it, except when there's an oversupply that $650 rent potential might become $600 or $550 with no short term prospect of either rent growth or CG.
 
Nothing wrong with it, except when there's an oversupply that $650 rent potential might become $600 or $550 with no short term prospect of either rent growth or CG.

That's why you do your DD.... See what's happening in the area.... Make sure there's height restriction, and there are no major development one after another.
 
I thought we're talking about Parramatta, which is clearly allowing high devs.

Don't get me wrong. I bought an OTP 2.5yrs ago and another right next door in Harris Park 1.5yrs ago settling in a couple months. But, like you said, I don't think there are any offerings of that nature now that offer the sort of yield to make it a viable investment option :p
 
I thought we're talking about Parramatta, which is clearly allowing high devs.

Don't get me wrong. I bought an OTP 2.5yrs ago and another right next door in Harris Park 1.5yrs ago settling in a couple months. But, like you said, I don't think there are any offerings of that nature now that offer the sort of yield to make it a viable investment option :p

I Agree. Just don't want people to have an idea that Every single OTP is bad forever.. I mean if you do find a good one (i know it's impossible :p) in a good area location, then go ahead and buy it :)

Your OTP must have grown in value so much by now, and you'll be in positive cash flow + depreciation benefit that you'll received will be huge :) Lucky u.
 
Ok I know this is not a realistic example, but say the median of a 2 bed apartment in a particular suburb is 600k, and if there're new development in that area marketed at around 620-650k for 2 bed with potential rent of 650 per week..... Why not ?

Because it's at the peak of boom time now.....which means CG is going none existent for years & years.
 
Because it's at the peak of boom time now.....which means CG is going none existent for years & years.

Whether there is going to be CG or not, no one can predict the future. Who know.....

For me Investing should be slow and boring, and the most important thing is the cashflow.

And to some, they prefer to invest in their own backyard, and there's nothing wrong with that.
 
Whether there is going to be CG or not, no one can predict the future. Who know.....

For me Investing should be slow and boring, and the most important thing is the cashflow.

And to some, they prefer to invest in their own backyard, and there's nothing wrong with that.

The OP was asking will you invest in parramatta at the current time . You appear to be saying yes .

With no disrespect , you joined the forum in March this year . Both myself and rixter have been members for over 14 years and have gone from inexperienced newbies to experienced investors with multimillion dollar portfolios and equity .

I think we're both disagreeing with in fairly strong terms in that we wouldn't invest in parramatta at the moment .

Buying in the wrong place and the wrong time , may not just give you slow growth , but it can put significantly backwards or even under ...

Btw , I'm not saying this for your benefit , but for the benefit of others who might be swayed by your comments into thinking that you will automatically get growth where ever you buy .

THAT JUST DOESNT AUTOMATICALLY HAPPEN .

There are plenty of opportunities out there . Why buy one when there are better alternatives

Cliff
 
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