Apartment or nothing?

Discussion in 'Investment Strategy' started by jinx77, 20th Nov, 2019.

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  1. jinx77

    jinx77 Well-Known Member

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    I’m a 34yo professional woman who has been looking to buy my first property in Melbourne as PPOR for a few months now. I have a huge deposit saved. But I can only afford an apartment or small unit as I’m buying alone. I want to buy a strata apartment in an older, smaller block in the inner city. Most people on this forum think this would be a bad investment and advise me not to buy.

    Is it better to continue saving until I can afford something better? The problem is that house prices continue going up, so saving to buy a house is like treading water. I know apartments don’t increase in value very much but isn’t it equally a waste of money to continue renting and paying off someone else’s mortgage?
     
  2. Morgs

    Morgs Well-Known Member Business Member

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    How do the numbers look for you in terms of renting vs. buying?

    What do you currently earn on your money and would that be better placed sitting in an offset account?

    No advice... just things I'd be asking myself in your position
     
  3. Mark

    Mark Well-Known Member

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    What's the price range you are looking at? You can still get a decent house in Melbourne at the same price of an inner city apartment although they can be quite far away from the CBD. Also, keep in mind that you don't have to put down 20percent deposit. I used mortgage insurance in my first purchase.
     
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  4. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Jinx77, you can't save yourself rich.

    Buying an apartment is a perfectly acceptable way to start a property portfolio in Sydney or Melbourne. The type of apartment you describe has good fundamentals. Got to start somewhere, and the capital appreciation will accumulate more quickly than your savings. So yes, go for it.
     
  5. Maximus

    Maximus Well-Known Member

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    Most people on this forum are averse to purchasing new units due to the issues of quality and incoming supply, older units (think red, tan bricks) in small boutique blocks 6-8 units are generally built much better.
    Nothing wrong with a unit for someone that isn't inclined to develop or add value, capital growth might not be great but as someone on this forum told me you need to enjoy your PPOR so its ok to not look at it completely with an investors mind set.
    No one can guarantee the market will keep going up, we may a have recession with massive job losses in the coming years.
     
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  6. hammer

    hammer Well-Known Member

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    Actually...You'll find the consensus on here is that if you're going to buy an apartment, an older apartment in a good area in a small block without a lift or pool is not a bad way to go.

    No shame in buying something you can actually afford safely.
     
  7. MWI

    MWI Well-Known Member

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    That's not true, perhaps you misunderstood. There is a difference where you buy a unit and what kind but not ALL units are bad investments.
    You are planning to buy in VIC, also a PPOR to live in, in better proximity, the fundamentals seem to make sense what you suggested too (smaller complex, older, better construction quality, less modern gadgets to pay for more in strata or maintenance).
    So if finances permit go for it, make that first step!
     
  8. The Y-man

    The Y-man Moderator Staff Member

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    There are proabably better investment properties, but a PPOR is a totally different kettle of fish. You have to buy something that suits your needs best.

    The Y-man
     
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  9. Depreciator

    Depreciator Moderator

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    I like old apartments in small blocks in well located inner suburbs. Apart from dramatically lower strata fees, there is often the scope to add value i.e. put in a new kitchen and bathroom. Can't do that with a new apartment.
     
  10. Guest

    Guest Guest

    In Melbourne you are probably paying less in rent than you would be on mortgage interest (+ other outgoings) as an owner. That means owning would result in more "dead money" than renting. So that is not a good reason to buy.
     
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  11. Stoffo

    Stoffo Well-Known Member

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    Why not rentvest ?
     
  12. Lindsay_W

    Lindsay_W Well-Known Member

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    Sounds like borrowing capacity is your issue not savings?
    I assume your partner no longer wants to contribute/you decided you don't want them to contribute or be on the title?
    Literally only one person told you not to buy an apartment in Melbourne period, the majority of members here told you that apartments in smaller blocks, walk ups with no lifts or pool etc are ok to buy. Seems like a bit of 'analysis paralysis' maybe?
    What's the main reason you haven't purchased yet?
     
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  13. Kelvin Cunnington

    Kelvin Cunnington Well-Known Member

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    There has been a lot of new apartment activity in Melbourne in the recent previous years, so I expect that supply would be approaching the level of close to too many - like what occurred in the early 2000's.
    I agree with what others have said here already - look for more established, smaller boutique apartment buildings with much lower outgoing fees (lifts, pools, etc).
    Places like Elwood, Albert Park etc have lots of these, and they are always in demand over the longer term, and can often have value added through renovations.
     
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  14. Marg4000

    Marg4000 Well-Known Member

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    Don’t write off units.
    Some of our best capital gains (almost trebling in 10 years) came from units.

    The vital factor is location. You want a well located, well maintained building, and a well located unit within the building (size, light, outlook, quiet). Think “best spot” in a smaller block very convenient to amenities.

    Avoid high rise, lifts, gyms and resident managers.
     
    Last edited: 22nd Nov, 2019
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