Buying a Home on a Street Filled with Investors and Developers

hi I am interested in a house located in melb east on a street filled with a lot of investors. The plan is actually to buy, rent it for couple years, and give it to grandson. The house is a nice one, will attract for PPOR, has a subdivision potential but my current situation doesn't allow me to do that, neither flipping. The street:

- 1 km long with around 100 houses (most of them IP)
- couple of them being offer for rent
- 3 houses on the market currently
- 10 new development units happening currently and expecting more new units to come
- near factories
- these all happening in this 1km street

I watched somewhere a property guru mentioned it is better to buy IP in a suburb where home owners are more than the property being rented. In this scenario is not a suburb but "a street".

Will someone please offer insights what the PROS and CONS can be in purchasing this home? Many thanks.

Ben

 

How do you know theyre mostly ips?

 

Looking at past sales and being offer for rent now,... development happening.... selling off the plan, what do you think about buying PPOR potential home in this street?

 

Youve seen a majority of the houses being offered for rent?

 

looking at past sales for the past 3 years and yes, most of them are rented or developed into couple units. Let say, they are investors preference street.

 

High risk. Buying near factories tends to be risky. Buying when everyone is developing may work very well, or be an absolute disaster.

Mind if I ask why you are buying for your grandson?

 

Thank you @hobartchic I just want to be sure when making a big financial decision buying my 1st IP as I may not be able to see far ahead like experienced investors.

One risk is renting the house can be a problem as more competition from new houses/units once they've completed.

My grandparents inherited me something that I am really grateful and if I can do the same to my grandson that will be wonderful.

 

Your question is one of the factors to consider but we could probably help more if you gave us the suburb. PPOR is not good with too many IPs around as people are more transient and harder to build a community feel but any where with a lot of units/apartments nearby tend to be more IPs.

Not many people can hold a million dollar plus investment house in good area returning sub 2.5% in rent

 

thx @kaibo suburb is Lilydale. you are right, this 1km street will be overcrowded with people. I know this by looking at sales past 3 years and they are being rented. also at least 30 houses (out of 100) are already subdivided, mostly into two but some into 3 to 6 units, hence the reason of my question what if i buy just to rent it out and not to build and then pass it on to family.

I just concerned the rent prospect as new units coming up, may put me in limbo with rates going up etc.....

 

it's all about the potential capital gain. These unit supply will be limitless unless the banks stop financing them. Rents will only go down as renters are always attracted to shiny new buildings especially when there is negligent rent difference

Rental is a trap for me if you have the money and looking for capital gain. I am sure if the land gets rezoned for apartments later your grandson will be happier than he already should be

 

It's a lovely sentiment but maybe you can help your grandson out now with TAFE/ University costs? I assume your children are well set up? Just be careful taking on debt to provide an inheritance, there's many other ways that you can help your grandson.
I think if you are determined to buy a house, I would recommend finding a good Buyers Agent, who can provide guidance, negotiating skills, and experience. Make sure they are registered and qualified.