I’m a first time home buyer looking to buy a PPOR strata apartment or small unit in Melbourne northern suburbs. I’ve been looking at listings for a few months now and noticed that a handful of properties that appear to be “good value” to the unassuming eye haven’t sold. The agents tell me that they haven’t sold because they’re tenanted, but there’s got to be a deeper reason to why a property would be sitting on the market for 4+ months when others in the area can sell after 1 month. Aside from building inspections and getting a conveyancer to look at a section 32, what other steps can buyers take to inform themselves on potential problems with a property that’s been on the market for a long time? What questions should we be asking at inspections to help us figure out that it’s a “problem property” instead of something benign, like an owner with unrealistic expectations?
Can you post an example - ideally of one that you don’t intend to buy so no one gazumps you - to illustrate what you mean.
If they've been on the market for an extended period, there's probably more to it eg. adverse strata report, upcoming special levy, dysfunctional body corporate.
Here’s an example of what I mean. This has been sitting on the market for months. A block of 10 in a reasonable suburb. 9/33 Gregory Grove, Preston, Vic 3072 The adjacent apartment sold for less (245K) after being listed for significantly less time. It also looks more run down than the one that can’t sell in the same building. https://www.realestate.com.au/property/unit-8-33-gregory-gr-preston-vic-3072 I’ve noticed this happening a lot in suburbs like Footscray, Preston, Caulfield and St Kilda. Some apartments are snatched up immediately whilst others in the same streets or even buildings remain unsold.
One bedroom apartments are a trap IMO. Cheap to buy, but they do nothing for you other than a few bucks on the rental yield (and only when rates are low). I had a client purchase a similar apartment nearby in 2007 for a similar price. He sold it 8 years later for about the same price. This add demonstrates that these apartments still aren't moving. In that same time frame, most property in Melbourne has at least doubled in value. The reason these properties are passed over are because: * Limited pool of people willing to rent them. * Negligible capital growth. * There's a lot of similar properties nearby. * There's a lot of much better properties nearby.
But I’m looking for a PPOR not an investment property. We don’t mind not making a lot of money when we sell it, we want to get out of renting and have a place to call our own. We can’t afford to buy a house in the suburbs we want to live in and don’t want to sacrifice our lifestyle by buying a big property that’s far from our workplace and friends. And actually some apartments in this area have gone up 100K in ten years so it’s obviously not always a bad idea, surely it depends on the area?
But buy something that doesnt go up and you will never afford a house where you want. Try Renting where you want and buy where it might go up?
@jinx77 How much loan will you need on the apartment? Looking at the ad for 9/33 Gregory, it looks like under 50 sqm. You'll only be able to get 80% LVR at best. Having a low price/ slow sale from having a tenant is not unusual. If you can get it for the lower end of the ad - ie 260k and keep the tenant at $1322pcm - it's actually not bad numbers (CF neutral?) While opportunity cost will be that risk, its a relatively small outlay, so any blip up in the market would not be a bad thing. Anyway, things to look at for any apartment purchase in Vic: OC costs Sinking funds - and potential sinking funds needed for repair (get building inspection if you are not sure) Minutes of OC meeting(s) - look for issues, troubles tenants etc Terms of lease of current tenant - month to month or longer? Is sale offered with vacant posession / conversely if the tenants look good and keeping the place in good nick - will they stay? (might mean you can't move in after all I've had similar apartments in Fairfield and still have one in Prahran. As @Peter_Tersteeg alluded to, prices have not moved for the last 10 years on my Prahran apartment. To put in perspective however, we bought Prahran for $150k in 2001~ish and was bank valued in 2005~ish for $300k (and it is still about $310k boo-hiss) The Fairfield apartment we bought for $140k about the same time as Prahran. We sold in 2008 for $220k, so not bad! The people who bought it off us sold in 2012 for $305k so not bad either. The Y-man
No 8 sold for $245k? No 9 is for sale for $260-280k? It could just be that the second one is asking too much, or is not negotiable on price. It could be that the first one was desperate to get out as quickly as possible, so priced it at a low price.
The client in my previous example sold the 1 bedroom apartment when he got married and she got pregnant. Not enough room to raise a family.
if its a PPOR and you have certain preferences that you need/want/not negotiate on, then those factors should be your main deciding factors, as if you come across the best investment but you are not going to be happy in it, then its not going to work!
Agree with sentiment here. For me there is no "investable" grade property in Melbourne under 400K at the moment (good capital growth prospects)
Like your gut told you, there is a reason(s) for that. If you are not sure about that, just pass them. There are always more choices out there. One bad choice in property game would drag you back for a few years at least.
