Considering buying apartment with expensive body corp

Discussion in 'What to buy' started by Szbrown, 7th Feb, 2020.

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  1. Szbrown

    Szbrown Member

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    Hi all,

    I'm a young male working in healthcare, 120k p.a + overtime

    I'm interested in purchasing an apartment to live in, and the apartment I'm looking at is about 290k and has all the facilities I want (pool, sauna, gym) and is located centrally to my hobbies (jiu-jitsu and surfing). It is central to a tram line and shopping centre also. I would happily reside there for 10+ years and I like the idea of not having house inspections / leases / being able to renovate.

    However it does tick a lot of the negative boxes for apartment investing, with a body corp of approx $100 a week, high rise, pool, sauna, gym etc.

    I'm not expecting it will appreciate similar to a house and land, however would be happy if it retained it's value with inflation.

    Is purchasing this apartment a dumb idea or justified given I will reside there long term?
     
  2. MWI

    MWI Well-Known Member

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    Just my opinion and I assume this is in QLD city, where prices went and are still down? Is it 2 Bed or studio or what, how many in the complex? Is it brand new so possible strata may increase by 100% next year or over 10+ years more as the building ages?
    If I was earning that kind of income I would rent out in this place or a unit in this complex (if I really wanted to live there) and I would buy a much better located place like a house say within inner or middle ring in QLD for investment.
    I pay same amount for strata for an apartment in SYD lifestyle beach which is worth 4 x more than your place (no lifts, gyms, pools, sauna, etc....).
    $5,200/$290K x 100% = 1.79% just for strata (enormous fee!).
    My fee comes to 0.43%.
    What would be the rent in this place to live in? Have you considered this option?
     
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  3. Szbrown

    Szbrown Member

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    It's on the Gold Coast, 1 bedroom studio and was build ~4yrs ago, other similar 1 bedroom apartments in the building rent for approx $420 a week
    I'm considering Renting but I don't like the idea of possibly having to uproot and move somewhere else after a year or two
     
  4. MWI

    MWI Well-Known Member

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    Only you can decide what is more important, as you say having to move or uproot (possibly?), or paying such high fees. I would assume many vacancies on GC so why would they be eager to move you out (unless they realise it is costing them too much so they need to get out?).
    I will be travelling to GC and BRI soon...... like to visit some family and friends!:)
     
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  5. Trainee

    Trainee Well-Known Member

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    There is no good financial reason to buy this. Rent there. Or rent cheaper and get a good gym membership.

    in ten years your priorities will change. And you dont want to be stuck with an aging unit in a building with aging facilities.
     
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  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Who do you expect to pay for all of the running costs, maintenance and cleaning of the facilities? If these are important to you, then you pay the price. If they're unimportant, buy in a similar location without the facilities to maintain.
     
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  7. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    You are doing this for purely emotional reasons. You can't put a price on 'security of tenure' or having 6 monthly inspections from some irritating PM telling you to tidy up or clean the oven, or seeking the LL's permission to paint a feature wall. Just buy it for your own pleasure and enjoy it. But don't try to make it into something it isn't - like a good financial decision or a capital growth strategy ;) for example.
     
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  8. Archaon

    Archaon Well-Known Member

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    Buying a house would mean Land rates/water rates which could equate to 3k per year.
     
  9. Trainee

    Trainee Well-Known Member

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    there are no council rates or water rates for apartments now?
     
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  10. Lindsay_W

    Lindsay_W Well-Known Member

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    If you're really going to live there for 10+ years then owning might be cheaper than renting, need to run the numbers.
    Buying in those large buildings can mean that special levies are required from time to time to repair lifts, cracks in pools etc etc - so really need to ensure there are enough funds in the sinking fund to cover such things
    In general a 1 bedroom apartment won't see much growth in value, for the same money you could get a larger 2 bedroom apartment (older) in a smaller block of units with lower body corp fees. Have a look around at that price point and compare.
     
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  11. Archaon

    Archaon Well-Known Member

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    very inexperienced in apartments, though I thought they were captured by BC, do they rate each apartment individually?
     
  12. Trainee

    Trainee Well-Known Member

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    council rates and water are separate, and about the same amount between houses and units.

    Main differences are insurance and repairs.
     
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  13. Lindsay_W

    Lindsay_W Well-Known Member

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    Council better refund me then!
     
  14. Scott No Mates

    Scott No Mates Well-Known Member

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    The land occupied by the common areas are rated by council and are included in your strata levies.

    The Unit itself is also rated separately - more often than not, where the land component is negligible (ie less than the minimum lot size for a block created by subdivision), then it will be charged the minimum rates amount.
     
  15. FatElephant

    FatElephant Well-Known Member

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    If you're going to be living there for 10+ years and it is very lifestyle driven then I would think that it would preferable to buy it rather than pay rent and having to move around? I think considering your income and the purchase price of this apartment you could get this apartment + another property with better potential gains if that's what you're aiming for.
     
  16. Szbrown

    Szbrown Member

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    Hi guys, thanks for all the replies and input

    After considering my values I’ve decided to purchase the apartment.

    It may not be the best financial decision compared to renting however it will provide me with a sense of security and accomplishment, in addition to allowing me to focus on other aspects of my life and career.

    I thought about the suggestion to purchase a 2 bedroom, however all I need is a one bedroom, and knowing I’ll be able to pay the mortgage off in 3-10 years and will then always have a place to live is comforting.

    Ultimately the only reason I personally care about accumulating money is because I want/need certain things that money provides, and having somewhere secure to live near all my interests will satisfy a lot of my wants/needs.
    My thoughts are that will in turn reduce the amount of money I feel I require.

    The way I made this decision was to think If someone offered me 300,000 cash or the apartment what would I take.
    I would take the apartment so that made my values clear to me.

    I appreciate all the input it did help with making this decision
     
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  17. Trainee

    Trainee Well-Known Member

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    ah well whatever makes you happy. For now.

    though the crystal ball says in a few years you will be selling this because you are starting a family and the special levies are preventing you from saving a deposit.

    thats the future though.
     
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  18. My House QLD

    My House QLD Well-Known Member Business Member

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    Is it a one bedroom or a studio? How many m2?
     
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  19. significance

    significance Well-Known Member

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    Congratulations on finding an apartment that is right for you.
    I've recently done the same thing -- bought an apartment in a high-rise with good facilities. $8k/year body corp plus $3k/year council rates, but in my case it was worth it because it let me lock in affordability to live in a nice area at a time when real estate values are low in Townsville and also has great prospects as a rental property if I decide to move out after a few years. The building is generally in good condition and it has a healthy sinking fund.

    I do recommend getting a Body Corporate Records search done as part of your due diligence, and making sure that your purchase contract has an out if the results are not satisfactory. This should pick up any maintenance or planning issues that are likely to result in special levies.
     
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  20. Szbrown

    Szbrown Member

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    One bedroom, 92 m²

    The most recent listing of the same apartment type sold for $290k a month ago.

    There is one listed now going for auction next month, mortgagee in possession, so I was planning to attend that with my maximum bid already decided. If I can get it for the price I want, great, if not I guess I'll continue to rent and invest in Index Funds -

    Bit thrown off by the fact it's mortgagee in possession and going to Auction, I'm not sure how much that changes things

    Thank you for the advice, I'm definitely going to enquire about this, considering it's mortgagee in possession I'm not going to be too surprised if there is body corp owed, going to have to factor all that into the price
     
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