VIC Corio - Have I overpaid? Should I cool off?

Hi everyone,

I've offered $298k for a property in Corio in the box below (you can probably guess which property it is). This is my second IP.

I've signed the contract and now I'm getting cold feet and wondering if I've been too gung ho and should cool off. Would really appreciate some advice right now!

- Block size is 837 sqm, in a court
- The house is brick veneer in average condition (updated kitchen and living area). Getting building and pest inspection done today, so that will also factor in my decision
- REA says rental is ~ $270-$310 pw range, but personally I think it can be only rented for $250 pw
- House can be rented as is without a great deal of work
- There are not a lot of places for rent in my area (most are within the Bacchus Marsh road / Princes Hwy wedge)

Reasons why I purchased:
- Block size is large for the area (most other blocks are 550 sqm- 650 sqm). Idea is to hold long term (10 years+). Potential to subdivide further down the track.
- Close proximity to Corio Shopping center
- Within budget

Reasons why I'm getting cold feet:
- Driving around the area, it is less than attractive (front yards and houses are so unkempt). Although I know its a low socioeconomic area, and I'm not the one living there.
- Looking more closely at property prices in the 'better' parts of Corio (west of Princess Road, north of Purnell), I'm wondering whether it would be better to buy on a smaller block for a similar price.
- Sounds silly but the REA is so enthusiastic and saying the vendors are happy with my offer, it's putting me off even more.
- Median of Corio is $220k

Does anyone have any thoughts? I'm torn.

 

Sounds like classic buyer's remorse.

Not unusual, most have similar reactions.

But take time to consider how much thought you put into the purchase. How many properties you inspected. Why you chose this property. How much research of the area. How much research of other areas you considered.

Your main consideration seems to be the big block. Just how likely is subdivision? And how long would you have to Wait? Will it be economically feasible?

Would you still buy if subdivision definitely never possible?

Marg

 

When the price mentioned as 259,000 - $279,000 why did you offered 298K?

House is looking decent but irregular land size doesn't matter much.

You are not going to live there, so IP is slightly different from PPOR style of purchase, as long as good yield and capital growth plus future development could be done, that's all matters.

IMO its a decent buy not a nightmare that you think but slighly overpaid, its OK in the long run if you are OK. But if you have serious doubts that i could have purchased a better property in a nice location its purely a human sentiment, it happens to all. Good luck.

 

Hi ndpjai, Marg, thanks so much for the replies!

The REA said they had an offer of $290k on the day, so I offered $295k. According to the REA the same buyer upped the price, so I increased it to $298k...assuming the REA was telling the truth.

I called the Geelong planning department and division appears to be possible (RGZ2), however I think it would only be economically feasible if there was growth (which I'm hoping since its a buy and hold). In terms of location, I've been priced out of other Geelong suburbs I was targeting (Newcomb, Bell Post Hill, Bell Park).

I attended an auction on the same day, in Norlane West, for an asbestos filled house which required a full reno to rent out, but on a rectangular block on 710 sqm. That property sold for $279k. In comparison, at the time I felt that the Corio was a good buy.
16 Holdsworth Court Norlane Vic 3214 - House for Sale #124787166 - realestate.com.au

 

Only offer what your research and information tells you. You were bidding against yourself for no reason apart from the selling agent spiel

 

Sucker

Drive them back down on the building and pest

 

That's where you went wrong. Believe the agent was telling the truth. Could have, but you also bid against yourself maybe.
Our latest purchase agent said 3 interested parties. Called his bluff, put in offer at what we thought, told him first and final offer, doesn't waste our time back and forth with counteroffers ( we have other options) . Agent came back an hour later saying congratulations, vendor accepted.

 

Not sure the median for Corio is now as little as $220K nowadays, that might have been 4-5 years ago, as it's always been a bit higher than Norlane.

837m2 is quite a large block for most of Corio, they tend to be more around the 600m2 mark, some a bit bigger, some under, but land size helps a fair bit for sure. It would be in the top 15-20% of block sizes in the area. The extra large block sizes on the Matthews Rd section are much more expensive as they are now being valued as if they are Lovely Banks, just on the other side of the road.

I live in Norlane West myself, and just had my 3-1-1 place built in 2010 on a 300m2 block valued at $310K, and some sale prices in and around my area should offer you a bit of succour. Mid last year, 511 Thompson Rd on a corner block sold at auction for $315K, 48 Dunloe sold for $312K late last year, 1/43 Dunloe, a new 2-2-1 on a half-size block sold for $315K, 538 Thompson Rd, a house about 10 y/o on the very busy main road with a bus stop in front (ie, no front of house parking available) sold just recently for a hefty $355K.

Also, 50 Dunloe (i live in this street) is on the market for $349k-$379K, and nearby 3 Hinton Cl is asking $399K-$429K. neither of those blocks are as big as yours, these are around the 600-700m2 mark.

Agree Corio is not the highest socio-economic area, but that place is within moments walk of Corio Village, and i can say 1st hand as i usually do my groceries at Coles around 10-11pm, i've not had any issues getting my groceries late at night, since that's about the time i've motivated to get off my ort to do my shopping lol! It's got to count for a bit that proximity, plus being next door to the Wexford campus primary school and also Northern Bay college. Put it this way, not exactly apples for apples, but contrast what you've got size and house-wise compared to this vacant block around seven kilometres closer to Geelong here.

11 Airey Avenue Manifold Heights Vic 3218 - Residential Land for Sale #201739938 - realestate.com.au

I know location, location, location, but sheesh....Geelong's not that big. You can drive to this place in 10-12 minutes from Corio, for a block less than 1/3 the size and no house on it. Orr St Manifold Heights saw a place sell for $836,500 at auction last weekend. Nothing stopping any Norlane or Corio-ite from driving the short commute to avail of all the amenities of this area. There's no way i'd myself pay three times the price for a place just because the coffee is closer and $15-$20 brunches are de rigueur.

Just my opinion, but i reckon for your land size, you're not going to be too disappointed. And rents are rising as well, look at Geelong's rentals on any real estate website or local GT magazine in the Saturday Geelong Addy, it's very hard to get a 1-bedder in Geelong for under $200 a week now. No real reason you can't ask a bit more for this one.

 

One little thing that annoys me about the little thing that shows the proximity of schools, that Holdsworth Ct place is right next door to the Peacock campus of the Northern Bay primary school. Yet the closest school is said to be St. Thomas Aquinas in Plume St Norlane. Can't work that one out to be frank.

That fake brick sheeting is what Mum's place in Newcomb had around it when it was bought in 1975, must have been quite popular in the late 60's or early 70's i guess.

 

I know! Rookie mistake. I had missed out on another property in Newcomb by $4k previously because I did call the REA's bluff, so I guess I wanted to avoid another similar scenario.

I also felt that because 50 Carmarthen Drive Corio Vic 3214 - House for Sale #124931590 - realestate.com.au is under contract (assuming sold for $350k - listed price) on a smaller 777 sqm block (albeit better shaped and with permit plans in place) that $298k was reasonable. But then again, its in the more desired area of Corio..

@Dave3214, appreciate the comments. I used to live on Shannahan Drive for a period (classified as Bell Park, but you go through Norlane West to get to it) and I felt that Norlane West had a better feel to it than the area I may just have purchased in Corio. I think this is also reflective in the prices of the properties you have listed as well, $300k+. I guess that's what contributed to my doubts as well.

 

Without having intimate knowlodge of the area (enter @Dave3214) I will say this;

1. Markets have already moved some in the lower price point suburbs this cycle. How do the median prices this cycle compare to the previous cycles peak price?

2. Typically in sub 350-400k purchases you should not purchase above median price, regardless of how you can justify your block is better than the next etc. valuers will go off comparable sales in the area, so you will always be struggling to obtain a favourable valuation.

3. Do you have your strategy confused/Not clear? What does block size etx matter in such an area at this point when development may be 20 years away? It should be buying under market value, tidy it up, get it rented for what it should be, revalue, draw our majority of initial deposit funds (and Reno funds if possible), look for the next one.