Dulwish Hill

I Just watched the auction video for 17/22 Ness Avenue, Dulwich Hill
https://www.facebook.com/randwmarrickville/videos/941605099273559

We were thinking of bidding on it but didn't end up getting sorted in time.

Here are the listing details - http://www.domain.com.au/17-22-ness-avenue-dulwich-hill-nsw-2203-2012999245

I was prepared to pay up to $649,000, Jodie wanted to spend $675,000 (but I wouldn’t have let her do that) as 4% gross and 3% net roi is our minimum returns as you can see in the calculations here - http://blog.collins.net.pr/2016/09/1722-ness-avenue-dulwich-hill_10.html

Lol people are losing their minds……. at $726,000 way way overpaid. Basically overpaid by a brand new car (or two)....think about that for a moment.

I did some quick sums basically @$500pw rent with 20% deposit of $145,00 and $34,000 stamp duty and legal costs this will be cashflow negative for about 6.5 years……and that’s without interest rates moving so basically they will be losing roi month in month out for about 10 years and never see an investment return until they sell it.

I hope they like golf......

Great work by the sales team though, the vendor must be ecstatic.

 

That does not look too bad to me if going to be home, close to golf club (although if it is at the bottom of the course not so good maybe) inner suburb, 2 beds...... I know someone who just paid 7 something for an old 1 bedder with under 500 return and a long way from city, it will be a lead weight for a long while.

 

An extra ~$70k is not much to a homeowner when repaid over 30 years. Probably they 10th home they've been outbid on and happy to just pay up to get something.

House in Kew went for $1.7m over reserve, that's minds being lost kinda money!

 

I like how it overlooks the golf course... I'd be happy to live somewhere with views like that.

 

Yeah, not a lot of units with that sort of outlook, usually it will be someones underwear on a balcony opposite, also is close enough to know what they are eating and current household issues that are discussed

 

$700-750K is about the market value for this type of Inner West property. (Despite your calculations and requirements).

 

@Dean Collins I think you will be continually outbid by OO's (and other investors to a degree).
Your attempt to buy blue chip in Sydney's inner areas may take a long while.

 

Price is unsurprising. It's a nice pocket around there. I have a few apartments nearby.

 

That's a nice pad. I wonder if I'd pay that much even if I could afford it. Nice lifestyle around those parts.

 

@Jennifer Duke can you please write a satirical article about how OO's are pushing investors out of the market with their silly and irrational emotional buying? Only fair seeing as investors are always getting the blame for everything

 

Yeah, not much chance of getting 2 bedders at/under $650k in Inner West.
Seems to be a good outlook.

 

At those yields/losses.....happy to be outbid

 

I do not think anyone would argue it would be good to buy now as an IP, as a home though, that is a different story & it clearly offers something different, 50 or 100k extra for that sort of outlook as a home compared to looking at other units that you can nearly touch would seem to be ok to me.

 

I think I must be out of touch with Australia.

Do you know how long it takes you to earn $100k outright?

I don't mean $100k of post tax salary, I mean $100k of outright non spoken for cash after all your mortgage/taxes/food/expenses/car payments/student loans etc are paid for.

Is $100k really then "not a big sum".

eg. if you are pulling in $150k a year and then paying $50k tax, then $40k living expenses (car food entertainment mobile internet holiday etc) then paying $40k a year housing expenses (mortgage etc)

Then that $100k "over paid" will cost you 5 years of your life because you wanted a view. You have to keep in mind you are now handcuffed to 80sqm with a car space only (no garage) and every day you go to work, 8 hours x 5 days x 48 weeks......for 5 years.

Unless of course you can find a bigger sucker and hope that when you sell in 10 years time someone is willing to pay more than you.

Like I said.....I think I might be out of touch with Australia and the value of a dollar.

 

Properties with a good outlook will always command a premium... so while you pay more upfront you should be able to sell for more at the end. And you get to enjoy the extra amenity too in the meantime. Also if the market tanks, yours will be the first to secure a buyer if all other factors are equal.

 

That's why investors get $10k and gear the other $95k - no my maths ain't funny.

$100k is what you want to make of it - if buying $300k properties it is substantial but will also take a while to recoup however if you're looking at $2m + market it's small change.

 

It also depends on your income.. if you are earning $>500k/year, 100k is not a big deal in comparison to if you are earning $150k/year.

 

At the end of the day, if you don't see value in buying at the market price then you are not losing any dollar. Just wait till another that pops up.

The reality is people buy with emotions and you can't fault them. It's their money and life.

 

Added to what others have said, it's not really that much difference between a place for $650k and one for $750k.

 

Do you know for a fact that the buyer is an investor? Maybe they are OO, as some others have mentioned. Most people buying their PPOR just buy what they want and can afford. When looking for a PPOR, we saw lots of auctions where we thought people paid too much.
We were outbid on a place in Marrickville 6 years ago - 3br house, no parking, small narrow block, but a gorgeous house, restored beautifully. It was down to us and this other couple. They bid $720k and we stopped. We didn't think it was worth that. Its worth over $1m now, but we didn't foresee that. Having said that, you're probably right, I'm not sure how much more the Inner West prices will go up from now.

It sounds like you stick to your guns buying at a good price/ below market value, that will maximise your profits. More power to you. Good luck with finding the next place.