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VIC First Home Buyer - Established or OTP?

Discussion in 'Where to Buy' started by June, 1st Apr, 2016.

  1. June

    June New Member

    Joined:
    1st Apr, 2016
    Posts:
    1
    Location:
    Melbourne
    First off, just wanted to say thank you to all contributors on this forum, your opinion and advices are very helpful especially to newbies like me!

    Tbh I'm very new to this whole property thing and didn't even know where to start or what I should be looking at, so please excuse me if I ask some silly questions.

    Okay, so my budget is ideally under $400k and I've been looking at some of the areas below,

    - Ardeer, Albion, Deer Park (old side): older established homes, 3 bedrooms with blocks of at least 600m2+ (I have no clue when it comes to development or subdivisions etc but I guess we'll get to that down the track) I've seen some under the $400k mark!
    - Moonee Ponds, Footscray, Bundoora (near La Trobe Uni), Coburg: 1-2 bedroom apartment in a smaller complex, not interested in something like the 'Riverside' currently being built in Footscray. Some similar to the below maybe?

    101/250 Barkly Street, Footscray VIC 3011 - Apartment for Sale - 2012660551
    90 Buckley Street, Footscray VIC 3011 - Apartment For Sale - 2012397766
    350 Ascot Vale Road, Moonee Ponds VIC 3039 - Apartment For Sale - 2012412174

    I'd like to rent it out and then hopefully the property would've had some decent growth in order for me to use the equity to purchase my second.

    Should I be looking at OTP to take advantage of the stamp duty savings or is it not really that worth it considering land has better growth. Which should I start my portfolio with? Yield vs Growth? What do you think of those areas?
     
  2. ashish1137

    ashish1137 Well-Known Member

    Joined:
    12th Sep, 2015
    Posts:
    308
    Location:
    Sydney
    I'd say you target both equity and cash flow and look at some upcoming areas in geelong. Good rentals, good demand, lot of options.

    Regards
     
  3. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    898
    Location:
    Melbourne
    I always buy pre-loved after being burned by OTP.

    Just way too much risk with OTP.

    The Y-man
     
  4. teetotal

    teetotal Well-Known Member

    Joined:
    7th Nov, 2015
    Posts:
    398
    Location:
    Sydney
    As long as you do the due diligence properly, either one can be a success.
    Just don't get carried away with anything.
     
  5. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    898
    Location:
    Melbourne

    Don't expect much growth if you buy OTP - often the stamp duty savings etc are offset by an inflated price you pay.

    Because you can be paying 30% more than "market value" it can take years for the property to follow the normal growth cycle (ie until it gets older).

    OTP/Brand new can depreciate ferociously (which means they lose value ~ your marketer makes it sound like a good thing)

    Remember you are usually buying from a seasoned developer - vs buying something from someone not in the business (so called "mum and dad" owners or investors)

    Have a look for threads on this forum where values have fallen prior to settlement etc, and they need to come up with extra cash.

    Imagine if you sign a contratc to buy and apartment for $400k, assuming you have $80k for a "deposit", only to be told youu need $100k "deposit" to settle because the value has fallen or you will be sued....


    The Y-man
     
  6. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Hey June, welcome aboard.
    That would be a big NO for OTP.
    You need to do some research on the oversupply of apartments in Melbourne:
    It’s been raining apartments in Melbourne, and it’s great news for renters
    Definitely go for for a house if you can.
     
  7. Sam Yue

    Sam Yue Well-Known Member

    Joined:
    14th Jul, 2015
    Posts:
    100
    Location:
    Sydney
    House Land package can be an option. More land content means safer. You can even consider buy a block of land, and then organise a builder to build for you. Cut out the middle man = more profit.