First home buyer - off the plan Melbourne

Hey everyone, trying to seek advice on buying my first property in Melbourne. Apologies in advance if this has been brought up before.

Bit of info:
- Recent graduate with a budget of up to ~600k for a new home.
- Looking for at least a unit with 2 bedrooms so I can live in one and rent out the other.
Ideally the property could also act as a good investment if I decide to move out in 5+ years.
- Wanting to purchase in inner suburbs of Melbourne (preferably inner north - Brunswick, Preston), but it seems I would only be able to afford apartments, so am thinking an off the plan apartment. It would also allow me to save up during this time.


I'd like to know if this is a poor decision and what everyone's opinions are on off the plan apartments. I'm getting a bit of FOMO and feel like the later I enter the market, the harder it'll be.

Appreciate any advice I could get.

 

Ugh.

What do you see as good about this plan, and what are the potential problems?

 

I think if you want to live in that area you are much better to rent . Why buy for 600k then have to pay water rates, council rates, BC fees, maintenance, insurance, sinking fund depreciation, falling value due to BS removal of Neg gearing and CG tax discount etc etc when you can rent for $300 or $150 if you share. You would be better to buy somewhere else for $300k and get $ 400 a week rent to cover your rent.

 

welcome to the forum @Calvin123

purchasing and OTP, you might be able to achieve 1st and 3rd points, but very likely not the 2nd point: Ideally the property could also act as a good investment if I decide to move out in 5+ years.

if the potential capital gain is minimum ( there might be exceptions), you are going to severely delay your property investing journey.

 

Yeah, hold-off for now, Calvin. Keep saving as much as you can and become an expert on property values in the inner north. Go to open house and auctions and see what's happening on the ground. FOMO is not so much a thing right now.
Scott

 

Every problem I've had with valuations being less than the purchase price in the last 2 years has been in off the plan apartments. They are a very high risk. I agree with everyone else, keep saving and use that time to educate yourself further about property and investment.

 

Thanks for the advice so far!
I think I'll avoid OTP apartments altogether.

I didn't think about this tactic, but I agree it's quite clever. Only thing is I want to take advantage of the First Home Owner's grant, which I reckon can't be used if I'm not living in the purchased property...

Would it still be advisable to buy a new apartment that has been fully completed?

Do you have any recommendations to maximize my property investment potential. If it's not OTP and just a newly completed apartment, would it still be a weak decision in an investment perspective - keeping in mind that I'd move out in 5 years time.

Cheers again for the help guys.

 

The point being, this point of the cycle, theres a good chance melbourne may just be overall flat for 5 years. If you buy new completed, youll be held down by all the otp in the pipeline. Live in and you dont even get depreciation.

 

Okay that makes a lot of sense. In other words, it's not the best time to purchase in this cycle.

I think I should re-evaluate. I kind of like the idea of renting and investing in somewhere else now, kind of a new concept to me - but still would like to take advantage of the grant though haha.

 

Slow down. You dont know enough to evaluate. Its like asking do you prefer apples without knowing all the other food groups out there.