VIC First IP - Corio/Norlane or Melton

Hello Everyone,

I'm new to the forum and would really appreciate some advice.

I have been reading some posts on this forum and they are really informative, thank you all for your contributions.

I am currently looking for an IP, after confirming how much the bank will lend me, I am narrowing down my search to something within my budget, which seems to be getting harder as time passes.

My budget is approximately $250,000 (including stamp duty).

I would prefer a property that needs work, as I can have the property renovated quite easily and would only need to pay for the materials used (extended family are tradies).

I am thinking either Corio/Norlane or Melton.

I am after long term CG. I am fine with the property being slightly negatively geared.
Also, I want to be able to find tenants relatively easy (I would struggle if the property was vacant for 3-4 months at any time).

Any suggestions? Which suburb would perform better in the long term?

Also, I cant really stretch my budget and I am not looking for any interstate properties.

Thank you all very much!

 

But what is your strategy?


Anyway, welcome to the forum. Maybe elaborate a bit on the areas you have mentioned. I understand they may be regional areas which can be tricky to find tenants for. Check vacancy rates against each area you are interested in. Hopefully others who have a better idea of those areas will be able to comment.

 

Hi Ragnar

Regarding the areas you have highlighted:

I don't like Norlane at all ... it has problems that would be difficult or impossible to overcome.

With the other two areas, there are great pockets and also really not great pockets so research is really important.

I don't see why you would have a 3-4mth vacancy if you have a good property manager behind you.

As to which would perform better long term is a question for the crystal ball and also largely dependent on the definition of "long term".

 

What about a unit or flat around sunshine way, Albion etc?
30 years Melton has done not much, there may be a few members here who have bought under market value and done some reno and thus created equity but growth generally has not come from suburb growth.
In general those 3 suburbs are quite low socio economic and not great owner occupier suburbs.

Have you considered taking on LMI to get a slightly more expensive but better quality IP? Or are you maxed at borrowing capacity?
What about holding off and saving some more? 6 months or a year of saving may make all the difference in 10 years time!

 

Hi Tennex,

Thank you for your reply.

I am quite new to property investing, so my strategy may change in future, but at the moment my strategy is to purchase a property below market value, renovate the property and lease it out. Have the property valued in 2017. Hopefully by then I will have some equity, and can use the equity as a deposit for a second IP.

I do have my doubts about Corio/Norlane and Melton, but they are the only suburbs where I can purchase a house on a large block that is within my budget. I will do a whole lot more research on those suburbs before finally deciding anything.

I am also thinking about either saving a little more to increase my budget or looking for a unit/flat in St Albans. In saying that, I would prefer to avoid any properties with a body corporate.

Cheers.

 

Hi Jacqui,

Thanks for the information, you have highlighted the fact that I need to do a lot more research so that I am aware of which pockets are good/bad etc.

I know how much of a difference finding the right pocket can make, i.e. in Glenroy there is a huge difference between the good pockets and bad pockets.

Cheers

 

Hi Greyghost,

Thanks for advice! I do have my doubts about Corio/Norlane and Melton, but they are within my budget. I have just recently started looking into St Albans for a flat/unit. I think the suburb will benefit from removing the level crossings and I read that the Gov is spending a lot of money on developments St Albans in 2016. I like St Albans' location and distance to CBD, I previously worked in Sunshine so I am lot more familiar with the area than I am with Corio/Norlane and Melton.

I would prefer to avoid LMI, I am also unsure how much taking on LMI would increase my budget. And yes if I don't find anything, I will continue to save.

Cheers

 

If you are currently avoiding LMI with an 80% lend, then going to 88% with LMI capped would increase your options to around $400k. You would still need to show serviceability. Speak to a broker about how much the LMI would cost, 88% is usually a nice point where the cost isn't too much.

 

Norlane is a rough suburb. But buying there will open doors to subdivision (STCA). I have seen builders are sub dividing blocks as small as 280 - 320 and selling for around 230k.

On the contrary, you can negotiate a bigger corner block for 260 - 280k and see if you can develop yourself. But you need to have some prior experience as per my opinion.

There are other pockets in Melb which may fit into your budget and do not have a bad reputation associated to it. Like armstrong creek and nearby areas. Corio is also a good suburb but you would need to do your own DD.

You can also opt for adelaide which is at its low and you can get some good bargains.

Long term CG and good tenants do not hold good good for suburbs like Norlane IMO.

All the best.

 

What is wrong with Norlane? I look at it on a map and it seems to be in a decent location near the bay.

 

Norlane has those nasty little strips of shops that never polish up. You never have all the shop owners agree to change the appearance of the whole strip.

Builders use Norlane as somewhere for their apprentices to have something to do in between proper paid jobs. They have to be learning even when no paid work is coming in. These builds are done at cost and sold off accordingly. It drags relative values down.

 

There is more to an area then how it appears on a map !!!!!!

 

Thank you JacM for your comments. I will have to spend some time in Norlane to see all the problems and if I'm prepared to take the risk and invest there. People have mentioned apartments in Albion and Sunshine. Unless it is a one bedder you won't get an apartment in Sunshine for $250k unless it's on Ballarat Road. I live in Albion and my concern with units in Albion is that there are so many of them that I am not convinced that there will be much CG. However accept for Albion one isn't going to find a 2 bedder for under $250k with ease that is as close to the CBD and has the public transport links. Also Albion units have the greatest yield for units in Melbourne, so they are the plus side for Albion CG potential. Also with Albion there is aircraft noise, which doesn't really bother me, but it is here. If I was looking at Melton I would look at Melton South due to the train station.

 

I am a homebuyer living in Norlane West (which oddly given it has a post office of that name doesn't get differentiated from Norlane by the real estate industry) and i can give you my run-down from living here for the last six years.

Yes, there are pockets (particularly on the Eastern side of Thompson Rd) that have a few undesirables living there, but recently there's been the huge new Bunnings store open up in Norlane's southern boundary, and many new places being built with the 'New Norlane' initiative that's been active for the last three or so years.

I bought a new build on a smart block for $260K in 2010, a 3 B/R townhouse, and i have found living here very convenient and to be honest, very peaceful. I'm one street off Thompson Rd, and during the day it's nice and quiet, family friendly with many young children who readily play with one another in holiday times, and for my own situation, just 5-15 minutes from work in Geelong and North Geelong. (i have a couple of different jobs).

I do find it kind of perplexing when people complain about housing affordability yet will eschew a suburb like Norlane and instead buy in a Melbourne suburb that may be as far from Melbourne transit-wise and be more than double the price. I rarely even go to Melbourne, but it's a 50 minute drive up the highway, with either the ring road or Princes Hwy equally accessible. Coming home you don't even face a traffic light if you use the ring road back to Norlane West. You're moments from major shops, 10 minutes from Geelong, 10 minutes from everything Pakington St has for the advantage of paying half the housing price of Geelong West's median, and unlike Armstrong Creek and their newly discovered traffic jams, Norlane has five dual-carriageway arterials running through it (being Anakie Rd, Thompson Rd, Melbourne Rd, Station St and Cox Rd. Getting around here is a breeze.

This might sound like a spruik, and i'd be lying if i say that i'd not like some capital growth in my property here. But this side of the suburb is quiet and convenient, and close to infrastructure of all sorts. I'd much rather walk the streets here than in some of Melbourne's streets anyway, and for people who are finding some of Melbourne's prices hard to stomach for a first home, getting a place here from the low-mid 200K's is surely worthwhile. Bear in mind, unlike Melton and the Northern/North Western suburbs of Melbourne, the beaches of Geelong and the Surf coast are only 20-30 minutes away too.

All this suburb needs is a few people to actually take the plunge and see it's advantages, rather than seeing the occasional feral story put them off, this area is no Robinson Crusoe either as far as trouble goes, there's no gang activity here or stuff you see in some of Melbourne's suburbs. The Ring Road in particular makes Norlane West extremely easy to access, and i do feel, as someone who has put his roots down here for the last six years that it's eminently livable and indeed quite a bargain given what you are near to and for the prices asked.

 

Just the typical issues with some of the areas, and yes there's four smaller strip shopping centres that can attract some of the less desirable types (Labuan Square, Robin Ave, Alkira Ave and Rose Ave) but nothing that's any worse than you'd see in many of Melbourne's outer suburbs and lower socio-economic areas. And most of the time they are simply just quiet, as most people shop at Corio Village which is five minutes away from most of Norlane.

Living here for six years (and being born here too) i haven't encountered anything in my area of Norlane West that's been in any way unpleasant or anti-social. Part of me wonders for example what a place would cost in Melbourne that is say 10 minutes from Lygon St or Chapel St....Geelong's version of those is Pakington St, of which Norlane is 10 minutes drive to. Doubt you could buy a place 10 minutes from those Melbourne streets for $200K! Basically you pay almost rural city prices for a suburb that's got access to much more infrastructure than any similarly priced area. You'd have to think something will change with the perception versus reality at some point.

 

You will find as suburbs become more dense people accept more suburban noise.

Look at the boom gates at coburg station. There is a development that overhangs the bloody thing. Every time I get stuck in my car there I wonder how people live in those things..

People pay for location, amenities/infrastructure etc. This is where I see the issues with Melton/norlane.. Those areas will if any derive "piggyback" growth based on a general rising market in melb., they struggle to generate their own genuine growth. Maybe there will be such a pricing difference due to lack of growth in them in the future which may spur a catch up, but I really to struggle to see the prospects in these suburbs short to medium term..

Where you buy elsewhere.. I'm not totally sure, but saving some more may be the best option.
Don't let FOMO get the best of you...

 

@Dave3214 thanka for your input. Did you mean properties east of Thompson Rd are less desirable such as sparks....what about east of Thompson road in Corio?

A quick search shows that most on sale now are to the east of Thompson Rd with 2 on Thompson road itself. Nice blocks.

 

Generally the areas west of Thompson Rd are more privately owned, whereas there's a larger number of commission housing areas in what are commonly known as the 'Birds' and the 'Flowers'. The New Norlane initiative though is marketed towards private buyers, indeed the 2-bedroom new places near Bunnings are advertised as $219,900 (but that's after claiming the FHBG).

Corio's best areas are generally in the 'C' streets around Cloverdale Drive, the newer areas in the 'Gun' streets like Remington Drive, and the newest area along Hendy St where new privately owned residences are priced around the mid $300K mark. You may notice with a Google map search, the street names do tend to run to a theme in these suburbs, as there's also the US state area just north of Cox Rd, and the Australian river names area near Corio Village.

A bit of the notoriety comes from what was a fair few old dilapidated 50's and 60's weatherboard places that were left vacant by the Ministry of Housing, and subsequently were a target for arsonists. Many of these are now cleared and are vacant blocks, and are being in-filled fairly rapidly by the new places. The Station St side of Norlane is within walking distance of the North Shore train station, and there's new builds in this area that are selling as well.

It's no Toorak by any means, but i just feel that you get a lot of bang for your buck in terms of utility living here, simply because it's quite close to Geelong, very easy to access, only 50 minutes to Melbourne and therefore there's all the infrastructure you need. The property market in Geelong is a little odd in some ways, as Armstrong Creek and the coastal regions seem to be the ones attracting people who seem to be happy to commute the 60-80 minutes each way to Melbourne. I wonder how many might think when coming home after a long day, that they could have got home half an hour earlier in Geelong's Northern suburbs. In a way it's the reverse of Melbourne's price delineation, as the areas closer to Melbourne in are the ones that are the cheapest. Norlane and Corio are only as far from Melbourne as Pakenham, Officer and Frankston/Cranbourne after all.

 

Dave3214 it is good to hear someone from the Norlane area. Back to the original post if I had only $250k to invest and wanted a house, Norlane or Corio would be the areas I would look at rather than Melton. At least Norlane and Corio are close to Victoria's 2nd largest city and near the bay. Melton is closer to Melbourne but there is so much land to develop in the Melton area. If you do like Melton look at Melton South as is close to a train station. Another area to look at is Ballarat especially Wendouree. Wendouree has a train station, has Ballarat Grammar is near a few other great schools (Ballarat College is one of the best schools in Victoria based on VCE marks and is cheaper than the top private schools in Melbourne), many people commute to Melbourne from Ballarat and Ballarat is the 3rd or 4th largest town in Melbourne (with Bendigo).

 

Hi @Dave3214

Thankyou for taking the time to share your experiences ! Lovely long posts full of personal experience is invaluable

With respect to the Albions and Meltons of the world, spend time on the ground in the Melbourne Metro suburbs and there are rapid trends towards clustering around the train stations even in the outer-ring suburbs. Perhaps the inevitable cost-of-living-squeeze forcing households to be single car or zero car households has arrived sooner than anticipated.

With Corio it is important to be very wary of acquisitions too close to the Matthews Avenue band due to the presence of a long string of giant electricity poles. Financiers don't like to be too close to them and this is reflected in the LVR on offer for such properties which can be problematic for buyers needing above 80% LVR, or owners needing to offload a property and find a buyer that can stump up a 20% deposit. The same goes for a long strip through several suburbs of Geelong clustered around those poles, and any other suburb that has them. There is a band of them along the western perimeter of Sunshine West for instance.