first IP: single fronted bluestone cottage in adelaide cbd fringes?

hi everyone, just wanted to get some thoughts regarding buying a single fronted bluestone cottage on the city fringes of adelaide as an investment property. they are usual 2 bed 1 bath with <350m2 of land. would they make an ideal investment for capital growth considering their location ? any downsides to a purchase of a circa 1900-1910 cottage?

 

Every property has pros and cons.

A few ‘downsides’ you might identify are:

- Significant owner occupier appeal may mean you have to pay a premium upfront (likely recouped when you eventually sell)
- Lower yield compared to less central suburbs may make it harder to hold if borrowing to purchase
- Low land content compared to suburbs further from the city centre
- Adelaide - May not grow as fast as Syd/Melb (a lot of diverse opinions on this point of course)

 

Make sure you get a building inspection. Since the slabs were much different in those days, some are sinking. Look up Underpinning, its an expensive job.

Be great from a CG pov. Prob not very good yield. Like anything that close in, in any city.

What sorta budget do you have? 1 mil gets you a small character property. Prob 2 mil if you were being literal about the blue stone part and want to be in a nice neighborhood.

216 Young Street, Unley, SA 5061 is a good example and fairly good value i think.

32 Culvert Street, Parkside, SA 5063 is across the road from my PM office and is at cheaper end of the scale (since amongst commercial).

6 College St, College Park, SA 5069 one extreme to the other

 

What sort of rental yield for these type of properties? Do you have to pay land tax if purchase using trust?

 

Low, probably 3%

Land tax has recently changed here. Trust or your own name doesn't make any difference. You get a tax free threshold of about $400k land value and then cents per dollar over that.

 

gorgeous houses though.

 

I've purchased both old and new properties and whilst they both have good and bad points, I've found the older places usually end up costing more. Especially as investments, because if your tenant reports a maintenance issue there is little choice but to get it rectified within a day or two.

I am currently looking at an off the plan apartment, I have been working on this site and am so impressed with the project that I'm now looking at ROI in these mixed use developments!

 

I'd buy it to live in.

 

Please search the forums for OTP apartments, they are a minefield of potential pitfalls!

 

Some of those stories were terrifying..!! How do you miss balconies and rooms :-/. The ones I'm looking at are great, certainly no issues like that. There is a lot of flexibility with the floor plan and finishes on these which is one of things I liked, the second appeal to me is the other buyers. I worked with each of them on the modifications they're all making and was very impressed by all of them.

I think it must be rare to find a good community like that?

 

Very interested to know what sort of OTP apartment it is? Are we talking small boutique block, beach side location etc?

I cant say I've ever heard ONE positive story in the last 4yrs. Everyone has been in either neutral or negative equity, delayed settlements, or building issues. Its a scary market

I couldn't stand the thought of competing against 50+ other likewise apartments

 

Is your OTP in Adelaide?

 

Yes, in Adelaide just outside of the CBD. There have been delays, I haven't heard of one that's ever been delivered on program either! I've worked in commercial construction for ten years and it's all too common. It will still be beautiful when complete, and the nice neighbours that are owner occupiers are a major draw card for me.

Im happy to share info if you would like to send me a message. Handover is due in a few months, I don't know how long the buying process takes... but I think that there is plenty of time?

 

East End?

 

I have witnessed one positives back on 2017. One of my customer bought an OTP unit for $550k in 2015, and the bank I worked for back than valued it at $730k when I did the loan .

This has prompted me to start looking into OTPs, as most I still think they are not investment grades, but some are actually not bad. Because cashed up developers they have the ability to buy up premium locations that you just wouldn't be able to purchase ie very close to train station and shopping centre within a very densed suburb.

 

Good point. I would guess some people have done very well out of OTP if purchased in a rising market at the right time. Sydney 2013-2015 for example, if you bought here and settled 2-3yrs later.

However “organic” growth is limited with this product if your 1 of 50+ units. There almost will always be a couple up for sale at anyone time, and if demand is high prices rearly move upwards.

 

I agree, I think the big high rises in the middle of the CBD that have tiny rooms and low ceilings lack appeal and growth. The one I'm considering is on the city fringe surrounded by parklands. The floor plan is good, 2 bed, 2 bath and 2 car parks. Ceilings between 2400 and 2700 plus a 50m2 balcony. It seems good to me for the price.

 

What amazing quality of property you can get for $900k in Adelaide
So jealous.

 

Which are a in Sydney would you look at OTP?

Curious.