Hi all, I'm considering the following property as my first IP: https://www.realestate.com.au/property-house-act-oxley-136435342 I like it a lot because of the big land and the potential for development such as building a second residence. Based on what research I have done (noting my undoubtedly under developed research skills), the suburb of Oxley also seems to have enjoyed good growth in house value, population, and residents' income. The convenience factors seem alright too based on its relative proximity to the Tuggeranong town centre and Wanniassa shops. There are some potential red flags though, which I'm not even sure are actual red flags so I wanted to run these by you seasoned veterans: 1. Microburbs shows the public housing tenants in this area as 20% which seems really high to me. I cannot for the life of me though find out where exactly the public housing is just based on online research. How much of a red flag is this? 2. Boomtown shows the DSR for Oxley as having trended downwards from Aug 2019. I'm having difficulty clearly corroborating or refuting this. Your thoughts? 3. Are there any other blatant red flags that I am too much of a beginner to see? I appreciate all your help.
Here are a few things to consider. If you are buying it with the plan of putting a secondary residence on the site then there is a lot of due diligence to undertake, such as: - What is the zoning of the land. Here is a summary of land in the ACT RZ1, RZ2, Rz3 & Rz4 in Canberra – The POD If it's RZ1 (most likely), you can put a secondary residence but you can't subdivide or sell the residences seperately so think carefully as to how you would actually make money from a secondary residence? Would you rent it out? Does it allow a seperate driveway, can you put a fence through the middle etc? It's a substantial project. - Have you looked at easements, the slope of the land, neighbouring properties etc etc? Once you have done all that you can determine whether any of the above is feasible and whether you could make any money in the end? Granny flats are expensive in Canberra, as is per m2 building costs. If purchasing purely as a buy and hold investment without the intention of developing then consider that it is a bit of an odd property. A very small house on such a big piece of land. Would this appeal to tenants? Would tenants be expected to maintain the lawn? Would this put them off? Other things to consider are that detached dwellings in Canberra have risen in value by about 20% the past year or so - so you are likely buying close to the top of this cycle. It may have more to run (i predict about 5-7% more but who knows). Will probably then go flat for a few years until the next upward cycle. Canberra tends to folllow the same path being sideways then upwards then sideways, upwards etc - rarely do we see downwards cycles here as employment is very stable and wage increases consistent. I do like the location - in between Erindale and the hyperdome and quick access to the freeway. If i was buying an IP house in Canberra i would target the cheaper end suburbs such as Oxley and others. I don't believe there is anything available from the ACT govt that pinpoints all the housing commission locations in Canberra. However if you spend a few hours in that street between about 11am and 3pm you will probably find out if there is housing commission in close proximity. I own an apartment next to housing commission and just a few hours there around this time and you see the characters. There does seem to be scope to renovate this property to add value however you are not going to attract a premium rent or probably amazing tenants until the property is renovated. No robes in beds 2 and 3 is a downer as well so you would want to see how big the bedrooms are and whether you can add these in without constricting the space too much. Good luck Todd
That's amazing, thank you very much for your detailed response. I have a few additional questions if you don't mind: 1. How have you found owning a property/properties near housing commission? Do you find it affects rentability/capital growth noticeably? 2. I have seen that page about the zones before but couldn't find how I'd tell a given block of land belongs to what zoning. Do you have any advice, or is it just a matter of asking the real estate agent? 3. Given your conjecture about the position of the Canberra market, would your personal move be to wait till it flatlines before making a purchase? Or is it simply a matter of hold for a bit longer to see gains? 4. What other cheaper end suburbs would you recommend I investigate?
Thank you very much for that. I must be being blind though, I can't seem to find where the zoning information is on allhomes. Is it on the property page itself or a separate map page?
1. It hasn't really affected our tenants or resale. We have CCTV and with an apartment an added layer of security meaning you have to get in the building then in the apartment. The block is in a good location, well lit street so hasn't been a problem yet. Residents are aware to be careful and most cross to the other side of the street when walking past the block 2. As others have said there are maps out there but the REA should tell you as well 3. 2-4 years ago i recommended people buy in the lower priced suburbs mainly in Belconnen being Holt, Higgins, Latham, Spence, Evatt etc and i northern Tuggeranong suburbs. But it's hard to say Canberra is a good buy right now seeing as prices in these suburbs have really moved up 20% in 1-2 years. Personally i wouldn't buy in Canberra right now (as a buy and hold investor) as i think there are other cities and towns that are maybe at the start of the growth cycle whereas Canberra could be near the end. You won't lose money but could go flat for a few years 4. The area of Tuggeranong you are looking i think is good. The cheap suburbs of Belconnen you may find something unrenovated that is still cheap but anything already renovated is selling at a premium.
on the property page, just click any house in the area and go down to the map then select the overlay
A portion of the holding costs may cease to deductible where there is intention and actions are commenced to use the vacant part of the land for a further dwelling. Once its completed and available for leasing then it may recommence.
