VIC Geelong 2018

Rental markets in Bendigo, Ballarat and Geelong crunched as first-home buyers snap up stock

Cometh FHBs!

 

Long time reader and only posted a few times but very keen to get more involved in on the PC conversations!

I've been looking around Newcomb, Norlane, Herne Hill area for quite some time. All have different suburb features with pros and cons.

Last weekend I purchased 9 Dundas Street in Herne Hill at auction for $416k (1st Investment Prop!). Research into Herne Hill’s indicates median property price is $495k and $490k for 2BR/3BR houses (even higher at $650k+ for new houses). Capital Growth is sitting at roughly 7.42% and rental yield at 3.60% (as quoted online… but my excel is showing 4.5% yield).

My broker has indicated I should be able to obtain a loan of $330k (79.32% LVR) Interest only loan at 4.68%. There was also the option of going a Fixed 3 year I/O @ 5.07% but I don’t see enough benefit for the extra $107 per month for locking it in. Revising RBA discussion and general internet chat I’m fairly confident RBA will hold at the current rate for at least the majority of this year then a slow increase.

My intention is to perform a basic renovation - Pressure clean roof, recarpet inside rooms, place yellow tongue and carpet down in the back room and structural dependant install plasterboard on the ceiling (transform into a proper room). Also look to take out the wall between kitchen and living - again structural dependant. Expectation is that is shouldn’t cost more than 10k - 15k if I do myself.

Current rental is $350 pw unrenovated but with the renovation that should increase to $400 - $410pw, as quoted by real estate agents.

 

You can get better rates than what you quoted above. Of course, depends on your circumstance and strategy.

 

Yes, you're probably correct but I'm pushing my serviceability as I also have a PPOR, I'm not looking at the big4 banks at the moment either due to my situation. @hieund85 do you have other lender suggestions on who I should try for a better rate?

 

Well.... 6 Dundas St, Herne Hill sold for $257,000 about 18 months ago, so clearly you must have seen something good? I think that one was in pretty poor condition but it does show how much the area has moved I suppose.

 

@Knights of Ni 6 Dundas St definitely needed some TLC IMO! I also feel that property was a unique sale, reviewing other comparable sales from that time period in the surrounding Herne Hill area, there are no other sales in the $250k to $270k range - most were typically selling for $330k, $350k, $370k! Id be really interested to know where that property is at now and if the current owner has performed a reno... might have to have a drive past and see

 

You can check some threads in Property Finance in PC and see the current rates of some lender. CBA, Westpac and the co cut rates. But their servicing cal is not really favourable. That's why I said dependung on your circumstances and strategy. Anyways, I am not a qualified person to talk about it. There are heaps of excellent mortgage brokers in this forum. You can reach out to them.

 

Much appreciated @hieund85

 

Jackson Mazzarella buys Geelong home aged 19 saving $25000 since 14 | Daily Mail Online

I think I've found the one he bought:
10 Robin Avenue, Norlane, Vic 3214 - Property Details

Good on him for being able to buy one at that age!

With the benefit of having a bit more knowledge I felt like he could had done a little better (although obviously it's better than doing nothing like a lot of his friends admittedly). The house he bought have little scope for 'value adding'. It is only 276m2 which means it's not subdividable, house is not big enough to add a third room and it requires renovation. Looks like the bathroom needs to be done up and it could do with new carpets - so potential another $10k? He is said to have saved up $25k which means ~90% LVR so potentially LMI unless he managed to get his parents to help out in some ways.

It does seem like you can't buy 3 BRs under $300k anymore in the 3214 area and the fact that he is a tradie means that he could potentially do a reno at a much cheaper amount than others. If he intends to move into it then I guess it's only a small loan amount even with p+i especially if he rents it out to a mate so maybe it's not such a bad idea! But all in all, good to see his not grumbling and got on with it!

 

Yep, sack your broker and find someone here. That's atrocious, even across my portfolio, I don't have anything above 4.59%.

 

Depending on servicing capability, one may not have many choices hence is limited to few at the expense of higher rates. 4.68% for IO INV is not too bad although not the best rates.

 

Anyone think inner Geelong has any growth left this cycle. Purchased a property in Geelong west just off pako towards the end of last year as a future ppor and kind of suspect I bought right at the top.

 

He said his LVR is 79.32%. For ~80% LVR I think even the big banks can do a lot better. He should be able to get low 4s.

 

It is not about LVR only. Income (esp for part time or non Payg), expenses will affect your borrowing cap. For example, the same application, if it goes to NAB my friend can service it but he cannot with WBC. And if you are at or close to your max, getting IO may not be easy and sometimes you may need to accept a slightly higher rate to get what u want. But again, I am an amater so please speak to one of the excellent brokers here.

 

Inner Geelong is quite volatile and it highly depends on the location. Hard to call but personally will not invest there atm. Outer is better

 

For me it feels a bit overpriced but I was thinking over a 20 year period it would be safer than outer Geelong where there is no shortage of land. Had a lot of applicants to rent the property and ended up renting it to a person who works for a gov organisation who is on mid 200k wage. I'm thinking that with tac, ndis, work cover etc there will be enough people on good wages to sustain solid growth long term in the more desirable parts of Geelong. Still would like some growth to at least cover costs before the market totally flattens out .

 

Maybe but the better quality houses are on place like Mt Duneed.

I get that there are some nicely renovated houses in inner geelong..but most are in very condition.

Thus why people are gravitating to the outer suburbs..they are only 10 min to Geelong...and plenty of amenities.

 

True Sash. More modern housing is in the newer estates and a lot of houses in the inner suburbs need a lot of money spent on them but you can't walk to the best jobs in Geelong, the waterfront, the train station, deakin or pakington st from these places but you can renovate a house. In time the outer suburbs will be old and run down as well . For the price I spent on my place I could have bought an awesome house in Armstrong creek etc but the walk score would have not satisfied my wife. I'm thinking the immediate uplift is in outer subrubs due to recent price inflation in the inner but long term inner will be more consistent. Still I'm a rookie. That was my second property purchase and my first as an investor of sorts. Tbh it scares me that for the same money I could have bought a house in sunshine or werribee though. Not so sure about putting that kind of money into a regional but I'd rather live in Geelong than sunshine so that's where I went. Not a pure investment decision .

 

Agree with this - location is the only thing that cannot be changed. Over time as the number of residents increase the outer suburbs traffic will also start to go crappy (as people have to drive). That's when people will realized how important it is to be near public transport or even better, close to CBD where employments are.

I would pick location close to CBD every day on the proviso it fits each's budget and strategy.

 

If you can score a good deal very close to the CBD, then go for it.

There are bargains still around.