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VIC Hold & Sell for short term again in Melbourne

Discussion in 'Where to Buy' started by namz, 25th Jul, 2016.

  1. namz

    namz New Member

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    Hi guys ,

    I am looking to invest some money in land somewhere in Melbourne and then sell it in 6 to 12 months to make some short term gain . This is my 1st time investing in property so I want to take baby steps before I decide on next step.

    Would appreciate if some suburbs \estates can be suggested for same. I dont mind holding onto a land that needs some time to be titled . Atm , I have my residential in Point Cook. I was thinking of Tarniet , Any other suggestions ?
     
  2. Air_Bender

    Air_Bender Well-Known Member

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    Well I'm no property expert but I was looking at buying land north of Epping/Wollert in the Aurora Estates. Primarily because it was affordable, close to work, Coles/other stores were already being built and a new Costco was supposedly coming (according to the sales agent).

    But traffic is pretty horrendous (to get in and out) and I've heard you'll have to wait quite a while for land to be titled, with regular delays.

    I ended up buying elsewhere but I did seriously consider taking the plunge and purchasing some land there.

    Anyways I thought you might be interested.

    Cheers
     
  3. Big Will

    Big Will Well-Known Member

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    @namz and @Air_Bender not to ruin your ideas and I wish you the best of luck with short term gains for Melbourne.

    You need to find something that has limited supply or unique factor. Buying in Epping is not what I call unique there is ALOT of undeveloped land that will hurt your gains (both short and medium term). If you buy in a new estate the building is going to severely depreciate (think of a car) and the land will almost struggle to keep up with that level of deprecation. After all who wants to pay 400k for a 1 yr old house when I can pay 400k for a new one? Who wants to pay 400k for a 2 yr old house when I can get a new one for 420k? etc etc.

    To get a short term gain in Melbourne within 6-12 months is I would say highly unlikely when you factor in buying and holding costs. You would need to renovate or develop a property. You will have 20k in stamp duty 80%LVR + 80k deposit + ~30k in cost ~110k total which would give you a mortgage of ~15k p.a. If you did above 80% you will need LMI + more money to cover mortgage repayments and banks are less likely to let you withdraw equity above 80%. Even at 7% growth you will earn 28k but you still had 20k in stamps so really you are at 7k in front (at best) and the bank will likely value it at 20k more than last years price (as they work conservative). So to get your 8k you will need to sell and if you use an agent they will charge you 10k in commission plus 5k marketing ~15k so you are in theory down 7k.

    If you want quick short term gains you will need to look regional or better yet find a mining town as you are not going to find in Syd, Melb, Bris. Please note I am not advocating you buying in regional/mining but that is your answer to make a profit within 6-12 months (being realistic).
     
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  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Property generally isn't something you'd invest in if you've got a short time frame, at least not a small scale. Between buying, holding and selling over a 12 month period, it's going to cost you at least 10% of your property value.

    Melbourne property is generally increasing at the moment, but I wouldn't be confident that most of the market would exceed 10% growth in the coming year.

    For a 6-12 month time frame, probably the best place to put money would be on an offset account (if available), or a term deposit. With these products, you'll at least not loose money.
     
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  5. Air_Bender

    Air_Bender Well-Known Member

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    Thanks @Big Will and I completely agree with everything you've just said. Although at the time I was just desperate to get into the market and didn't consider those points you've made.

    Just to clarify I actually ended up buying a beautifully renovated 3 bedder in Mill Park. This is my PPOR and will be for a very long time. Hoping to get on the IP ladder sometime in the next year or two but for the time being I'm quite happy with my purchase.

    I was merely suggesting that particular estate as I have researched the area quite a bit and thought it might be of some interest to the OP.

    Cheers
     
    Last edited: 25th Jul, 2016
  6. Big Will

    Big Will Well-Known Member

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    I think Mill Park should do okay, hard to say if it will do better then other places but at least it is got less land available then others. My wife's family has a number of PPORs in the area and there are some really nice houses in Mill Park.

    For me it just lacks train station, highway access to city (this is a problem with the north-east in general) and movie cinema, however everything else is decent.

    FYI not saying it is a bad suburb just not what I look for in IP which might not even be right :)
     
  7. JamesP

    JamesP Well-Known Member

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    The Mansfield estate in Berwick jumped from low 400's to low 600's practically overnight. Between Cylde and Evand rd.They were never 500k haha, 30% instant jump.

    We bought for 500k last November up the road, not certain but could sell for low 600's already with a minor reno. If it was mid 600's, after tax it would be a pretty nice short term profit.
     
  8. strongy1986

    strongy1986 Well-Known Member

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    Good paper profit but what is the point of the post?
    Are you suggesting that iys possible to invest with a 6 month time frame and profit?
    I reckon its a mad idea and i would strongly discourage it.
     
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  9. JamesP

    JamesP Well-Known Member

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    Yeah that's what we did, knew the area well and it was positive geared anyway so worth a crack. Definitely can be done if you ride what's called the ripple. Practically everyone in Melbourne has made 20% short term profit this last 6-12 months.
     
  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Predicting the ripple effect is a great strategy and overall not difficult to predict with good research. The real question is could you do it again with similar results in the same time frame?

    I've seen properties increase 200% over 2-3 years (20-20 vision in hind sight). For the most part though, the ripple effect will get you reasonable growth over the medium term. It's not a short term strategy.
     
  11. Big Will

    Big Will Well-Known Member

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    I hope for 20% in the next 6-12 months but I doubt it.

    Property is not usually a great investment for a short term outlook. Generally speaking if you are targeting nice tidy profits in the next 6-12 months you generally will need to take a risk on future CG and win (e.g. regional towns or mining towns) or have impeccable timing of the market and if you did have this impeccable timing of markets where you can get 20% p.a increase within 6-12 months you wouldn't be on the forum and please PM me before you leave.