How to save $100K on a new apartment

Nathan Birch used to gather a few investors and en bloc purchase...perhaps some BA like PropertUnity can gather a few of us....i am not saying now but lets park the idea behind our little head?

 

I was a student of Henry Kaye (alright do not judge me from here ), they have similar methodology but this was in the boom of sydney early 2000 and negotiate bulk purchases and discount for otp that will complete in 18-36months. Maybe what you're suggesting may work better for otp crash. Am I already in your database?

 

How interesting! Just last night i have a close friend who has also indicated she is ready to go where i go...

For the sake of a friendly discussion then, what would be a) your budget b) your area of preference?

i am thinking small development of 20-30, in Epping area..2 bedders , 500K (what the heck! we can dream ..and more importantly we can wait right?)

ideally gather 20 investors and buy 80% of the whole block and pitch to some desperate small developers...

your thots pls

 

Most of the apartments are being bought by people who have never seen a downturns in Sydney (both overseas investors and locals)...when the market turns it will get interesting.

Unfortunately...a lot come from Asian countries like China, India, Korea, Thailand, Malaysia etc.....they just don't understand the fundamentals of the market. When it does turn...it will be a long time before people make money in Sydney...this has what has happened across every cycle...1989 to 1996....and then from 2000 to 2003.......interesting times ahead.

The other areas which I think it going to take a battering is all the people who built McMansions....the demand for this sort of product is diminishing as the demographics change...smaller well appointed homes, well designed units, and townhouses/terraces will command a premium.

 

what occupation can sniff the developer is struggling if they can't sell the whole project? BA? RE? Banker/Broker, Accountant? You'll need that person to lead the way...

Chatswood might be a goer for me.... as they call " Asian Prestige suburb" in their local papers. many crans going up in recent years....

 

ANZ...

 

So, the opposite of what you were hoping for, another one slams the door shut.

 

Just seems incredible to me that the banks would be deliberately steering into these headwinds.

 

Are ANZ a big apartment development funder though? Maybe they don't think they are that exposed...

 

Let's assume they stick with these policies, what does it really mean ? To me it means selling at cost to get off the hook or banks selling to recover costs.

If the developers have backs to the wall, what sort of discount, I mean real discount, is there going to be ? Or in other words, what are they needing to break even. What do we think a retail unit of 500k is really costing ?

To me, all these units you see for 5-600k would need to be around 300 before I thought they were a reasonable buy, a new 600k unit is nowhere near attractive to me if it is still 500K, the risk of poor workmanship and maintenance outweigh 100k by a long shot as they are very poor investments to begin with.

I do not see much happening with rents for a long time, in fact I think wages are always going to be cut, if not directly, through lack of employment etc....so would not count on that making up for things

 

Nothing done for more than the original 5 years they stated that the markets will remain trading.?

 

It will depend entirely on how much the developers have borrowed and how much debt they can or cant repay their lender because of a yet to be determined series of incomplete settlements. If they have sold everything offshore and those buyers cant settle, could spell very big trouble. If they have sold the majority locally and those borrowers cant settle because the servicing goalposts have moved between when they exchanged and when they settled, I expect less trouble because those buyers will have better access to friends and family to assist . The entire scenario is a guessing game for the time being.

 

Not going to happen. Construction costs are 300K + these days.

 

Yes, because they have an option and need to rent them until they can offload them.

 

Hi Euro, have you written to the Big 4 banks with your hypothesis and if so, did you get a response?

 

That is really what I was getting at, was the basic base costs.

And apart from maybe very select places/locations, even at cost they are not that attractive, IMO.

 

Count me in for a decent dockland otp

 

Do they consider Dockland's as regional cheapies ?

 

Could this be the Chinese knight on a white horse, here to save Chinese borrowers?

China Oceanwide to buy Genworth Financial for $US2.7 billion

 

I do not know. But who is giving them LMI territory loans anyways ?

Recently was talking to a local who I warned a while ago about going for OTP apartment, they are having issues, many lenders only wanting to do 70%, but after finding some that will do 80% the vals are so poor it can't be done. Even with help, val is the problem, as many have spoken of.

let's see how low they go over next 2 years, Sydney has to be on the verge of a stall as well, if it pulls back in general, this will further complicate a problem that exists in what could be argues is the peak, at least a high point.