investing in melbourne

Hi Am looking at investing in a property within 300K. Hopefully can get at least 5% rental yield. And growth in the future. Any recommendations

 

Townhouses, units, houses??

Higher yields will tend to be townhouses, units.

I still think good opportunities in the 17km ring, north and west, close to rail.
Not sure you be able to buy a house though at this price point, more likely townhouse, unit.

I am building townhouses in Thomastown, 2 bedders selling these around $350K price.

Check out Lalor also.

I prefer to buy in areas where there is limited land, believe better chances for growth?

All the best

MTR

 

At that price point your going to be buying a shoebox in the cbd or a unit that's far away from the city.

I'd suggest looking at close regional hubs such as Ballarat or Bendigo or go South along the train line to areas like Frankston. That way you'll be able to afford a house that has enough land to cut up in the future which may negate the lower growth in areas not within the usual 12km belt of Melbourne's high growth precincts.

The other benefit of going regional is that rental yields for houses are higher. 5% is achievable whereas in Melbourne getting 5% on a unit (that's worth buying) is more difficult.

 

Werribee or Wyndham vale or possibly tarneit

 

But is there any chance of growth in the future? I have seen those have not growth much at all.. How is the supply side?

 

Hey mtr, what do older homes cost to buy/rent in thomastown? Can you buy an old home with Reno potential under 350?

 

No way, end values have jumped significantly over the last 2 years, in particular development sites.



MTR

 

Just had a quick look online, wow. Couldn't believe they have moved so pricey for that area. The rent return doesn't look worth it either

 

Rents are very low in Melb across the board. The only way it would work is buying new product, townhouse and with the depreciation schedule you will be slightly positively geared.

Curious, what is your strategy?

BTW, I will send you a pm, I have been away and forgot.

MTR

 

@RM1827

There is certainly a chance of growth.

No one has a crystal ball, however the regional areas have been rather subdued over the last five years while Melbourne has powered ahead since January 2015. Still, country Victoria has performed at 4.29 % over 12 months overall, which isn't too bad considering there's a wide range of villages and towns encompassed in that percentage. (Compare this with Melbourne lower priced units over 12 months at 0.87 %)

The above could mean there's room for prices to move upwards. It could also be said that growth flows out in waves so there is a possibility that these regional centers will perform well in time to come.

Residex goes on to predict Ballarat to grow 6% per annum over the next 5 years whereas Bendigo is 5%. Again these are only estimations.

I think the thing to note really is the difference of stock you can consider at $300,000 in Melbourne vs. Regional areas. 1 Small one bedroom apartment, which there are tens of thousands of in Melbourne's CBD vs. a 3BR house on 800sqm in an area that only has a few thousand of them. One could also adhere to the old adage, land appreciates; buildings depreciate.

If you had $500,000 I'd say buy a unit in Melbourne any day of the week, but you don't. Don't make the mistake of buying in Melbourne's new suburbs like Tarneit where there is nothing but open land and house and land packages as far as the eye can see. These areas will perform poorly in my opinion.

Finally, the main part of a buying strategy in a regional area is getting a block big enough that one day you can knock the existing home down and build 2+ dwellings on it to manufacture some capital. Other hands on strategies can help too like buying something older and renovating it to get better yields and more equity.

Strategy and financial structure are always the most important, so maybe start there first before the "where to buy" anyway.

Too Long Didn't Read (TLDR): Regional Victorian houses won't perform as well as Melbourne Houses but you can't buy a Melbourne House for $300,000. Regional houses will perform better than really cheap Melbourne apartments.

 

Agree. Also, you can buy an older apartment and renovate it. I've had several clients get above 5% after a spruce up.

 

Thanks all, appreciate your feedback. Now if I had to get more specific from the comments, what if you had a choice between about Wydham vale, Weribee, Frankston, or Cranbourne. Which option in the long term best bang for buck, and also whats couold I buy in $300 -310K. House, Unit?

 

Hopefully not the near/mid future...boom stopping after Spring sell-off.

Forget yield too.

 

I actually just got an agent to come and appraise my ip in pt cook. Tenant thought otherwise and called to offer to buy the property off me. Pt cook is the fatest selling land estate in vic. Now still working out a deal. I feel there is some capital gain in that area where u buy the land and organise the builder u get a place still below mkt value. I am sure the same can be done for tarneit etc but pt cook has an large population of mainland Chinese and Hong Kong owners now. Anyone who knows box hill and seen the flowon effects in Ringwood all the way in Croydon will know it will rise over time.

Different markets different conditions I have done many renos on apartments but there is no market for those now in Melbourne as they are far too many unless u in the higher end of luxury which requires 100k reno

I agree with jake if u had 500k go buy in unit like landed villa in the east further away as there is also some value in these

 

I had a look on google maps on Tarneit, Wyndham Vale...no trees!!! (I know they are new suburbs)

 

Demographics play a big part i think in how fast the suburb will go. Tarneit has quite a large population of indians (and some who are gujarti ethnicity). These guju indians are hard core savers (i know a guy who is an accountant in the day and a cleaner in the night) just so he can push forward paying off his loan in tarneit.

 

They are hardworking people no doubt. I will need to drive around the areas myself. February next year hopefully.

 

No to Wydham Vale, Werribee, Cranbourne or any other suburb that has a large amount of vacant land next to it. Same goes for Craigieburn, Taylors Lakes, Narre Warren, Tarneit, Hoppers Crossing, Derrimut, etc, etc.

Pick suburbs that are land locked by other surrounding suburbs so supply can only go up (not out). Then buy in residential zones that cap upwards buildings. This way you're future proofing yourself from large increases in supply which stifle prices.

So the obvious pick then is Frankston. Ocean (Bay) on one side, Freeway and other suburbs on the other side.

As for what you can get, visit house.ksou.cn to view recent sales for free.

 

Sub-300k will get you nice 2 bed villas in Dandenong or Franganastan. 5% gross can be achieved.

 

Question......Jake.....why is it land has risen in places like Tarneit/Truganania from 90k to over 200k since 2007?

The demographic is mostly South Asians/Asian who are targeting schools in those areas.....I guess time will tell.