VIC Knoxfield - OTP Townhouse IP

Hi,

First post in this forum!.

I live in sydney and while doing some research to buy my first IP (currently focused in Melbourne as sydney prices.. mamma mia!) i was presented with an opportunity for an OTP townhouse in Knoxfield (part of a 7 'unit' complex) to be completed by end of 2021. I have been always been put off by anything OTP for multiple reasons (most have been extensively covered in this forum too), however, discussing with my mortgage broker, who is also a property investor, he mentioned that considering my budget - 650k to 700k, deposit of 120k - and the type of property, it might be a good opportunity (he is not an expert in the area however). So i guess the questions i have are:

1) On a high level, is it an OTP townhouse even worth looking? (i know there are many, many other factors to consider) My broker mentioned an advantage over apartments is that is unlikely to come under valuation by the bank. True?

2) The area seems to be quite far from the CBD which raises a lot of questions on how likely are people willing to rent that far off from the city, however, growth have been 'decent' in the area over long term. Any guidance? Is it actually worth looking that far? It raises questions on whether im missing some potential areas locally in Sydney.

Thanks in advance for any input.

 

Hi Ricard,
I can share my input and knowledge on this.
For the budget of 650k to 700k, you can very well look for a standalone house in knoxfield, Wantrina, Scoresby etc...
I think within a couple of years time, you can generate an equity of 50K - 100K by investing in it.
Quite far from CBD is not of a much concern because there are people who work in and around local business in knoxfield, local council and as small business owners.
When compared to CBD, the duration to find a tenant may take a little longer.

 

Not necessarily multiple units. Sub-divided houses like 2 in one block (where you can get one house with around 350m2 land)

 

Thank you @DivndBuild and @The Y-man

So it sounds that for the area, the whole OTP townhouse thing doesn't make much sense as there will be other 'better assets' available (actually started to have a look and inded there quite a few houses/units around those areas within my budget like you said).

Is there anything else you can say about the areas in general that i should look for? Is it too much of a greenfield patch with many new 'land packages' coming up or a bit more established?

 

I bought a house on 720sqm in the area in 2013, more than doubled since...

Was alot of chinese interest around 2017 and has since worn off.

Can still pick up a house on a full block for that price range but will be in need of a renovation.

If it's an investment, I'd look for a full block.

 

Just to cover that question, Knoxfield is an established built up area and not near new land releases.

 

Thanks @craigc - I feel the conversation went on a tangent and this point was missed he he.

Thank you for the insight @Optimus. This adds more to the point of why the idea of the OTP was not very appealing to me.

Will do for sure @The Y-man.