Hi All, This is my first post, I'm glad i found this site, which certainly is a wealth of information. My better half and I are looking for an IP in Melbourne. With the right financing package, we could look at something between 600k to 850k. Unfortunately we need to buy something that is Off the Plan. Currently we have a couple of shortlist, but to be honest, I have been away from Melbourne for almost 20 years now and my information is no longer quite as updated as it was before. 1) A town house in Notting Hill, about 177m2 asking for 845k 2) A town house in Glen Iris, about 90m2 asking for 879k 3) An apartment in Richmond, about 77m2 asking for 650k Which one would be a better choice? The whole idea we have is to buy something and put it out for rental. Eventually (say in 10 years time) we could potentially be spending a large part of a year in Melbourne. We could stay in that house, or we could just use the rental for Airbnb. But for the possibility of staying there, I much rather something with a bit of land. At this stage, Cash Yield is more important, we certainly hope to be able to participate in some market upside as well in the years to come. So the golden question is Which? Your views would help greatly
it won't? i had the impression that the Notting hill one shoudl be able to be rented out for 600 pw.... on a net basis, it should give me a 3.5% thereabout... its not fantastic, but it does goes into part of retirement planning
When you consider the various holding costs and financing 100% of the purchase price, you're probably going to need an annual renal yield of around 7% - 8% of the purchase price for a cash-flow neutral property.
Ah I see where you're coming from. There's two sides to the coin. The professional investors will look at it from an entry cap rate and exit cap rate and in that case, carrying cost is impt. In my case, I look at it as a Saving for retirement. And before I get there, I hope I can rent it out, so that some one can help me with the interest cost and a bit more. Hence I actually look at cash yield really from a cash flow perspective. Also, from my last two weeks' research, doesn't seem easy to achieve a 7% yield in the current market My 2 cents worth
7 % is unlikely unless there is something special about the property, such as maybe dual key, or you run it via air bnb etc ta rolf
Yeah. That's why I wanted to know which would you choose and why. As before all comments will be greatly appreciated
Hi All, Thru my research and reading last week, I have narrow down my search to just two of the 3 I had been looking at. We will skip apartments. 1) 2 bed room townhouse in Glen Iris 2) 3 Ben room townhouse in Notting hill They both asking for about 850k a piece with the Glen Iris one having a built up of 90m2 and total area of 101m2. The Notting Hill one is 140m2 and 177m2 respectively. Rental for Glen Iris I've been told is between 600 to 700 pw whilst Notting Hill is 600-650 pw. Tenancy pool for Glen Iris I presume would mostly be professionals working near city, small family unit. Notting Hill (I happen to be rather familiar with this area) would most likely be students or people working in Monash. I'm still torn between the two. My take is that Glen Iris is more likely to be defensive in future downturn but it's also smaller. I intend to live in it eventually. Whereas I see Notting Hill price being more volatile, given the one group of rental it covers and being further from City. But it's a nice size that I see myself living in, in time to come. Without viewing (which will be done in July) I'm still quite torn between the two. Would really like to hear all your expert advice as this is my first foray into Melbourne and any large mistake would likely means upheaval in my retirement plan.
FWIW my opinion, For same price, with a better yield, even though slightly smaller land I’d take the blue chip Glen Iris over the student Notting Hill. Note haven’t checked the properties personally. Good luck!
