Main Road Purchases

Ah yes, that makes sense. I thought you could just cut the ties between the PPoR and LOC and then leave it as is - probably not the most logical thought process..haha

 

For interests sake, does anyone else have any positve or negative stories about buying on a main road?

 

Investments are always deal-specific. It's like saying, just because the resources sector is weak doesn't mean every resource stock is a bad buy.

Generally though, you need to be picking up main road properties VERY cheaply because they don't sell the always sell for that huge premium in a bull market, and the fall the fastest in a bad market. Had 2 of them once. Not great buys - they were profitable but I think I would've done a lot better on a side street.

 

I bought on a corner block on a somewhat busy main road, renovated and leased immediately, got a very strong val as well. Qualifies also to be subdivided and a granny flat added. One of my best buys as I bought undervalue also.

 

Uncle bought on main road for $500k in 2012
Zoning changed, sold for $1.3m in 2014

 

Look at houses on Mamre Rd in St Marys NSW. Got rezoned. Went from 300k to 800k+ in 3 yrs

 

But a big chunk (300k) would have been natural cg for the area, but still an extra 200+ on top

 

200k on top is huge on a 300k house though

 

Well that was probably the premium for re zoning

Either way, good get! There's some nice big blocks with ugly houses along there.

Do you know if that house opp the servo was ever finished our knocked down?

 

Residential to commercial?

 

I think there are considerable holes in the initial strategy suggested.
It is a very high risk idea to purposely buy on a main road just for the purpose of a "hopeful" high desktop valuation.

I think a better idea would be to decide what outcomes you want from the property purchase, and then purchase a property which will deliver these outcomes.

If that means purposely seeking out main road purchases (for the development factor or converting into a commercial tenancy), that may be a good purchase.

However seeking Mia. Road purchases for no purpose at all does not make sense.

1) main roads (unless can be developed) = less demand.
2) less demand = no run away prices at auction
3) rentals are not typically affected in many cases for main road properties. They seem to rent.

As others have pointed out (and I have personally been in this situation myself) if your bank values your property much higher than what you will sell it for on the open market and you take that equity and use it, you are putting yourself in a risky situation.

If you are ok with the higher level of risk, that's ok. So long as you inderstand the consequences.

If you take the money and purchase other IP's and your situation changes in someway forcing you to have to sell, you may be forced to sell all 3 assists to cover the money you owe the bank and could also potentially end up still owing them money and not even owning an asset growing in valuable to offset the money you owe the bank.


We always think that we won't be the unlucky ones and that nothing will happen to us, but we all encounter unexpected changes in our circumstances at various times. I have been caught out in negative equity situation. I was fortunate that circumstances shifted allowing me the option of waiting for time to turn it around. Had I not have had that luxury I would have had to sell other assets just to cover the loss. (Bc I got a higher desk top val than I could sell the property for)

 

Sorry about typos.... iPad typing ;-) will edit later

 

You are more at risk of bank policy too. I have seen them send out valuers for anything over $1.25m - rules out most of Sydney.

 

I've discussed this with an RE agent friend. He said with the number of houses sold each year, why go for the one on the main road?

 

I did a post about buying property on main roads a few weeks ago, it's a good strategy. I have made a lot of easy money from buying in blue chip suburbs on the main roads. It basically allows you entry into a better market at a lower rate yet still achieving the same percentage in growth from the better suburb. As some have stated, you can end up in a bit of trouble in a flat market if your trying to sell but this is why you need to time this strategy well. And bank valuations is a great point and very true, they usually come in your favour in the right suburb.

 

Do you have a link to the thread mate?

 

https://propertychat.com.au/community/threads/worst-street-in-the-best-area.3993/#post-66549

 

I've noticed a number of client's who will *only* buy on main roads - when I've asked them why they've mentioned that within their culture a main road address is seen as superior/not negative at all.

What I've noticed since then is that a number of purchases on main roads which have gone for far more than expected have more often than not been from a non-Australian background. Perhaps as Australia becomes even increasingly multicultural, the gap between main road and suburban values will reduce?

 

Low density to high density
I think its going to be replaced by multi storey units.