VIC Maribyrnong, South Yarra

Hi all
New poster. Just want your opinions pls
What are your thoughts in buying a established townhouse in Maribyrnong (say, waterford green estate), land size about 250 sqm to 330 sqm, about 16 years old, between high point shopping centre and Maribyrnong river, yield 3.4% conservatively.

compared to buying a old 70s apartment in South Yarra, (say, Rockley Rd or Kensington Rd) in a block of 12, at least 85 sqm internal, yield about 3.3% plus.

Which would be best from capital gains perspective with budget of $750k.

Thanks

 

Well... you will be pre-paying your own capital growth for the first couple of percent per annum due to low yields. So in a way the first 2% of growth doesn't count because you will be paying for it with out of pocket expense (paying mortgage interest). What is your goal ? It may be that neither of these areas are aligned with your target.

 

Goal is capital growth. rental yield comes second.

 

Hi @melbpropinv , do you happen to have a measurable target in mind... such as "a rent roll of $x per week" or "equity of $x" ?

 

Thanks Jacqui. Aiming for 7 percent growth if it's still possible. Will hold long term 10 years plus. For either of these properties target rent is about $450 pw at least.

 

OK. So setting aside this particular property purchase, what is your end goal? Regardless of how many properties or transactions it takes to get there, what do you want to have at the end of it all?

 

@JacM is correct about setting your goals first BUT for the sake of answering your question. I personally believe the Maribynong townhouse over a 10 year hold will out perform South Yarra.
South Yarra is a bit close to the CBD not to feel the grunt once the Melbourne inner city property bubble bursts (and make no mistake it will, just go look at Southbank or Docklands to see the ridiculous over development happening).

Once this happens, people needing to sell in South Yarra will be up against reduced pricing for inner city suburbs. As a ripple effect increases CG, a ripple effect will decrease CG.

I am also a big believer in land appreciates and a property depreciates. I am also against buying apartments regardless if its only in a block of 12.

 

I agree with @albanga that my preference would be the Maribyrnong option, however it is essential to clearly understand what the overall objectives are and thus whether either of these properties will help take you closer to that goal.