VIC Melbourne locations for 425-500k

Just before I go on, let me just give a brief on my situation

• Budget 400-500k
• Able to put a lot of cash in so no issues if interest rates rise.
• Looking at long term B&H (15+ years), which means I prefer somewhere that is desirable and people really want to live that will appreciate due to that demand rather than something that is BMV but might not be in so much demand in the longer term which might suit someone else looking for a quick turn over.

I was looking at a couple of different areas.

1. Some suburbs were mentioned previously that people would be more likely to want to live in (compared to Jacana/Broadmeadows/Meadow Heights which has problems):

Avondale Heights / Pascoe Vale / Arport west / Glenroy / Hadfield / Oak park / Sunshine

These are around 12-15km from the city.

From a quick search on recent sales, it looks like there are very decent looking houses around these suburbs for about 450-500k.
The land size is around 280-370 sqm for that price. The nicer the house the less land and vice-versa. Not sure about yield though yet.


2. Then there are further out areas such as Hoopers (30km from CBD) and Albanvale (22km from CBD).

For about 430-450k looks like you can get 550-600sqm decent looking house



I know that no one can predict which areas will have more growth, but my thinking is that certain areas (usually nearer to the city) will always be in demand and less chance of being below average growth in the long term. For this reason I am looking at the first group. You get about 60% of the land, but if they appreciate equally as the large size equivalent further out then there is no loss (investment wise).

Appreciate your thoughts on this.

(also recommendations for other suburbs would be welcome if you have any)

 

Better growth - first home buyer suburbs. Kindly go through forum on melbourne threads.

Regards

 

Thanks for the tip ashish.
I have been searching for Melbourne but did not think to look for FHB threads which don't always say Melbourne in a title search.

For what its worth, more than a few times I have been reading until I couldn't see straight (I mean that literally). It is not as if I have not checked anything.
It is an enormous amount of work digesting the information of an entirely new city that you do not live in. People keep saying that there are sub markets throughout Melbourne but god only knows how to find that information out when you don't have a base to start from.
I have read a noted a list of suburbs in a few different groups and am starting to get a feel for some parts of it, but it is vast.
On top of that I just read a thread on zoning which I know nothing about and honestly I would just give up after finding yet another dimension on top of still having some other dimensions that I am not yet able to fully take in.

Also please note that I am not just asking for suburbs to check - my question was a little more geared at the comparison between buying a closer-in suburb on a smaller block vs a further out suburb on a bigger block of land.

In any case - thanks for the tip about searching fhb.

 

Hmmm
Quite a long post.

First of all, buy a map.
Research on areas excluding East (the costliest).
Keep moving out until properties start hitting your budget.
Once they start hitting your budget, research more on nearby areas.
With the suburb names, search in forum and i am sure you would be able to figure out rest.

Once you have answer to above and 2/3 good areas, fly to melb for a couple of days and see which one suits your strategy.

Isnt straight forward but should give you enough to start. Where are you from btw? Doesnt says in your profile.

Regards

 

You forgot to mention anything to do with growth drivers, demograpghics, abs trends.

Just fly down and take a look to see what suits? What kind of weak advice is that?

 

I think you just saw the last paragraph of my post. I said to figure out the areas first.
At this point, melbourne is hot everywhere.

If one buys outskirts (based on budgets), or try to figure out suburbs where first home buyer is getting in, you reckon it would be reflected in stats? If yes, all the best to you.

 

I flew down and talked to people there... Helpful locals. But at the end of the day, it's your individual decision. Always keep in your mind, locals anywhere in any location may have a vested interest and may tell you what suits them... But hang around here long enough and you'll be able to sort out the wheat from the chaff.

 

I actually think I got the answer from a post in another thread by @Greyghost (which I have probably read 3 times but was not thinking of this particular question when I was going through it previously, so I missed it).

It says to go for a more desirable suburb for better capital growth - which I *think* matches up with my thought of going for a slightly smaller house in a more desirable/expensive suburb over a bigger piece of land somewhere further out that is not quite as desirable (but may become more desirable later but without more information I think it is a little risky to assume this)

Please correct me if I am way off.

 

Do you have a rough idea what sort of rental yield you might achieve for a property like that (less land but more desirable suburb)?

 

I don't actually.
I am a couple of months behind you in learning this so sorry if this is an stupid/obvious question but how do you figure out yield. Do you just look for similar looking houses for rent on realesteate.com.au ?

 

As a rough guide you can quickly check them on re.com under suburb profile info. However I find the stats are a bit old and overstating the yield.

To be more accurate, you can do exactly as you suggested.

 

Ok I see what you mean now.
2.6% yield vs 4% is considerable.
Sigh..

Appreciate you pointing that out - thanks.

 

So 2.6% is what you will get if you buy one of your preferred properties? If yes, that will definitely affect your serviceability big time and portfolio growth.

 

Yeah for sure.
Serviceability is a little less of an issue for me in general (I can make it up with profit of my other property so it would also be tax deductible from that rental profit) but yes 1.5% less is not small.

 

That is one strategy that some prefer but if following it you need to factor in higher buying and holding costs on any profit. This strategy also ignores the value of the ripple effect and gentrification. It's a personal choice but some investors here have very deep pockets and plan to hold forever so their strategy isn't about cash flow and they're not reliant on a particular yield to keep investing.

 

Yeah the cash flow will be reduced and directed to growth.
On top of that, I guess it is difficult to pick where will be the most growth, so might be safer to ensure a decent yield. Plus higher yield often means the area has not yet had its growth and often indicates that you will get the growth coming in whereas you already missed the growth in those other suburbs.

 

You're very focussed on growth. Maybe do some research on dips in the market. Very rarely mentioned here, especially when a boom is in the forefront of everyone's mind, but they happen. It's not all about growth sadly.

 

Exactly. Listen to the numbers, not the hype.

 

Thanks Gully - really appreciate the info.

Yeah I guess I was hoping for something like what you call 'bridesmaid suburbs' - not the expensive suburbs but also better than the cheaper far out suburbs.
Your point is taken though - they have boomed which means not much growth in the medium term plus yields are awful.
I guess that leaves me with further out suburbs that are in the middle of their growth and not yet past it. Any thoughts on what suburbs these might be?

- Werribee seems popular but 30km out seems far (?)
- Albanvale a bit closer (23km) so might be a good place to look now? Concerned about lack of train station there.
- Epping still has good yields but I am not sure what the deal is there. One website said it has a lot of crime, but someone on here said it has improved and is not so bad now.
- A bunch of people have mentioned Frankston but holy crap that is far.