VIC Melton area for 400-450k investment property

Hi Everyone

I am a new investor so learning the ropes here

I live with my partner in Tarneit and built my own house in 2016 in Werribee
So have a investment property in Werribee and owner occupied one in Tarneit

Now looking to purchase another investment property

Ive been looking at area's and I stumbled onto Melton. I checked its annual growth data
Steady the last 5 years but last year between 2016 and 2017 it shot up ( check attachment)
Rental yeild has kind of stale and the same for the last 5 years and dropped 1 % the last year:
Melton Investment Property Market Data

Looking to buy a house there at least 3 bedroom and our budget is 400-450k which this area seems affordable to our budget

can I please get any opinions on Melton? I know this question is probably like asking how long is a piece of string. But personal opinions with more experienced investors who have bought in Melton would be great ( or area's similar for our budget )

 

Too late.

Consider Geelong. You may still catch the moving bus.

Regards

 

For that price I would concentrate on type of zoning. Stay near shopping centre in Melton proper or close to station in Melton South.

If you pick right, can get property with over 70% land to asset ratio.
Try to go near amenities and snag a house with 2 bathrooms for slightly better yield.

 

Its still in our price range and if the trend keeps going up like it did last year I dont see how its not a good place to buy an investment property or to late to

if it was out of our price range then yes that would be to late

Geelong is another option to, any particular suburbs you have in mind ?

 

Thanks. By saying " for that price " are you able to eleborate on that? Is that low ?

 

No, I think your price point is the higher end for Melton. Standard stock in the area can be picked up for even sub 4's still. If spending mid 4's or closer to 5's I would make certain you pick a property with a twist/X-factor, i.e. zoning.
Yields will be 3-3.5% but that is anywhere in Melb atm so it will cost you a bit to hold but if you get something with dev potential then you have a few outs:

1. Wait for natural CG
2. Buy, get DA and on-sell to developer
3. Get DA and build yourself, if have access to funds and risk appetite permitting.

Have seen properties closer in to the city (still west but 15kms out) achieve substantial profit within 12 months using strategy 2.

Not saying Melton will experience same level growth as inner ring but with Melb population tipped to be #1 AU wide by 2030, so these ppl will have to live somewhere.

 

Thanks you seem to know the lingo, some of the abbreviations you mentioned I do not know what they mean haha

400-450k is our budget but 450k is our max, if we find something cheaper of course we'll want to go for that

CG? - Capital gains?
DA ?
Strategy 2 unsure what this is but ill search on the site hopefully theres a sticky with it

Sorry new investor

I am also checking out geelong suburbs to. And of course if I find a house at a good price in our budget closer to the city id try to jump onto that

 

Yes.

Development Application

You buy the asset, get the development approval (DA) and then sell the asset together with the approval to a developer.

Don't apologise, we are all here to learn

Geelong has better yields and closer to water, so has lifestyle aspect. Perhaps check out the Geelong thread? Heaps of opinions on the area.

 

Ample

Armstrong creek and vicinity at a good price point.
Norlane/ corio and vicinity for bigger blocks and subdivisions (a lot of due diligence required though).
And then you can always head to coastal suburbs.

 

Got two in west already. Good time to spread out towards south east or look interstate from growth perspective and to avoid land tax burden too and catch the growth wave ...

 

For 450K if you want to get into Geelong you still have quite a bit of options.

Two ways you can go about it. either:
- Go as close to Geelong CBD as you can, that's where everyone expect the employment hub will be in the future. Suburbs like North Geelong, Newcomb, Thomson, Breakwater or even South Geelong are a couple of options
- Or go for newer estates like Armstrong Creek which will give you a better rental return and depreciation in general, if cashflow is important to you

Long term you can't go wrong by staying as close to Geelong CBD as you possibly can, so that would be my suggestion.

Good luck

 

In my opinion Melton still has room for more growth. I bought in Melton South in early 2017 and I'm quite pleased with how much the market has shot up in the past year.

My recommendation would be to look for something on a decent piece of land, close to the train station, schools, shops etc. With your budget you'll definitely find something.

Good luck.

 

Hi, I've just purchased in Melton and believe there is still some growth to come. You can definitely get one of the better (there are some real dumps that will require significant work) properties on the market in your range. If you can't look yourself engage a local agent to do so on your behalf. I would stay away from the new developments that are mainly in west and South Melton. As per the advice by others look for something with a land component that gives the potential to add value later.

The market is pretty warm and getting hotter so if you are going to get in I'd be looking to move pretty quickly.

 

Thank you I am also looking at Rockbank and Plumpton area

 

H mate.. when u said to look interstate to avoid land tax burden..can u plz laborate it?
Regards

 

Each state taxes the land you own in it separately, and on a sliding scale with a tax-free threshold in each city.
So 3mil of property in one state will attract a higher overall land tax compared with 1mil in each of 3 states. A bit like if you could earn income in 3 name and get 3 tax free thresholds and each one will have more access to lower marginal rates.
If you had say a property in each of the 4 capitals below their thresholds you would end up paying no land tax.

Another reason is that each city booms at different times, so if you have all your properties in one city and there is no growth in that city for years (which is very normal), you can not continue buying and expanding your portfolio without equity growing for those years, whereas if you have properties in multiple major capitals, even if one city does not grow for years, overall your values should continue rising and allow you to continue growing your portfolio.

 

Agree, too late in the cycle for Melton, buy in periods where the ripple of growth is moving out from the centre of the city, not when it has arrived. 3.5% yield is too low for outer suburb purchases.
Just settled my first house outside of VIC in Logan area for this reason(land tax also which has been mentioned). Should yield >5.5% day 1.and sits on > 600 metres

 

Well what yeild % should I look for? over 4?

 

Outer suburbs my minimum would be 5 at current rates level. Hence why i went to Logan for latest purchase. Cashflow is important, it allows you to buy more without running out. So unless you have a lot of spare income or are sinking a reasonable deposit in, you will be losing money on something they may not lift significantly in value until another cycle passes at this point. Just my opinion , others will vary.

I should add, i've owned in Melton since 2006. Depreciation changes also hurt as it was a good place to buy on cash flow neutral/ negative geared due to newer housing stock and depn schedules but you cant do this anymore due to depn changes since May last year.

 

I spoke to the guy who sold me my house a few years ago, rung him again about house number 2 I am researching as we speak and he also suggested armstrong creek. I checked it out today but no nearby train station ??