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Moonee Ponds VIC Apartments ?

Discussion in 'Where to Buy' started by Dudechi, 4th Dec, 2015.

  1. Dudechi

    Dudechi Member

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    Hi everyone,

    I am sort of new to this Forum and property investment in general but I am slowly learning and hopefully this is the right place to.

    What is everyone's opinions on apartments ? I have read a few threads and it seems that CBD and docklands are areas to avoid, I've been offered an apartment in Moonee Ponds for $475K. The apartment is a 2 bedroom, 1 bathroom with balcony. Its around 75 m2 including the balcony.

    It's off the plan so I will save on stamp duty and the block next to it is renting out similar apartments to it for ~ 400 p/w.
    It's a 1 minute walk to the train station and 1 minute walk to woolworths. Corporate rate is $1750 including the car park stacker system warranty.

    I really would appreciate opinions on property investment in this suburb and in general about apartments. Any calculations or feedback/opinions ?

    Thank you
     
  2. Barny

    Barny Well-Known Member

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    Hey dude, Moonee ponds is an awesome area to live in, lots of little funky restaurants/cafes and wine bars popping up of late. I'm there regularly.
    To live is sweet, and the location is perfect for everything you need wether you live there or for a rental. So easy to get into the city with the train station so close too.
    Apartments as investments....I can't stand em personally. I would never live in one, I would never buy one as an investment. New off the plan, you never know what the finished product will be and if it gets finished.
    As an investment the cash flow at that buy in price is crap, and will cost you weekly to hold it. If rents drop in other apartments near by then yours will drop too, if other apartments sell at a price expect that to set the bar.
    Will growth occur in the future? I have no idea, can you add value to a new apartment? Nah, so when it gets a little older it will be worth slightly less than the newer apartment that gets built near it.
     
  3. The Y-man

    The Y-man Moderator Staff Member

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    Apartments are ok - but I would NOT do off the plan for all sorts of reasons I have explained both here and in the former place.

    Get an older one built in the 60's or 70's, preferably in a smaller block.

    I have had, and continue to hold 1BR and 2BR apartments in my portfolio. The worst two (I tried twice to make sure) were off the plan or brand new.

    The stamp duty savings and depreciation are factored into the sale price, as well as a nice profit for the developer.

    Calculate your pricing comparison on $ per sqm.

    The Y-man
     
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  4. CosmicTrevor

    CosmicTrevor Well-Known Member

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    A couple of points;
    • 400 pw for a $475k investment is a gross yield of 4.2% (using the 50 week rule), is that what you expect, is that typical for the area?
    • Car stacker - sounds like a nightmare to me.
    • Whether an apartment is the right investment totally depends on your strategy and goals
     
  5. CosmicTrevor

    CosmicTrevor Well-Known Member

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    Totally agree with the Y-man on using price/sqm, just remember to normalise when comparing with/without a car space. For example, if a car space is worth $50k in that area you should add $50k to the purchase price of an apartment without a car park to do a proper price/sqm analysis.
     
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  6. The Y-man

    The Y-man Moderator Staff Member

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  7. Redwood

    Redwood Well-Known Member

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    Mooney ponds is a awesome area, proximity to the city - airport - schools - trains and freeways. Ticks all the boxes. The only concern is that like most inner city locations there is a heap of large scale development - I mean complexes with 100 plus apartments. They are selling ok as there is demand, however above $8500 psqm internal which is high for me. Yours sounds less which is a positive assuming around 65sqm....

    Yields are around 4% and this will depend on whether you have a car park - I can guess which complex you are going into and they are a great developer - reputable with great design.

    Have a look around - Essendon is great however valuers are calling it an 'oversupply' - me I think its a great suburb. Try ascot vale as well, cheaper and within close proximity.

    Cheers Ivan
     
  8. Dudechi

    Dudechi Member

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    Thank you all for the replies.

    The property will end being negatively geared but if you include the depreciation and other losses and come tax time, it will end up being positive cash flow. This is according to a friend doing the calculations.

    Can anyone sort of guide to understand that process or lead me to a thread or anything that explains step by step ?
     
  9. The Y-man

    The Y-man Moderator Staff Member

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    Rent = 400*48 (allow 1 month vacancy pa) = 19.2k
    Outgoings = $5,000
    Management fees = 1.92k
    Interest (100% lvr) = $23.75k

    That's 11.47k out of pocket per annum.

    So your tax savings would nee to be greater than this for breakeven

    Remember
    - depreciation runs out
    - you want that value of the property to go up to make any money

    The Y-man
     
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  10. Dudechi

    Dudechi Member

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    Thanks for the reply Y man.

    Rent part - ok
    Outgoings 5K ? Maybe less
    Management 1.92k ? Is that at 10% of rent ? Because that's a lot ! My exisiting ip is at 5.5 % .

    Just trying to understand the calculations you made, thanks mate
     
  11. The Y-man

    The Y-man Moderator Staff Member

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    5k allows for the body corp, landlord insurance, sinking funds etc. Is the $1750 an estimate or actual? Estimates have a nasty habit of doubling or tripling. Are there lifts? Pools? Gyms?

    Also, you'll be surprised how much work is needed to repair / fit out off the plan properties.

    If you can get prop management at 5.5% then good.

    The Y-man
     
  12. Dudechi

    Dudechi Member

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    No gym or pool, just lifts and roof seating area for everyone.
    Yeh that's the corp rate 1750 all up since it's the same developer as the building next to it and that's running the same .
     
  13. Jake Milne

    Jake Milne #1 Buyers Agent, Vic. Business Member

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    Stay away from OTP if you're looking for capital growth. The premium you'll pay for a new property is not worth the depreciation you'll get unless you're on a very high income. There's always, and I mean ALWAYS headaches with off the plan properties.

    Apartments in Melbourne can be a good investment but you have to focus on areas that have high demand for them like St Kilda for example. Moonee Ponds is a great suburb but you'd really be better off getting a house or town house here.
     
  14. JK200SX

    JK200SX Well-Known Member

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    What income would be suitable in such a situation?
     
  15. CosmicTrevor

    CosmicTrevor Well-Known Member

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    I can't see the sinking fund + admin fund being <$2k pa with a car stacker. Do some googling on the systems, I've heard they are unreliable and slow and require constant maintenance. There was a story recently in one of the papers about systems installed in New York City - it will probably come up if you Google.