VIC My thoughts on what makes a good purchase

Somewhere people with buckets of money want to live, and these people who don't think twice when buying, particularly if they come from a place where the same quality home would cost many times. Eg. rich migrants.

 

Just wanted to brag
I know one that jumped 245k in one year - it was a 435k property to start with

 

Whoops read that wrong

Best advise don't take advise about property from someone that does not own property (or IP property)

 

Maybe I was speaking figuratively when I said $200,000 a year, but the gains on those properties is $83,000 a year in gains, or more than most people ean in income. Those are HUGE returns. Absolutely massive. A person could have trippled their initial investment in just one year -pro rata.

If you had 30k in 2014 and you put it into a balanced portfolio lik a good little boy you might in the best case have MAYBE 50k.

If you put it into property you have cleared say 600k or a 2000% return. % returns are meaningless for property.

If you were a buyer with a 20% deposit, your return is 500% or so.

 

Disagree. The baseline is different, but % is the only way to compare.

well sure. Resi property works well because of leverage. When it works well.

Though there would be negative cashflow over the years as well. And selling costs are significant.

 

1) TLDR - what is desirable is changing and includes sunshine and altona definitely and as far out as ringwood and beyond. I don't know how to define suburbs.

I've always held the view that due to a range of governmental reasons; melbourne is split into two distinct areas - places people WANT to live and places where they HAVE to live.

The places where people want to live historically included the inner souther eastern and eastern suburbs out to say 20km out (glen waverly area) and the inner norf. ( I think this has very drastically changed and I don't know how to define this anymore ). You might as well throw the inner west out as far as sunshine. These places are now very desirable locations and are hard to buy into with very high demand. I have people in my age bracket, similar age to myself with a similar partner looking at buying in the 1 to 1.1 million range who have simply given up on desirable locations (such as sunshine and Altona).

Past that you have the outer south east and outer west. These area areas where people HAVE to live because they cannot afford to move elsewhere. The commute into the city is absolutely grueling. To be totally honest if I did not have to commute to the city I would chose to life probably in officer or pakenham or even further out than that. I feel like you really do get the best quality of life out there if you can afford one of the more upmarket homes - and i think these have increased in value a fair amount - rich tradies and what not are buying them.

I think there is now a lot of grey area in this and I am not sure exactly how to define where people want to live now, I would hazard a guess and say if a 3 bed house is over 1 million then it is where people want to live. The more desirable a location, the more exponential the gains will become.

The hard part is to find the most desirable location that you are not priced out of purchasing. I don't think buying a place in Clyde or Pakenham, for example would be the best idea for growth, but I want to know what others think.

I'd be looking for something run down with the most land possible in reservoir or maybe laverton (but I really don't know about either of those places) .

2) I would be happy with a good apartment. I love apartment living. Are apartments in desirable locations, next to train stations, that have had moderate increases in the past, starting to increase ?

3) cool.

4) True. I in your experience can you under cut the price and get it cheaper or do people just hold out ?

5) Maybe I should define it further as say increased by more than X over the last Y years ?

What do you think of laverton ? I think on paper it looks good but I not in practice.

I think I need 6) within X (20km ? 30km ?) of the CBD.

 

That house in Glen Iris made $100,000 net a year. Its owner paid the mortgage, but they also needed to pay rent, its all out in the wash, less costs they are up around $1 million or a little less.

The Glen Iris apartment and Dandenong house sold during the slump ? I think they would be a bit more now ?

That Dandenong place, its made 400k in 15 years, or 26k a year. Nice return. Interest rates also fell from 9% to 3% over that period...

 

Very simple

understand supply vs demand and what product is in demand. Its not rocket science and its not a top secret

 

Hey buddy.

Thought I would chime in here a bit.

You have been given great tips and pointers by some really well respected members here.

I won't comment on your choice of criteria, as other well seasoned and experienced members have said things far better than what I could, and there isn't really much to add on that side of topic...

However, I think I understand where you are coming from, and it was a similar situation to what I was in about 6 months ago. You see a property go up 100K per year for 5 years in suburb X, and then compare it to a property in suburb Y that went up only 10K per year within the same time period... of course the first one seems more attractive. But if you look at the numbers, say the first one was 2M property (so % gain is 5% pa), versus a 200K property - % gain is the same.

But as others have mentioned it isn't really about the $$, its about the %. I understand the old age saying of you don't bank %, but you bank $$. But that doesn't apply to property. It applies to trading and business. In property, what you can buy is highly dependent on what you can afford . ie the value of the deposit you have available and your serviceability. Working on a 20% deposit scenario, if you only have 100K, then there isn't really any point in looking at 2M properties.. is there. You will be limited to buying something between 400 to 500K.

Lets say if you bought something for 400K, jazzed it up, added value, and in 18 mths time, it was worth 500K, that is a 25% gain. There isn't any point in looking at something worth 2M under the same buying criteria, and saying if I did the same thing I would get a 25% gain = 500K gain!!! Firstly, you would need 400K deposit atleast, then even more $$ to spend upto a level to make someone want to spend >2.6M.

I was in a similar dilema, constantly thinking about how to afford to buy in a "better" area, where I could make that 100 to 120K by doing the above. I finally came to the conclusion, by constantly looking for things beyond my reach, I was going to miss out on what WAS within my reach. So, the best thing to do is get a good broker, determine what you can afford to buy, determine a strategy, and then start looking in the best area for your price range. Australia is a big market, even Victoria. Just because you can't find something in your price range with the criteria you want in the areas you want in Melbourne, doesn't mean they don't exist. Look beyond. A simple example is with Balwyn -one of the reasons Balwyn is so expensive is the huge demand for Balwyn High - public school with excellent reputation and results, and zoned. I am sure there are similar schools outside of Melbourne. There are highly sought after public schools in places like Geelong, Ballarat etc. Even if you looked more regional, I am sure you will find such schools. Now, buying a property in these areas that need a bit of work done, you can buy, add value, get a decent % gain, and then rinse and repeat. With each rinse, you could repeat in a higher $$ suburb/area, and that way, build yourself upto the areas that you talk about. This is just one eg of a broader look at a simple criteria.

Buy within your budget the best thing you can, and then add value. In property, % is your friend.

Cheers,
K.

 

Given you are renting now, a good purchase would be anything you enjoy living in, even if that means an apartment.