New vs Old - What do you think?

I have never used on, but I'm pretty sure @MTR has,maybe she could recommend.

 

The promoter was talking crap to get a sale, hardly surprises me. there is no way a promoter has any skill in assesing wether or not a build has been done to code. They could provide you with rental estimates, engage a property manager, assist in finance, take photos of the build and keep you informed, but thats about it.

 

fear sells.

 

Forgot? But enjoying the light banter.

 

and you call this light banter....

 

@Daisycutter4

 

Good article @Daisycutter4, presents a fairly two sided discussion on the merits of investing in H&L and accords with my experience.

 

Yeah I saw the article.....there are markets within markets....Melbourne is going from strength to strength for outer suburbs.

I just asked about another block in Officer similar to the one I bought...it is now 174k ...I bought in for 144k. That is crazy...apparently....Satterley is now increasing prices ridiculously..as they can't keep up with demand.

I am hearing the same in some of the estates in Craigieburn. For example...the Villawood Estate (Mickleham) backs the Stockland Highland estate. The price of the Villawood Trillium Estate is about 40k cheaper...the demand as a result has got to the point where this particular estate will sell out by the end of the year! Villawood got shut out by Stockland..so their new estate is now in Mickleham is now no where near infrastructure.

 

Just trying to get my mind around Craigieburn from the desktop Sash. Demand doesn't look that good and there a fair bit of supply.

• Yields are close to 5% which is good but vacancy is 3.7% (96 for rent) which is not great
• Online search is 162 visits per property where as the Victorian average is 473 visits per property (below average)
• There are 304 houses on the market for sale (2.54% stock on market) which is high
• 21% investor mix but that may be changing now due to more investor sales
• 20-39 average age, so young families, I wonder what the average LVR is?

Prices have definitely risen since 2013 - do you think they will keep going with more supply. And would it better to buy an established house cheaper (say a few years old) rather than a new H & L?

What do you think?

 

Perhaps you need to get on the ground to understand the demand.

If you are an "armchair" investor...it will be very hard to get an understanding of what is going on.

The estate I went into has less than 5% investors. Have a look at what is in the Villawood estate and see if there is much for rent.

The other question...is how is it that banks are willing to lend in these areas?

This area is 30 klms from the city...Stockland is about to put in a suburb the size of a small city. The infrastructure is huge. I liken this to what happened in the NW of Sydney. It also does not have the stigma of the West. The other advantage is that it is also 20 minutes from Tullamarine Airport.

Lets put it this way...Melbourne has much more growth left in the Outer suburbs and would not be surprised it if still out performed Brisbane. The immigration rates there are the highest in the country.

As for established houses...they are inferior quality compared to what they are building now. Have a look at the house they auctioned at Villawood just recenty...somebody paid over 660k for house there. The price point last year was early 3s at the bottom. Now you will need to start from mid 3s for smaller house.

The block of land I bought was 125k for 270sqm...now that block is starting around 165k. The build prices in that period has also gone up 10k. My fully complete 3x2x2 house fully tricked up is 301k.

I will be able to pull more equity out on completion albeit it will only be 50-60k. But to do that in 18 months is not bad.

 

That's great, good underpinning in the Villawood estate.

I do also think that the macro, broader picture is important though. Renters don't care too much about the finer details in build quality and will look for value. And if prices faulter in some areas due to over supply there is always a flow on affect to the surrounding areas.

I know when Kellyville (NW Sydney) started, it took years for some people to get their money back on what they originally paid.

Time will tell?

 

Moreover, craigieburn area is very famous amongst Punjabi's (Indians). Big houses, fancy cars and small families. Thats how they like it.

I started my search with craigieburn for my first property. The area is also famous amongst Punjabi's in NSW. Thats how I narrowed down to that area.

It has a sikh template which is regarded well. Though it has risen in value now. A friend of mine owns a 700 sq mt block which he purchased in 2012-2013 for mid to high 2's. He plans to develop there in future to gain more. The block is only 500 mtrs to train sation. Most of the cabbies prefer that area as wel being near to the airport. He also drives a taxi. Cragieburn has one of the biggest shopping malls. Good schools in vicinity. So a healthy mix of culture and workforce.

Though I did not ended up investing there as I was too late and prices were up the roof in 6 months of my analysing and trying to get something and arranging funds simultaneously.

Regards

 

Yep...did not want to identify the particular group but you are right....the Indian Punjabis are a crazy lot....they will pay crazy prices to be near their communities.

A recent example...I enquired when the email hit about a 500sqm block.....by the time I called some had put down a deposit on untitled land in the 3s. They usually build homes worth 300k so by the time they complete everything you do not get change from 650k.

What I am now seeing is that their kids are also now getting a start and buying he smaller homes to be near their parents.

 

I love land - the bigger the better.

 

Thanks Cactus. Angela did a good job putting this story together.
The discussion around H&L can be hyped unfortunately. It can work if you're careful about market selection, but obviously there are a few land mines (no pun intended... or maybe it was) that need to be dealt with in the process.

 

This is so true. I have friends that bought out of promoters selling in tax depreciation and all the typical "fundamentals" of an area, population growth, etc etc.. Paid 400k two years ago... Comparable houses selling at 320k now,.. I think this kind of outcome is more common with H&L than other type of stocks... You really need to do your due diligence which most mum and dad investors don't do...there might be money to be made in H&L building yourself but you need to know what you are doing.... Buyer beware

 

how about the gujus areas?

 

Not much into that.

Care to put some light.

 

As in where do they group and live
There's where the real money is