OTP apartment for PPOR, am I crazy?

Family friend got theirs for $1.3m I believe. The owner before them bought it at ~$2m. Yikes!

 

Homeboy...do yourself a favor wait a couple of months....watch that market closely and keep in in touch with the agents...I reckon that $1.15m product could be selling for 750-800k in a few years...I looked at these and there is no scarcity around there...add another 200k and you will get into a house in the area perhaps even less shortly....

 

Lifestyle decision - dunno, maybe.. Plenty of smashed avo places and $5 small cappuccino places around there, close to cbd and entertainment etc...
Investment decision - Sydney at peak or a bit over, otp, 82sqm, 1.15 large etc... What do you think..
What has worked for you in the past ( none of this I'm guessing)....

 

Investment decision - probably not the best time & limited upside in capital.

Lifestyle & personal decision wise - a new place to live in Alexandria is very attractive. I certainly appreciate the appeal & would personally like to live in this type of place.

If it were me, i'd do it...but only when i deemed i could afford it (thats very personal & will be subject to your own goals/plans). Like buying a ferrari, i'd know its not the smartest thing to do financially, but if i really wanted it, i'd pay the price.

If you can move away from the notion that you need to own the place you sleep in, it may be a worthwhile approach renting there & using your capital elsewhere.

 

So @jamesk what did you end up doing?

 

Maybe I should look at apartments

 

If I really love a suburb and want to buy a home there, I would go for old properties. Just like old cars, they offer much better value for money. If new property is really attracted to you, why not buying an old property with good location and floorplan and then renovate it to make it look new. You can save a lot this way.

 

I was sorting through some old emails and realised I forgot to give everyone an update on our decision. Everyone in the thread took the time to respond so I thought it was only fair to provide some closure….albeit a couple years late .

After even more research and discussions we ended up going forward with the purchase. I won’t go through the details but we ultimately made a conscious decision to prioritise lifestyle over finances. Settlement happened around mid-2018 (build took a couple extra months to complete) without any valuation issues. We moved in soon after and have been living here for a bit over 2 years now.

The apartment is exactly what we expected and we've been very happy with the purchase. It has some unique features we value highly that we haven't seen in other apartments in area (both old and new). We're also pretty happy with the rest of the complex - neighbours are friendly, it's mostly owner-occupier, strata committee and building management are helpful, and the developer has been fixing warranty issues without too much hassle.

On the financial front, property prices in Erskineville have cooled down since we purchased and I estimate our apartment would currently fetch $1 - $1.05M. This is what we expected would happen when we made the original decision so we're not stressed over it. We also had a small windfall (developer purchased one of our IPs) that allowed us to pay off this mortgage (don't worry it's all in the offset).

Looking long term our plan is to continue living here for another 5-10 years while we build our forever home somewhere in the Inner West or Inner City (most likely a warehouse conversion or terrace rebuild). When that happens we'll convert this apartment to an IP and rent it out. Eventually we want to let our nieces live here for costs (bills, rates, maintenance) if they end up deciding to work near the CBD but that's a couple decades away so who knows.

Overall it's been a very positive experience for us and we'd do it again given the same choice. However, I do want to stress that our experience might not apply to everyone - the apartment itself matched our needs almost perfectly (we haven't seen any others come close) and we've been quite blessed financially so a misstep here would not have been that problematic for us.

 

That’s great news and thanks for the update!

 

Being happy is the important thing. Especially if you have other investments and understand the risks.