Hi forumites, first post here! Wanted to see what people's views are of OTP's in regional areas? I know there is a fair bit of disdain for OTP's in general. The one we are looking at is in Ballarat. Pros: We can buy one right now- we have enough for the 5% deposit and would have enough saved by completion mid next year to cover the additional 5-6%, by which time hopefully the value has gone up a bit Massive stamp duty savings Good depreciation Cons: ? If you were in our position (DINK excellent salaries but savings currently very low due to two recent property purchases + reno), would this be an option for you? Or should we stop being impatient and save up/ accumulate equity before purchasing? The stamp duty savings are a big one for me, especially in Victoria where it is so high !
^^ what he said, plus, ....and what if the banks don't want to lend to you with a 10% deposit at the time of settlement? and what if you have a change in circumstances? job change? etc and no longer qualify for finance.
Great question Y-man. In that case, we'd have to make up the shortfall in the loan vs loan value, correct? (So I guess we need to budget that in)
OTP only works in a rising market where nothing changes, or it actually gets better, by the time settlement comes around. Regional or metro makes no difference to the risks.
Agree, why OTP and not just a normal house somewhere? Shouldn't be basing it on depreciation. And if you're concerned about equity, you might be in an even worse position.
What are your risks? Interest rates Other projects in the pipeline (supply) Regional economy (demand) Up the duff Bank policy Sunset clause Plague Pestilence Rising/falling market Loss of employment Illness Change in your circumstances
Con #2 for OTP Depreciation isn't all that amazing for OTP, an older property can be pretty generous in that department. On the plus side, you could meet Alice Webb http://www.heraldsun.com.au/news/vi...ng-to-video-game/story-fnpp4dl6-1227551137258
Off the plan + regional area + 10% deposit = recipe for disaster IMO. I don't mean to sound negative - but it doesn't sound like a good purchase. Cheers Jamie
Yep...regional areas have their own downfalls as it is. Not saying they can't be a good investment. But can be tricky and can hit your equity growth hard if you don't buy at a decent price at the right time. Add OTP to it, which has also has its cons as mentioned above like Val issues at settlement and it's suddenly getting very dim. Plus OTP in a regional area where land is just everywhere might cause an oversupply if the council gets signature happy on approvals creating more problems on values.
@The Y-man - I'd have mentioned aliens if it was in the outback but we're only talking Bendigo (more likely to be attacked by a pack of drunken bogans on the back of a ute).
Hi there, I would be by absolute exception that I would buy in a regional area however I would certainly exclude off the plan. The pros you have mentioned are the same as every OTP property however my experience has shown that generally when finance is involved, prices are inflated and bank valuers do not value the property at contract price. That is the con. Don't just focus on stamp duty focus on the actual value of the property and the long term prospects for the area. Generally regional areas don't stack up due to a lack of population growth as opposed to metro areas, I would much prefer to invest in a metro area. Cheers, Ivan
One key question Why otp and not established in Ballarat? ?? The risks in terms of location and market id the same Yes you get more depreciation for a nrw one But for every one pro for otp in ballarat there are two to 4 cons for it Go established if you thibk ballarat is the one Btw i have ones in bendigo and ballarat
Which part of Ballarat are you referring about. Some excellent suburbs and some good established stock down there for sale but not sure i would run with an OTP. Cheers Richard
