OTP Townhouse vs Ready to move in Unit

Hi All,

I am a FHB and seeking advice on the below options to buy a place for PPOR.

1. OTP Townhouse in Girraween due in late 2021. Costs about 680k for 3B/2B/2C ~ 150sqm incl living area + courtyard + parking
2. Ready to move in apartment in a high-rise in Norwest (MODA on Fairway drive). Costs about 750k for 2B/2B/1C ~ 85sqm internal + 23 sqm balcony

Both locations have proximity to public transport and good primary schools which is a factor for me. Norwest seems to have good growth projections for future.
School-wise I prefer Bella vista primary over Girraween as the latter is crowded though its one of the top in western suburbs.

Thanks in advance.

 

Make sure you consider strata fees for a unit. They can be very high. Assume $6,000 to $10,000 per year for a new unit, but get actual pricing. It will be on the high side if building has lift / gym / pool.

Also there will be lots of supply of units in the North West so this will impact capital growth and rental vacancy.

 

Thanks wombat777. I am told that the strata will be around 4k per year and yes the building has gym & pool. But I will find out the actuals.

Will strata vary much b/w a unit on floor 10 vs one on ground floor considering they are of same size. The only difference will be lift access in this case.

I inspected a unit on top most floor and the price quoted was 100k more than the ground floor unit. I know top floor units are expensive but 10k for each floor?? Is that even reasonable?

 

Honest answer: avoid both. But given you are choosing between those two, you probably wont like the reasons.

 

I think I should have included this as opt#3

However interested to know cons from your perspective as well.

 

The high rise body corp is almost guaranteed to rise in the future. 4k will be the lowest you will ever see.

OTP townhouse that doesnt complete for a year? Who knows what will happen during that time. Expect lower valuation than purchase price. How much deposit do you have?

Investment wise, older would be better, imho. You can get a 3 bed house out west, but you have to be willing to live there.

Get that you want to 'take advantage' of all the grants and the new places look sparkling, but if you are asking potential future gains..... the new stuff has no future redevelopment value.

 

Thank

Thanks Trainee. OTP looks bit risky, thats why was inclined to unit in Norwest. I am still in analysis paralysis like most FHB I guess.

 

Yes, OTP is risky. But so are highrises. Increasing body corp, unlimited supply, no future redevelopment potential.

Do a thought exercise. Would you buy an old 2 bed unit around Eastwood? Or a 3 bed house around Seven Hills?

 

totally agree with @Trainee. If you are buying OTP and borrowing 80% LVR, what if at completion value dropped? Will you be able to cover for the shortfall? This happens a lot were buyers are already heavily leveraged if you cant settle you could lose a lot of money ( deposit, downpayment, etc )

High Rises is a disaster. My mate lost $250k in Value from buying in 2018 to now.

 

Thanks everyone for the insights. I am also not comfortable going ahead with OTP, and for high-rise renting seems to be better at this point.

With the property prices being insane (to me as its not in my budget ) in desired suburbs, I am getting a feeling that I should stop thinking about buying one and instead look at other investment options. That's another debatable topic - Property vs Shares

 

Have a think about this. People who buy expensive (say, above median) properties are often upgraders. They might buy a 1.5m property with a 1m deposit. Where does that money come from? Often from selling an existing property they bought years ago.

 

Already mentioned in the thread, but yes OTP can be risky; particularly regarding valuations. OTP and the high-rise option suffer from a similar trait - they not scarce. There is probably many other properties just like the one you are looking at, all with similar layouts and finishes, so future buyers will have plenty of choice - which is not great when you are looking for capital growth.

Is there a 3rd or 4th option where you can research an established townhouse or villa unit in those areas? Sorry, I'm in Melbourne - not familiar with the suburbs you've mentioned.