PPOR - Eastern Suburbs of Melbourne, all eggs in one basket?

Discussion in 'Investment Strategy' started by mc123, 14th Nov, 2016.

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  1. mc123

    mc123 Well-Known Member

    Joined:
    28th Jul, 2015
    Posts:
    100
    Location:
    Australia
    Hi all, long term lurker but keen to hear your thoughts on a recent dilemma I face. I'm not sure if my mind is made up but my preference is 2 and 3 at the moment.

    In short - late 20s couple, both working - one in CBD, other in suburbs, and looking to buy a PPOR in the eastern suburbs of Melbourne.

    I don't intend to move around so this will be a home to raise a family.

    We have narrowed it down to two suburbs - Blackburn or Mitcham.
    - Criteria is 3 bedrooms or 4,
    - Preferably a house on land but open to the idea of a large unit on a 2 dwelling block or the rear of a - townhouse with reasonable backyard space for entertaining. Obviously, budget will be less for the unit / townhouse vs house
    - 10-15 minute walk to blackburn or mitcham train station, so that will be a 1 to 1.5 km radius.
    - Able to be rented out straight away without any additional work, but will move in when the time is right (several years?)


    option 1) - Go for the "dream" family home that has been selling for ~$1.5 million in Blackburn.
    Being conservative, this will mean selling all existing assets (shares, one investment property) to arrive at deposit of $700k + borrowing ~$800k (note that this will represent ~4x combined before-tax income)
    pros - dream home, won't need to move again or 'upgrade'
    cons - all eggs in one basket, punting on continued property growth


    option 2) - go for a large 3 bed unit or 3 / 4 bed townhouse for $0.9 to $1.1 million in Blackburn. deposit of $400k, borrow $500k to $700k
    Pros - keep all assets, being diversified and able to build an income stream off shares to retire early etc.
    Cons - potentially may want to upgrade later on, high transaction costs, larger houses on land may be out of reach in future?


    option 3 - reasonable family house with land in Mitcham for ~$1.1 million. If going to live this far out, we would avoid a townhouse.

    same pros as option 2 -
    Cons - distance further than blackburn.

    In 4-5 years my partner would take time off for kids etc.

    Another suburb is Doncaster where you can probably get a full blown family house for the $1.2 million mark. Only downside is taking the bus into the City?.

    ps - all assets were purchased via employment income and bonuses.

    Appreciate your responses!
     
  2. The Y-man

    The Y-man Moderator Staff Member

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    13,436
    Location:
    Melbourne
    In all honesty the difference between BBN and Mitchy stations is 5 minutes.....

    The Y-man
     
  3. Tony3008

    Tony3008 Well-Known Member

    Joined:
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    Posts:
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    Location:
    Docklands, Victoria
    A number of trains run to Blackburn only which makes it a slightly better station to live near
     
  4. mc123

    mc123 Well-Known Member

    Joined:
    28th Jul, 2015
    Posts:
    100
    Location:
    Australia
    Yep. the train difference time is marginal. it's about 4km from Blackburn to Mitcham.

    Mitcham - has shops and supermarkets
    Blackburn - my perception is it's a 'quiet' sleepy neighbourhood with older residents or families, potentially more choice of primary schools later down the track, for groceries it's either Box hill, Blackburn North or Mitcham.

    fyi i've run some comparables - median 3 bedroom house in blackburn is ~$1.18 mm since May 2016, median 4 bedroom house is ~$1.4 mm since May.
    Median 3 bedroom house in Mitcham is ~$0.9 mm and ~$1.1 mm for 4 bedrooms since August (I got lazy with the data points)
     
  5. Property Hoarder

    Property Hoarder Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    59
    Location:
    Melbourne
    If Mitcham is going to allow you to keep your current assets. Option 3 would be my preference.

    I do not think you can go wrong with either suburb. The all station trains (ending at Blackburn) are not going to make a big difference. Most people want the limited expresses.

    I know people over look Nunawading and there would not be as many nice streets compared to Mitcham or Blackburn but I would also keep an eye out there as well.
     
  6. mc123

    mc123 Well-Known Member

    Joined:
    28th Jul, 2015
    Posts:
    100
    Location:
    Australia
    Thanks for the posts.
    I guess the two likely alternatives are - for $1.0 to 1.1 million I can get a large townhouse / larger unit with spare change in Blackburn, whilst in Mitcham I can get a house on land for the same.

    Thinking about the future and plans to raise a family / primary schools. I would naturally think having a backyard will provide the space to grow into, along with extending down the track.

    Any thoughts on raising a family in a larger unit?

    Something like this property that sold in October seems like a very good compromise
    (2/19 Tyrrell Avenue Blackburn) :

    2/19 Tyrrell Avenue, Blackburn, Vic 3130 - Property Details

    Thanks
     

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