VIC Searching for second investment property in Metro Melbourne

Hi guys,

First post!

Myself and my fiancee are on the hunt for our second investment property.

We have a budget of up to 410k (house and land), we have cash and equity ready to go for a deposit now, and we are ideally looking for a 3-4 bedroom house in a suburb with good potential for growth and decent rental demand.

Would prefer to buy land and build or go for a house and land package, as we don't want to have to deal with the hassles of wear and tear which come with older properties (at least for the first few years anyway).

Have so far looked at Werribee, Clyde North, Wollert, Melton South and Rockbank.

Any advice for us?

Cheers

 

Welcome P1ngu, awesome name!

How did your research go into Werribee, Clyde North, Wollert, Melton South and Rockbank? What did you see? Any standout areas?

 

Werribee would be my pick

 

The areas you have mentioned lack the drivers for strong capital growth as there is no land scarcity.

IMO stick to the middle ring 10-25km from the CBD. Areas that are gentrifying and where the rate of owner occupiers and professionals are increasing.

You will not find a new house but should be able to pick up an older unit/townhouse in a small complex with potential for you to add value in the future such as a cosmetic renovation.

Make sure you buy in good proximity to infrastructure and buy well. I would use an independent valuer and do building and pest inspection. The valuer may possibly give you some sort of idea on the increase in value if you do the Reno as well.

Good luck.

 

A large new unit in an area like Noble Park may be worth a look.

 

Thanks!

We have looked at Clydevale, Eliston, Clyde Springs, Meridian and Highgrove in Clyde North - Eliston was a standout due to close proximity to future train station, but the latest release has a 400m2 block going for 270k - way over our budget once build and finance costs are factored in. Seems we may have missed the boat in Clyde North, everything seems to sell on the day of release, with nothing else within our budget and checklist currently available out that way. We will be meeting an agent from the 'homebuyer centre' on Sunday to go through a few options he says he has for us, but I'm still sceptical we will find anything in that area.

Werribee we have looked at Harpley, which looks quite good - again though we may be looking there too late in the piece, as prices have jumped.

Wollert seems to be closer to some good schools in the vicinity of South Morang and has lots of options in our Price range, but it will be at least 5-7 years before we see any decent growth I would say. Rental demand and average price per week also seems to be lower here.

We are happy to go for a property which will allow us to break even on rent (or only require a slight top up), but which might take a bit more time to see significant growth, if that makes sense.

 

Thanks Pacman!

As much as we would love to buy within 10-25km of the city, we have not found anything suitable within our budget in this area. We also are not keen on buying a boxy apartment with high strata levies and low quality fixtures and fittings, or student apartments - which we have found many of within our budget.

We have just returned from a one year sabbatical overseas. Before we left, in 2015, we were still able to buy a small property (house, not unit, in decent condition) in Endeavour Hills (her parents live there, good proximity to freeway and pt) and Doveton (which seems to be ever so slowly gentrifying as public housing is sold off to developers). As of now, there is really nothing left under 400k, and even if there is, it gets bid to well above the indicated price on auction day.

You can buy units on main roads in Dandenong for 300-370k, but we are also sceptical of the growth potential for these.

What are your thoughts on Werribee?

 

I am no expert and you will have to do your own research and it will depend on your circumstances but if you ask for my opinion on Werribee:

Average capital growth over the last 5 years for 3 bedroom house has been very average . The returns are approximately 4.4% and rental yield is 4% (realestate.com.au/invest)

Now although past performance is not necessarily the most accurate way to predict future performance, we have to ask ourselves why would it perform any better in the future?

There is a huge difference between 4% cap growth and 8% especially over 10 years.

Hope that helps.

 

@P1ngu if u want to buy units townhouses u should buy these in more premium suburbs however 410k is not that sufficient to get a townhosue or unit for the likes of east. For that price u can get an older unit in Kingsbury or Bundoora which is close to Latrobe university.

For that price bracket Werribee seems like the only viable option. It has the infrastructure at the moment and is more change to grow over time.

 

Is there an option for you to consider either Brisbane or Adelaide?

 

Endeavour Hills has well and truly gone from $410k budget. Only possible left to buy would be unrenovated 2 bed units around $400k. One recently sold close to shops for $390k. Need to be closer to $600k for median house now. Still plenty of buying in doveton at that price however, lots of original 3-1 houses if you are happy with lower socioeconomic group. Townhouses in Hallam can be picked up around $390 or $400k.
As for future growth crystal ball - ???.
Have you considered land & then build on smaller block in Mernda - it may just sneak in to your budget.
Good luck with your search.

 

So we actually managed to find a H&L package with a 3-2-2 house on 290m2 of land in an estate in Clyde for about 388k.

Its a sought after estate, and the home will be very near to parks, future shops and eventually the clyde train station. Clyde rental yields according to RE are at about 4.3% but we are counting on holding on to it for a while for growth. Have heard from others that people have bought land there and held on to it to find a builder, and have had the land value shoot up by a lot in just a few months.

Thoughts?

 

388K is a good price though your land seems a bit small. Clyde is 48kms away. You could have bought in werribee for that price with much cheaper outlay.

 

As an IP the distance to the CBD is a secondary concern, and due to the budget, ultimately very limiting for us.
Only thought with Werribee is that the abundance of land over in the west, puts a limit on Capital Growth for the time being, where as the lack of land in the south east is driving prices (for CG) higher (IMO).

Also this week on the news, a youth jail and tip over on that side isnt very desirable to live near

 

Have a look at Deer Park, the older section not the new estate that they call Deer Park but is actually Derrimut. 18kms to city, still reasonably priced although has had a decent run last 18 months

 

I think distance to CBD is important (as majority of suburbs are growing from CBD outwards) not the reverse. I did think that way to abt abundance of land (pt Cook) but it moved 100K just in 2 years. and the demographics support this move outwards

The problem is a lot of people are moving to the west (who have fixed budgets) rather than further out south east. Got a few buyers for my IP are actually renting in Carnegie and clayton and buying in Pt Cook etc. Some these guys work in IBM, Pricewaterhouse coopers etc. Youth jail is further to werribee south. I don't own in werribee but live in the east. No doubt east is better but talking more closer to CBD suburbs. Still 388K is a good buy no doubt for that price median across Melbourne wise.

 

@melbournian fair enough, usually i would agree, but more if it was my PPOR. Also, the big price rises over west are the 'desirable' beachside suburbs of PC, altona and williamstown, anything further west, is where all that extra land is being developed, if you got into pt cook early, you did well!

 

if it is PPOR and if you are willing to pay the price - I would be in the east hands down

 

yes would be great but this thread is specifically for the 2nd IP

we jumped on the Clyde one because it was released originally in november, and the people who had got it had their finance fall through and it was presented to us the next day when we had an appt with the agent... if the developer re-releases it themselves, they would probably jack up the land price, as everything else in that area has gone up since then

 

Hi @P1ngu

You don't need to disclose how much you paid for your land but what price range are 250-300sqm blocks going for in Clyde at the moment? I know there's been alot of buyer activity in the area and it has seen a decent increase.