VIC Where to buy first IP in Melbourne under $540k?

Hey JayWin. Still looking.

Considering putting an offer on an offmarket listing on Carramar Dr Franga. It's a decent block of land at 638sqm, the house was renovated slightly over 10 years ago, there is no potential for 2nd dwelling in the back but there is scope for duplex side by side. 555-560k would take it off market.

I've always been looking for properties that need "a bit of work" so that I can create equity through cosmetic renos. This property doesn't need all that much work to it in order to rent out for the 360-380/week mark. In this market I'm finding that unrenovated houses seem to be fetching similar prices to reno'd ones anyway.. Also have reservations about the street, seems like a bit of a thoroughfare but it's not a main road.

Not sure if is a wise first IP opportunity as I want to buy the right first property to set up subsequent purchases.

 

Sometimes you have to just point and shoot. Back yourself and the research you've undertaken. Sometimes good is better than perfect. Sometimes perfect never comes.

 

Yeah I feel like I'm overanalysing... there's no doubting it, this property is definitely priced higher than I'd like to pay and compared to previous sales, but the market is moving so quickly and there's so much variance it's difficult to judge its value.

 

Hi all, still yet to buy my first IP... overanalysis paralysis has kicked in!

This property seems to go against all the tips/strategies that I've wanted to use...
- Cashflow isn't ideal; about $180 out of pocket per week
- Low rental yield of 3.3% at $380 per week
- Limited subdivision potential due to tree & environmental overlay
- Already renovated/value has already been added, nothing needed to be done

At 555k I feel it is above market value but then again - it might've gone for 580 by auction or something? Off market buying is always hard. I'd be relying on the market to move, no scope to add value.

It all seems to be pointing towards a no... am I being too picky?

 

I would hold off for now. I suspect you will have more to choose from later.

 

Thanks Wattledo, I think this is a good calculated risk. I guess we won't know how the market will move given the FHB boost

 

What makes you think this?
and
How much later? In 6-12 months or 3-5 years?

 

Of course, nobody knows what is going to happen but .... is anyone else seriously considering selling right now? I know it's crossed my mind a few times lately.
There are heaps of investors in Frankston, it's definitely a good place for an investment. High liklihood of getting good long term tenants; high possibility of gentrification and a long way to go with it, to boot.
At the same time, in downturns there are plenty of properties on the market. Maybe 400 in the whole area now. 2013 try 13000+. Problem with so many 'investors' is that they all want to sell at the same time. With IO advantagess vanishing before our eyes, I think there will be higher volumes on the market in times to come.
I do see and hear about first home owners buying up which is great news for the area. The more, the better. Perhaps it is one area where many properties will be transferred from investors to fhbs?
Having bought in Frankston in January 2010 (a few months before peak), I advise treading carefully in a heightened market.

 

Just to add on to this particular part, I'm 25 and from out east in Melbourne (Ringwood area) and I can attest to the fact that in the last year i know of over 20+ people from my high school alone that have bought into Frankston as first home buyers.
Its not exactly close to where these people live but its recognised as a far more affordable option with some decent houses and decent blocks.

To Werdna, those figures you have discussed a couple posts above are not really attractive to me in the slightest, you mention that it is already renovated that its yield is poor and that its price is high with several overlays impacting it.
Aside from FOMO I see little reason you would want to obtain it.

I've just done a quick realestate.com.au check here at work filtered by 3 bed+ 2 bath+ 2car+ and 500m2 land+ and the following two come up in Carrum Downs

9 Tattler Street Carrum Downs Vic 3201 - House for Sale #125833106 - realestate.com.au

16 Capella Place Carrum Downs Vic 3201 - House for Sale #125737006 - realestate.com.au

Far more attractive price, rent will be 380+ both have work that can be done on them to add value (although one a little more work than the other)


I believe these could be far better options for you in the few minutes that i've had a look.

 

Cool!

Agree.

 

Thanks for this mate, I've looked into Carrum Downs before and I just don't feel confident in Carrum Downs as a suburb. Lack of infrastructure (or future plans), lack of train station, aside from the fact it's next door to Seaford I don't see the appeal... Maybe that's the only appeal? I feel like buying in CD would be speculating. But keen to hear your thoughts?

 

Just looked at the two listings:
- 9 Tattler looks good but it's directly in front of a primary school
- 16 Capella is positioned in a strange end of a street/court

 

Buy in Frankston.

 

100k saved by age 23 is impressive man.
Im 24yrs old

 

In general, I'd say Carrum downs still benefits from the improvements Frankston is getting, they're less than 10km apart.
Parts of Carrum Downs are less than 5km from Kananook train station with plenty of Bus stops to take people there.
There are 3 primary schools and 1 high school ( two may be private from memory) within Carrum Downs itself and in close proximity to many more.
Close to the nicer suburbs of the South East, Seaford, Patterson lakes. Sandhurst etc.
Demographics point to it being a generally family oriented area which holds well for potential long term tenants.
Extremely close to Freeway entry points.

Its prices have risen along with Frankstons, the positive improvements within one suburb spill over to those that surround them and the current trend indicates that those positive impacts are increasing value for many suburbs around Frankston.

An easy comparison for me is all the improvements that have occurred out east (Ringwood region) All the train station improvements, Eastland rebuild etc these price jumps have improved values as far out as Croydon or even Lilydale where price growth charts for the last two to three years are nearly vertical.

In my opinion (which of course may not be correct) I think a suburb like Carrum Downs is viable for the same reasons you like Frankston, although at a slightly lower price point.

 

Fair point, but I guess the CG is all relative. For the extra 20k, I'd rather buy in Frankston and have confidence in its track record and infrastructure plans.