touchingcloth

Hi all,

Was just wondering if anyone would confirm my suspicions WITH REASONS that I am indeed crazy.

Allow me to elaborate.

The wife and I are moving to Melbourne next month and have never been there before. I'd like an investment property one day...and thought about the following route (still pronounced rute )

As we don't like to pay rent, we've booked a hotel for 3 weeks and by that time would like to have completed on ownership of a property which we can live in for a year or two and then turn into a rental property.

I understand the common sense thing about renting for 6 months to a year to gauge the lay of the land and then to buy. However, this way we would have burned $10-$15K in rent payments.

So I thought, why not arrange low-doc mortgage & start viewing appartments in Melbourne CBD from day 1, with a view to complete very soon afterwards.

I know its a gamble...but I'm gambling on the fact that the Melbourne CBD is as good a place to have an IP as any.

The avantages are also that its a good areas to live when starting out in this new city..i.e for job searches etc.

Any input greatly appreciated.

Thanks
TC

The Koalas

Hiya
I know of two people who have bought property in OZ and they all said it is a very slow process at the best of times, you may be looking at paying out for a hotel for a lot longer than three weeks. I am no expert but that is what I am told.
Jayne

touchingcloth

Hi Jayne,

Thanks for the reply...but I thought that it was quite the opposite of here in the UK...i.e you see a place...you like it...offer...acceptance...deposit...done..all within a month.

Anyone heard different?

TC

Vicky88

It is possible to complete a property transfer in 3 weeks, we have done it before. Just make sure you have a good conveyancer who is on the ball and that you keep in contact with your bank so nothing gets delayed.

touchingcloth

Thanks Vicky,

can anyone recommend a proactive conveyancer in Melbourne please?

TC

thebears

Personally mate I would be very wary

Apartments are not favoured by banks (and good reason for it)
Location may be okay but but build quality is piss poor
Ladies of the night are now the biggest tenants in the docklands and owner occupiers (especially professional women) are up in arms about it.
Many banks will only lend up to 70% and if you do not have PR you can only by off plan or from a developer (means you pay stupid premiums).

My advise is too settle in rental for a year (yes a year) and research the area before buying an investment property. There is a different between investment and gambling - its called stupidity.

I understand the thought of wasting rent money but interest is also wasted money and stamp duty makes it a serious investment not something to flog off in 2 to 5 years.

I would also strongly advise a buyers agent - cost is 1.5% but easily retreived with getting a better price negotiated than you or I could achieve. They also ensure you get the right place for your individual circumstances.

Melbourne is also a very split market with the top end bouyant and the lower to middle end in a slump - you can to a big part ignore the medium price index.

Also pay attention to things going on like the construction of the eastern freeway and think about what is going to happen to the standard of living when fuel prices mean people dont want to travel so far to get to work.

Good luck and welcome to Melbourne

Kiwi

wongstonn

Certainly a year or two ago, and maybe even noe, there were a glut of investment properties in the CBD - market stoked up by a property boom and the fact that people from some Asian countries have a distinct preference for CBD living - so they were pouring cash in.

It is obviously important to consider the state of market. The market is probably still too high. The RBA raised interest rates by 0.25 a couple of weeks ago, and the talk is of further increases. You are worried about 'wasting' 15k on renting for a while. Put it this way, if property prices drop by 15k or more in the next year or so than that money spent of rent is money well spent. With CBD apartment prices as they are, a 15k drop is not a big percentage drop whatsoever.

High petrol prices and increasing interest rates mean there are a lot of people financially strained out here.

Neil

thebears

And there is a reason Central equity customers can't get funding from banks and why property seminars are so widely used in the UK.

Wol

We're in our second year of renting - and have avoided some BIG mistakes by doing it.

Be very wary about property here - there is an enormous amount of jerry-built rubbish in poor condition on the market. Get to know it first.

touchingcloth

Hi Kiwi,Wongston,Wol,

Thanks for the replies.

I think I just needed someone to show me the pitfalls of my way of doing things.

What you have all said definitly gives food for thought.

I was under the assumption that due to Melbourne's victoria architecture, there would be a lot of desirable period properties in demand within the CBD. I guess there maybe but not within my budget!!!

I thought that 'Jerry built rubbish is irrelevant to a degree for an IP as long as the rent comes in at the end of each week.

But i do now agree in that i shouln't be a silly boy...and should wait to buy.

However, i am also aware that life is far too short to be waiting out boom/bust cycles.

Kiwi, i'm interested in the point of using a buying agent. I'm just wondering how they operate to get their leverage on price.

Have a good day all

TC

steve`o

with aus banks paying 6.5% intrest could you not put your hard earned in the bank and use the intrest to pay the rent therefore protecting your capital untill you have a clearer picture of where to buy??

thebears

Its all about relationships and who you know. The guys I use know all the long term players in the Melbourne market. They are ex auctioneers, valuers and agents (not the young kids in suits). They are blunt and too the point which is what you want.

When you walk into an agents office you are only one sale to them. When a buyers agent walks in there is the potential of a few hundred sales.

I buy property every 2 years but these guys do it 7 days a week in this market. They have a wealth of knowledge on tap and go into more details to get the right property for you - no pressure or rush.

This is a list of some of them:

http://www.domain.com.au/Public/Buye...aspx?state=vic

But I would strongly recommend these guys / they are the ones i am using and are very good.

http://www.jpp.com.au/

nfernand

After 15 months I as still on rent. Paying $600 aweek in Sydney. But on the other hand my property in the UK too is on rent but equivalent to $400 a week.

Property prices will come down and MUST. Affordability here is much less than in the UK.
Life here is great !

touchingcloth

I've just been James Buyers' video presentations. Thanks for the link, as they're certainly impressive.

I hadn't even considered the auction route. Was always scared of auctions!..but using a buyer seems to be a good method.

Do you know whether they aim to buy at less that the advertised reserve price of an auction?

Have they badgered you into offering a certain amount on a property...or do they leave it to yourself?

TC

thebears

They prepare a specific property report based on your individual requirements ie pricing is not as straight forward as this is the market price. What you are willing to pay may be more or less than the person next to you at the auction. They do the research and show you the range in which the property will reach at the auction - if possible they may help you negotiate a private sale beforehand.

Depending on the situation they may advise to go to auction - each case is reviewed independently.

They back up the price recommendations with recent sales (prices of houses next door etc and coming up for sale. They have huge amounts of data too refer to - we even mentioned houses we looked at back in 2003 and 2004 and off the top of their heads they knew the agent and the closing price - mainly because the area we are looking in is their prime area.