Forums / Property Investing / Help Needed! / Best Melbourne Suburbs to Invest up to $500K

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  • Profile photo of yesindeedyesindeed
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    @yesindeed
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    Hi

    I am looking to buy an IP in Melbourne over the next 3-4 months. I am not familiar with Melbourne suburbs. I am hoping the forum will be able to help with some answers.

    Can you suggest top 3-4 suburbs of your choice for an IP up to $500,000.

    Thanks

    Profile photo of fWordfWord
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    On the General Property forum there was recently a thread on which areas people speculated would record good gains in the not-so-distant future.

    The response (or rather the relative lack of it) is disappointing. My guess is that human nature takes precedence. If people think a particular area is going to boom, they're not going to let fellow investors get wind of it. In other words, you got to do the research yourself.

    I'm a newcomer to the world of property and essentially still a first home buyer. But here's my two cents worth: when searching for a home to buy in Melbourne's outer east (proximity to my parents' home and workplace taking precedence), I chose Croydon over Ringwood, Bayswater, Boronia and Ferntree Gully.

    Ringwood is pretty pricey these days for an average first home buyer, and perhaps a little 'busy' and congested for me. One of my workmates in particular told me not to buy in Ringwood. But Ringwood north is very nice, if you can still find a detached house on substantial block of land that's not under transmission lines, within your price range, consider that. Boronia seemed nice and even Bayswater was decent but was told by numerous people to avoid buying in these areas. To be honest though, any of the areas you could buy into at under 500K would have a stigma of some sort. That's the impression I'm getting. Even Croydon used to have a bad rap, from what I've heard and read.

    Ferntree Gully…some told me it's a nice place and I saw a few houses there myself while shopping for a first home, but it's bordering on becoming a little too far from the CBD. If I wanted to live as far as FTG, I'd rather be looking even further out at say, Sassafras, which although is out in the sticks, is a beautiful tree-lined area, winding roads and general seclusion. In essence, it's actually special and has something going for it.

    The options under 500K in the outer east expand considerably if you're looking for something like a unit/ townhouse. But for a detached house with land in that budget, it gets a little harder.

    In the days when I was looking, Heathmont was my top choice, and it's had good apparent growth since then, pricing out the sub 500K buyers. Of course, I wanted to get something in Mitcham, Nunawading and even Vermont South, but I'd be hard-pressed to find something livable (and with land) in those areas under 500K.

    Croydon is quiet and livable, is serviced by rail and buses, easy access to shopping, lots of schools including some prestigious ones. I like the area north of Maroondah highway, near Croydon Hills and Warranwood. In essence it is like being in the country and being able to drive to something more city-like (ie. Ringwood, Boronia) in minutes.

    There's a book I've been reading that talks about buying average 3 bedroom houses on a 'family-sized block' in a 'working class area'. I think Croydon would qualify as 'working class', and you can probably still find such houses on blocks of land 800sqm or above, and for under 500K. To me that sounds like a decent buy. Maybe it's something that my Dad drilled into me, but as you can see I'm a big fan of actually owning land. If you wanted to buy into a unit, townhouse, apartment etc I'd be searching hard in the middle and inner suburbs. But good luck finding even a unit under 600K in Doncaster, Balwyn or Templestowe!!

    Also, I'd rather be living in an older house in Croydon than a brand new house in say, Cranbourne, Berwick or Lyndhurst, or Hampton Park, even though you would certainly be able to afford land in both instances.

    But remember again, I'm just a first home buyer looking to turn into an investor. Just thought I'd give you one opinion since you're getting none otherwise!

    Note that the West is something I haven't researched into, but there is apparently good potential there also, so have a look into it…areas such as Werribee or Hoppers Crossing…Tarneit…

    Profile photo of Ryan McLeanRyan McLean
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    May I ask why you are choosing Melbourne as a place to invest?
    Melbourne isn’t necessarily positive cash flow.

    I would be interested to know your reasons for choosing Melbourne and what your long term investment strategy is.

    Ryan McLean
    http://CashFlowInvestor.com.au
    Positive Cash Flow Properties Are Just A Click Away

    Ryan McLean | On Property
    http://onproperty.com.au
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    Profile photo of maree_bradrossmaree_bradross
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    @maree_bradross
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    There was a fantastic lift out magazine in the Sunday Age the other week that comprehensively reviewed all Melbourne suburbs. If you like I could photocopy it for you and post to you?
    BTW Melbourne's predicted population growth is huge.
    Regards, Maree

    Profile photo of DWolfeDWolfe
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    Old chestnut, growth or cash flow. I do like Croydon but the FHB have ravaged the prices. And yes like many places it used to be full of druggies and obnoxious high school students. Bring on Geelong (not sure yet which surrounding suburbs) You can still get houses for under $250k with an hr commute to Melb which isn't far off the commute from Croydon.

    Bayswater would have been good along with Boronia but like a lot of areas they have gone up a lot in the last year. But saying that each time I think we have topped out, the price goes up again so you tell me.

    If you can get into any prestige suburb now without losing a bundle in holding costs then go for it because the prices will just keep going up steadily.

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of fWordfWord
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    maree_bradross wrote:
    There was a fantastic lift out magazine in the Sunday Age the other week that comprehensively reviewed all Melbourne suburbs. If you like I could photocopy it for you and post to you?
    BTW Melbourne's predicted population growth is huge.
    Regards, Maree

    Would this happen to be the Domain Property Review? It's a very interesting read with star ratings for quite a few suburbs. It's also interesting to see how the star ratings have changed since the last similar publication. Not sure if the increase in rating in some suburbs is anything to go by, but it could indicate increased confidence in the property market.

    Not surprisingly though, the suburbs that you know and love have the highest star ratings but are also the most unaffordable. Some of the cheaper suburbs that buck this trend are arguably the ones you wouldn't want to be caught dead walking the streets in. Either that, or walk the streets and you'll be dead anyway. As an example, one of those suburbs I was considering was supposed to be so full of ferals that it wasn't going to be a nice place to live in.

    OK, just kidding yeah…but read carefully and form your own opinion. Don't just look at 'star ratings'.

    Profile photo of fWordfWord
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    DWolfe wrote:

    Old chestnut, growth or cash flow. I do like Croydon but the FHB have ravaged the prices. And yes like many places it used to be full of druggies and obnoxious high school students. Bring on Geelong (not sure yet which surrounding suburbs) You can still get houses for under $250k with an hr commute to Melb which isn't far off the commute from Croydon.

    Bayswater would have been good along with Boronia but like a lot of areas they have gone up a lot in the last year. But saying that each time I think we have topped out, the price goes up again so you tell me.

    If you can get into any prestige suburb now without losing a bundle in holding costs then go for it because the prices will just keep going up steadily.

    D

    Just went on RE.com and did a search on Geelong. There's some nice houses there for under 400K, generally the two-bedroom variety it seems. It'd be nice to live close to the water. Geez, I remember the days when Geelong was a sleepy little town. Like someone once said, 'If you bought anywhere in Melbourne 5 years ago, you'd made big bucks by now.'

    Speaking of prices…a number of years ago a friend was lamenting spending 560K+ on a house in Templestowe (east Melb), saying she overpaid. Well, a few days ago a house just a few doors away sold for 1.2 mil. Goes to show that even if she did some basic renovations, her house would probably go for over 800K. Time does heal most wounds it seems, unless the choice of area is drastically wrong. Another example is a house we used to rent in Balwyn North (also east Melb). It sold for 550K maybe 7 years ago. It was opposite the park, and although an ugly house, I begged my parents to buy it. We didn't of course, because not only was it ugly. It was riddled with damp in the rumpus downstairs.

    Still, the land would be worth a pretty penny now. Knock down that house (still perfectly livable), put up a modern 4 bedroom 2 bathroom, DLUG and it'd be worth at least 1.5 mil.

    Profile photo of yesindeedyesindeed
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    @yesindeed
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    Thanks everyone for your feedback. Very helpful!

    Ryan – I am based in NZ and the property market has slowed down considerably here and is going to be subdued for the next 3-4 years. From what I have researched, the residential property market in Australia will grow significantly in the next couple of years atleast. I am mainly looking to invest with capital gains in mind. Why Melbourne ? – Projected growth… plus I am more familiar with Melbourne than any other city in Aus (other than Sydney but it seems way to expensive). Would be interested in your feedback on my view.

    maree_bradross: I would MUCH appreciate if you can send me the article. Considering that I am in NZ, I would not be able to get hold of the article any other way. My email id is [email protected].

    DWolfe – I am coming to Aus with growth in mind. From a cashflow perspective, I think NZ is a better bet at the moment.

    Profile photo of peterpithpeterpith
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    Hi Maree,

    Just wondering If you could kindly send me the article from the age.

    My email is [email protected]

    Thanks

    Peter Pith.

    Profile photo of maree_bradrossmaree_bradross
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    @maree_bradross
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    No worries – will copy tomorrow and pop in the post, it is a magazine style format and probably to large to scan and email. Cheers

    Profile photo of pavashpavash
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    @pavash
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    Hi Maree

    I would appreciate if you can also email me that article from the age as well.

    My email is [email protected]l.com

    Thanks
    Pavash

    Profile photo of wongtomowongtomo
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    @wongtomo
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    Hi Maree

    I would appreciate if you can also email me that article from the age as well.

    My email is [email protected]

    Thanks
    Wongtomo

    Profile photo of christianbchristianb
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    In my opinion, the best value – by a long way – seems to be the area between Heidelberg and Preston. It's close to town, well serviced, only just begun gentrification, and has liberal planning regulations.

    Profile photo of DWolfeDWolfe
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    Hi Christianb,

    Can you still get into these burbs for under $500k, pretty good value if so.

    I'm going to plug Boronia again as their council is proactively trying to change the community. Wantirna is tapped out, with very GREEDY vendors and a bit of a monopoly with the agent in town. It is very rare that I call people greedy but really at $750-$800k? It is Wantirna?!

    Sunshine still ok, you can get in around $500k. It's getting pretty tough now…

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of christianbchristianb
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    Yes, you can. Just. And DWolfe, I would also endorse your Sunshine recommendation.

    Profile photo of DWolfeDWolfe
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    Yeah pity I didn't get into Sunshine when you could buy in for $250k, pretty much in the centre of town :( Ah well, time to make money :)

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of gronk007gronk007
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    Hi All,

    DWolfe – completely agree with you re: Wantirna – there was alot of stock on the market in March-June, and it was getting silly – there's no train line, and if Knox wasn't where it was…..you can make your own conclusions.

    I like beating the Heathmont/Ringwood drum; yes it has gone up in value (16-22% in capital growth on units AND houses in the last 12 months, depending if you read YIP, RPData etc). You can still get a unit as an IP in Ringwood/Heathmont. FYI I have a PPOR and an IP in Heathmont….

    I also like Ballarat – looking there at the moment myself, still some good returns to be had there, but if you're NZ you should come over and have a look :)

    I can't comment too much on the West, but I've read there's a massive shift of people heading towards Melton, where a median property value is still $240,000…

    Profile photo of DWolfeDWolfe
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    Hi Gronk007,

    Yeah, I did like Mitcham, Ringwood and Heathmont. The thing about Heathmont is that there is the not so nice bit, so have to be choosy. I also like Croydon South but that has also gone up quite a lot. Still like Bayswater which you can pick up a bv house for around $400-$450k. You can get into the nasty bit of Wantirna South for around $400-$450 :) Just depends. I think it is going to get pretty hard to find anything under that price quite soon. Family houses are a good bet, as are retiree size units of 2 beds in small blocks of 3 or 4 with courtyards.

    Just my opinions

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of Charles 1Charles 1
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    If you don’t know Melbourne, stick to the inner eastern and south eastern suburbs.
    The northern and western suburbs of Melbourne have always had a stigma – people there want to move to the south east, but those who live in the south and east wouldn’t move to the western suburbs.

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