1 BR – easy to resell?

Hi There!

I am a newbie myself and seriously considering to buy a 1BR flat since that's the only kind of property I can afford at the moment.
But they are mostly student accomodations and people's been telling me it's a bad idea.

What am I to do to ever own my own property then?

Maria, in property circles there are things called BAD EGGS. From the old saying that you cant make a bad egg into an omelette.

The point being that if you purchase bad to start with, you cant possibly make a good investment as your property commodity will never be in demand !!! NEVER !!! NOT EVER !!!

There is however a dissuader to this. Sometimes a property LOOKING like a bad egg can be changed into a useful property. This is one of the areas where you can make money. Finding a run-down 2 bedroom BV and expanding it to a 3 BR with study.

I actually used to sell some of these low value student accomodation units. The sales pitch was they were 'cash cows' at 6.5% return and they would be a solid managed investment. Thats the sales pitch. Want to know the reality?

You have an 'investment' that the banks wont lend on or allow you to borrow on. You have itinerant tenancies which means that they are either one year .. or even less. You have reasonable bodycorp fees. You have almost NO growth demonstrated over a 5 year period. You have a 'fashion statement' which means students are looking for the most up-to-date unit for their money.

With any reasonable investment you want to be holding onto a valued commodity. Thats central to having an asset that will appreciate in value.

To answer your question regarding value .. i just organised an investment of 2 bedroom units for a relative. Just under 10 square units .. including a breakfast area .. a carspace .. a storage unit and even a balcony with great views to the hills. Returns just over 7%. How much you ask? Does 92k per unit sound like a good price?

I have no qualms with it being a good long term investment because – its close to facilities .. both shopping centre and industrial zones, it has a regular supply of tenants, the property can be let to just about anyone, the rent offered is affordable, and the property is comfortable to live in. With views.

For your long term investing you need to make good property judgements rather than 'adequate' ones. If you cant see your property being successful without it majorly changing its status .. then you have a long term investment bad egg.

Thats just not where you want to be.

Wow!Thanks heaps Aaron C and Xdrew for your inputs!

Definitely eye opening!

I'll just have to find something outin the suburbs then.

Does anyone have any idea on where I can find out informations about suburbs that have healthy growth and good returns?

Thanks again!

Have done a bit a research recently and it seems that the Australian Government is very generous and have implemented many schemes to help make it more affordable for Australians to own their home:

First Home Saver Account

• Government making contribution equal to 17% of your personal contribution up to a maximum amount
• Earnings from this saving account is taxed at only 15%
• There is no need to report income from this account in your tax return
• Other people such as parents can also help contribute funds into this account

First Home Owner Grants:

If you have never bought a property in the past you may be entitled to one or more of the following (1 July 2010, to 30 June 2012):

• First Home Owner Grant $7,000
• First Home Bonus $13,000 (For newly constructed homes)
• First Home Owner Regional Bonus $6,500

i.e. Buying a newly constructed home in regional Victoria might mean you could access $26,500 worth of grant

Affordable Homes Program

In South Australia, they have an affordable homes program, to help those that earn less than $72,907 p.a. earn their own home. The houses they offer are around $250,000 and include former public and community housing block and new houses in the latest developments. These houses are available to eligible households for a fixed period of 30-90 days before they are offered for sale on the open market. Have done a brief analysis and it appears that the houses they offer are +20% below the price of many similar properties in the same suburb.

Hope that helps!

The general vibe in this thread seems to be go for 2 bedroom apartments rather than 1 bedroom. I have been looking at 1 bedroom around Elwood, St Kilda because it is close to the CBD and is seem as a trendy area for renters, singles and couples with no children.