All Topics / Help Needed! / The property invest quest Apartments with best returns and where?

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  • Profile photo of Steven_BelloSteven_Bello
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    @steven_bello
    Join Date: 2012
    Post Count: 3

    Hi all

    I'm looking to invest in an apartment over the next few months or investing in a specific area and have a couple of questions:

    • What areas are secure right now in the Australian market? Melbourne looks pretty good but also considering some growing areas like Darwin. Any advice? Are there any areas to avoid?
    • Has anyone any experience with buying or investing in serviced apartments? I don't necessarily need immediate returns but are they any good for steady returns?

    Advice much appreciated! I'm a bit of a novice

    SB

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
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    What results are you trying to achieve with your purchase?

    My understanding is that apartments in Melbourne were getting close to over-supply. Not sure if the market has changed that much in more recent months but you would need to do further research on this aspect of your decision. 

    Certainly the Darwin market is reported to be at an interesting phase with a lot of mining activity feeding the property market. Seem to recall reading an article in recent weeks which suggest that the mining investment in NT was second only to WA. Someone might be able to find the article.

    You'll find insurance premiums in Darwin to be higher than down south and you are investing into a smaller, albeit growing market.  

    As a rule of thumb apartments tend to have higher body corporate costs, particularly if there is a lift in the building. You will also find that rental returns (in $ terms) and growth rates will track the performance of other properties in the building. 

    Serviced apartments are not considered a standard residential loan and therefore financing these becomes a little bit more difficult. You may find you'll need to provide a larger deposit for any purchase made and as a consequence the number of potential buyers diminishes which, in turn, suppresses capital growth rates.

    Hope this helps.

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
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    Hi Steven,

    Stay away from serviced apartments. They have fantastic yields but that's about it. I had one case where an applicant was purchasing a serviced apartment. Luckily we did an upfront valuation before he purchased the property and they valuation came back $120k less due to a fire sale in the complex 2 months ago. 

    Is there a specific reason why you are looking at an apartment? If you are looking at an apartment go for at least a 2 bedder with minimal strata cost.

    Regards

    Shahin

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    Profile photo of Nigel KibelNigel Kibel
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    <moderator: delete advertising>  what Derek is saying is correct I think there will definitely be an over supply in the city itself. Stay away from high rise projects as well.

    I also like inner city Brisbane I think that market is under valued by at least 10% so there are opportunities there. I am also looking for projects in inner city Brisbane at Present.

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    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
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    I also agree with shahin

    Stay away from serviced apartments and hotel suits you will get no capital growth. As a rule of thumb stay with around 10km of a city center. This rule will vary a little with cities like Melbourne and Sydney but a definite with say Brisbane 

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    Profile photo of Steven_BelloSteven_Bello
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    @steven_bello
    Join Date: 2012
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    Thanks all, very helpful and thorough advice. I was looking to invest in an apartment as I also want to live in the property but I'm open to over styles of property too.

    The info on Darwin was particularly helpful.

    Thanks all!

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