Home' API Magazine : October 2014 Contents OCTOBER 2014 n APIMAGAZINE.COM.AU n 57
nWHAT ARE ITS CONS AS AN INVESTMENT PROPERTY?
PS: The townhouse is smallish and doesn’t have a downstairs toilet,
which may limit appeal to some renters. Built in the late 1960s, the
ongoing maintenance may be above average, with higher strata fees.
C W: The age, as this was built in 1967, and is a middle unit in a block
of four on an irregular shaped allotment with two blocks of four
townhouses. It was built to a price but that’s where the opportunity is
for an entry-level investor to get a well performing investment.
nWHAT ADDITIONAL QUESTIONS WOULD YOU ASK
PS: My main inquires would centre on the asking price, which
appears to be high and the owners corporation’s documents.
I would request the minutes and the financial statements to satisfy
myself that the group is well managed and there are sufficient
provisions to cover the ongoing maintenance and the future larger
C W: Because of the age I’d want to know more about the strata
manager and how much is in the sinking fund. Also how many
owners are occupiers?
nHOW HAS THE MARKET BEEN PERFORMING IN THIS
SUBURB AND FOR THIS PROPERTY TYPE?
PS: Units and townhouses are popular and a well-represented type
of property in Black Forest, accounting for around 30 per cent of
all properties. The annual change in median price of units in Black
Forest over 10 years has typically been between six and seven per
cent, i.e. slightly above the Adelaide average. However, at times
Black Forest’s capital growth has significantly outperformed
the city average.
C W: This suburb has always done well, the median price for a
unit has gone from $84,750 in 2000 to $310,000 in 2014. So this
townhouse is a great prospect if the price is right.
nWHAT IS THE MARKET OUTLOOK IN THIS SUBURB
AND FOR THIS PROPERTY TYPE?
PS: Black Forest (and the rest of the 5035 postcode) is one of my
favourite inner-ring Adelaide suburbs. It’s a part of the Unley
council so it offers similar streetscape and character and many of
the amenities of this upmarket area, yet it’s more affordable. The
combination of convenient location, quality and current relative
affordability would, in my opinion, ensure good long-term prospects
for Black Forest.
C W: This suburb is close to the city with a diverse range of
accommodation with good local facilities and transport options so it
will continue to perform.
Surrounded by character homes and situated in wide tree-
lined streets in an underperforming suburb, this area has a very
nWHAT SORT OF INVESTOR WOULD THIS PROPERTY
PS: The property would suit a long-term investor looking for an
affordable entry point into a quality inner-city area with good long-
term capital growth prospects, low vacancy rates and above average
rental yield, (which are typically about) five to 5.2 per cent for units.
C W: A first-time investor would suit this, as it would be easily
managed. It will always attract tenants with its location.
nAT ITS PRICE POINT/RANGE, WOULD YOU LOOK
TO TALK TO THE AGENT FURTHER OR WALK AWAY?
PS: The main sticking point seems to be the high asking price. In its
current condition the property is worth around $290,000. However,
the location, suburb and the property itself tick a lot of boxes. I’d
therefore put it on my short list and I wouldn’t walk away just because
the asking price seems high. Instead, I’d aim to arrange a private
viewing to firstly confirm the property is indeed suitable and then
would use the opportunity to discuss with the selling agent the ways
to bridge the price gap.
C W: Yes. We’d talk and we’d offer $275,000. This property is
worth no more than $295,000. I believe the asking price is based
on the breakeven point for the vendor. Up to $290,000 we buy,
if not we walk. If we buy for less we’re very happy, if not, there’s
$390,000 - $420, 000
Alderley is a centrally located suburb only seven kilometres
northwest of Brisbane’s CBD. The property in question is a top floor
apartment in a boutique block of six. Offering scenic city views, an
elevated leafy outlook and good street appeal, this contender is a tidy
and well-presented property. The apartment is also walking distance
to the railway, the local shopping centre and cafes. It has an asking
price in the range of $390,000 to $420,000.
nWHAT WOULD BE THE APPROXIMATE RENTAL
RETURN PER WEEK?
SM: $360 per week. The market has dropped a little because of higher
vacancy. This would have been $380 per week last year. Many tenants
in this price range have either been not renewing or breaking leases
and buying property in this same price range and not necessarily in
the same area.
BA: The property would rent for between $375 and $400 per week
based on local rental evidence.
nWHAT ARE ITS PROS AS AN INVESTMENT PROPERTY?
SM: A two-bedroom, two-bathroom unit with single lock up garage
means it has good appeal. It’s close to the train station and local
shopping. It’s a small unit complex (total of six units) with good size
bedrooms, good size living/dining area. The grounds appear well kept
which means an active body corporate.
“Black Forest (and the rest of the 5035 postcode) is
one of my favourite inner-ring Adelaide suburbs.”
Black Forest, SA and Alderley, Qld n OPEN FOR INSPECTION
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