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The main pros are the proximity to Strathfield station, which
is only 300 metres away, the included car space, the internal
laundry, the balconies and the lock-up storage space. The unit
block is a 1970s era building, and provided the maintenance
hasn’t been neglected, these types of buildings were built to last
and have few major problems.
¿ WHAT ARE ITS CONS AS AN INVESTMENT PROPERTY?
JSS: The rental yield is below the average for the suburb and
despite Strathfield experiencing good capital growth recently,
15.1 per cent in the last quarter, it seems that this unit is
overpriced based on the predicted yield. Strathfield has had very
good growth in the last year and may well have run its course. It
could be a good option to look for a similar unit in a surrounding
suburb which is yet to experience the ripple effect of capital
growth rises. Also, the building is dated and this might mean
that the owners’ corporation (OC) fees could be high. Further
research into the OC fees for this building and any upcoming
maintenance issues it might be facing are required – ask the
agent for a copy of the minutes from the last two OC meetings if
they’re not included in the documentation.
N V: I wouldn’t advocate buying this particular unit, as the eight-
storey building is too large and there’s a glut of similar units in
this area. The busy position is also too noisy. These are all factors
that are likely to restrict capital growth.
¿ WHAT ADDITIONAL QUESTIONS WOULD YOU ASK
JSS: Why is the vendor selling? How motivated are they to sell?
How long has it been on the market? Have they had other offers,
and if so, how much for and why were they rejected? The agent
may not provide you with sufficiently detailed answers to the
above questions, but you should ask. Some agents will give you
this info freely.
N V: I wouldn’t bother calling the agent for the reasons listed
above. If, however, I thought the unit was more promising,
some of the main questions I would ask would be, how much
are the strata levies? What’s the internal floor size? Are there
any problems with the unit or the building and why is the
owner selling? I’d also ask how much interest there’s been in
the property and has the vendor received any offers? You would
also ask questions about things you can’t tell from just looking
at the photos, like how much light is there inside the unit?
What’s the layout like and what’s the orientation and aspect?
Unusually, a floor plan isn’t provided, so I’d want to know what
the kitchen is like and does it require updating and what’s the
condition overall and how much work does the agent think
¿ WHAT SORT OF INVESTOR WOULD THIS PROPERTY
JSS: A buy and hold investor who’s prepared to be in the market
for the very long-term. The yield isn’t reaching averages for
the suburb and there are limited prospects for capital growth.
However, investors in this category may well be able to do better
by looking at a similar unit in a nearby suburb.
N V: Due to its limitations in terms of capital growth, it’s most
likely to appeal to an investor who is chasing a higher rental
return but is indifferent to capital growth potential. Savvier
investors realise that over the long-term, capital gain is more
compelling than short-term rental yield.
¿ AT ITS ASKING PRICE, WOULD YOU LOOK TO TALK TO THE
AGENT, OR WALK AWAY?
JSS: I would be inclined to contact the agent with a view to
finding out why it is that they’re asking a price that’s well
above the Residex valuation. The median suburb price for a
comparable unit is $539,000 and the prices being achieved in
the street are below average for the suburb. The capital growth
based on the last selling price of the property and the suburb’s
average capital growth could be up to $555,600. There has been
some recent significant capital growth that may make these
three-month-old valuations a little outdated, but at the asking
price this unit isn’t a fabulous investment. It would need to
be purchased well below the asking price in order to generate
a yield and a value that would make it a good investment. In
order to achieve this, you would want to ask the agent how
open to negotiation the vendor is. You should also ask why the
vendor is selling, in a bid to ascertain some information about
if they’re a distressed vendor or if they’re likely to want to hold
out for the asking price. This might help you determine if it’s
of value to frame an offer on the property that’s closer to a price
that would make it a good investment. There’s around six per
cent discounting from the asking price occurring in the suburb,
although this data is three months old.
N V: I’d walk away in search of something with better capital
growth prospects. If the unit was more suitable, I would arrange
an inspection and start my due diligence process from there.
¿ BALLARAT, VIC
$220,000 - $250,000
Ballarat is one of Victoria’s major
regional centres and is located
around 100 kilometres west of
Melbourne. Its gold rush history
has raised its profile among the
Australian population, but Ballarat’s
economic base has now expanded into a broader range of
industries including tourism and agriculture. Transport options
include a train line connecting through to the Melbourne CBD.
The selected listing provides for a lowset timber cottage with
three bedrooms and one bathroom and is within close proximity
of services and facilities. The property has been listed for sale at
$220,000 to $250,000 and reportedly achieves a rental of $200 to
$240 per week.
æThe unit block is a 1970s
era building, and provided
the maintenance hasn’t been
neglected, these types of
buildings were built to last and
have few major problems.Æ
\\ OPEN FOR INSPECTION
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