Chris Gray's Purchase or Pass: To buy or not to buy

In our Purchase or Pass segment this week we are joined by Anthony Bell from Bell Partners, Nathan O'Brien from Century 21 and Tom Panos from News Corp we take a look at an investment property based that’s recently been on the market and we discuss the pros and cons and whether we would buy it personally.

Location: 8.2kms from CBD

Beds: 2

Bath: 1

Parking: 1 (2)

SQM: 90m

Price: $1.411m

Rent: $1,000-1,100/wk 

It’s a 2 bed, 1 bath unit with lock up garage, 8.4kms from the CBD and just 130m to put your toes on the sand of the local beach. It’s in a very small, boutique Art Deco, security block of 6 units, with no lifts, gyms or pools. There’s 2 large double bedrooms, a deluxe gallery kitchen and a designer bathroom with separate shower and bath. Whilst it is not on title and hasn’t been advertised as such, it is possible to park a second car outside your garage.

Chris: So, talking to you Nathan, what are your initial thoughts on it?

Nathan: Generally speaking Chris, I think it looks to be a well maintained property. It is looking a little bit old, but I think it presents well. 

Chris: Yep, sounds good. Now, Antony, it’s probably good for an estate agent to be honest and to not have advertised it as two spaces when it’s only one

Antony: Yeah, I think if you’re getting it for free, you know, it’s an excellent proposition, but if you’re paying for it I’d be obviously checking the contract and checking what the real rights to that property actually are. Look, I think that property ticks a lot of the boxes, I wouldn’t say all of them, the age of the building (that) was just mentioned is a very poignant piece to take into control and so the body corporate and where that’s all up to, to me, would be high on the examination list.

Chris: Look, that’s probably one of the things, having a small block. People say ‘why should I have a small block rather than 100 people in there?’ If you’ve got six people to convince, I’m sure you guys get to deal with these strata issues, how easy is it to deal with the six people to make a decision versus the 100?

Nathan: Absolutely, it’s a lot easier when there are less people involved, however, I think at the same time, I think overall just coming back to your questions, it’s an appealing block, but I think also that can be a bit of a challenge at times with strata costs as well. So, you’ve got to weight up the pros and cons.

Chris: And also give them the right kinds of things for the suburbs, because some people love the lifts, gyms and pools, but it could be argued, well, if the beach is around your doorstep why do you need all that kind of stuff.

Antony: I think that’s important, I do like units that have outdoor space attached to them, meaning a balcony, or some opportunity to… actually just while you’re inside your living space you get a shot at just walking out… but it’s still ticking all the boxes.

Chris: Again with the second parking, whether you’ve got it on title or not… if you can use it, how many renters and owners die for something like that?

Antony: Look, on a beachside place you can only imagine parking on a Sat or Sunday is going to be an absolute difficult thing to pull. So, if it’s through the body corporate records, it’s not on title but it’s actually awarded to the owner of the strata, then I’m a like for it and I think that becomes a really important part of the second spot in today’s sort of living- very rarely do you have a family of one car and it gives you the opportunity of bringing other tenants in or share apartments and that will push the rent up.

Chris: I mentioned that the agent, we don’t mention which agents are selling these properties or the addresses or anything, but this agent, he’s done the right thing, he’s advertising it as one rather than two. I guess from your perspective being an estate manager, there must be a lot of pressure on agents now, you’ve got to do the right thing and you’ve got to advertise legally what it is.

Nathan: Absolutely, you’ve got to not misrepresent the property in any way shape or form but the fact that you’ve got the space there for a second car, it’s a huge selling point. Especially for when you’re looking for the right tenant, you really want to maximise your rent there. It’s definitely a great value add to that property.

Chris: Again, probably going back to the clearance rates our conversation right at the start of the show, these kind of things are so unique the clearance rates on those are nearly 100 percent no matter what the market, aren’t they?

Antony: Yeah, hot demand on both sides Chris. Hot demand on clearance rates, which means that there would always be an upward pressure on pricing.

If you’re an investor and survive the negative gearing onslaught … if you lose a tenant, your speed to acquiring a new tenant is going to be very very fast in areas like that so your days off market, rent wise, are going to be very very few.

Chris: Purchase or pass for you

Antony: I would buy

Chris: and how about yourself

Nathan: Yeah, same with me, purchase 

Chris: I think this is a cracking unit if you’ve got the funds to buy it as it really does tick every single box. The rent in winter in a more expensive property might drop down below 4 per cent at times but I think the capital growth will more than compensate so I would buy.

To watch the episode in full, click here.