Chris Gray's Purchase or Pass: Can $500k get you into a blue chip suburb close to the city?

Chris Gray's Purchase or Pass: Can $500k get you into a blue chip suburb close to the city?
Chris Gray's Purchase or Pass: Can $500k get you into a blue chip suburb close to the city?

With so many people thinking that property is getting too expensive for everyone to afford, in our Purchase or Pass segment this week with Century 21's Charles Tarbey I thought we would see if $500k can still get you into a blue chip suburb close to the city. And to make it as hard as possible I chose our most famous beach, Bondi Beach.

Location: 6.5 kms from CBD

Beds: Studio

Bath: 1

SQM: 31m

Parking: 1

Price: $435k

Rent: $400/wk

It’s a studio unit with lock up garage, 6.5kms from the CBD and just 1.3km to the sand. It’s located on the first floor of a small security block of 15 units and is half way in between the shops and transport hub of Bondi Junction and the lifestyle and leisure of Bondi Beach. The property is currently in good condition, but judging from the photos could do with an upgrade. The property sold 2 months ago for $435k and the expected rent is around $400/wk, the size is 31sm.

Charles: 31sm and $400 per week, let’s just assume for a moment you’ve borrowed the entire $435k, how often can you find a property where your rental return is not much lower than the repayments in a suburb like Bondi, it’s almost a steal. You might even buy it just for the car parking space because that’s pretty hard to get. The only thing that concerns me is 31sm is below the value of where most banks will look at, so it has to be specialised lending. You might end up having to pay a little bit more in interest to get it, but 31sm Bondi beach, one carpark, $400 per week rent, $435k that’s a pretty good price.

Chris: I mean, we’ll start on the negatives because it’s by no means perfect. So from those photos, it’s on the main road and there were traffic lights there. So traffic lights, I mean Bondi road is buses, cabs all the hoons on Saturday and Friday night. Traffic lights is obviously a nightmare because people are constantly stopping and starting and it’s small, so it’s limited funding. It isn’t perfect but for $435k what do expect? Because you’re paying for what you get.

Charles: If you were a businessman and you’re travelling to that area a lot it would cost you more in hotels. So, you could probably get it spruced up a little bit and you could have an investment property

Chris: That was the other positive. Obviously the pictures are not perfect and anything you did to it would be an improvement and, again, there’s double glazing these days, it’s pretty good stuff. You spend some good money on that and you probably aren’t going to hear the traffic.

Charles: I would be a purchaser at that price, given that I know it’s incredibly hard to find something.

Chris: Probably the debate I’ll quickly give you is if you had a chance in this time of the market your only other chance of $435k is probably to go to regional NSW or QLD or something like that. If you’re say like me and you’ve got no idea because you’ve never been outside the city walls, would you take a punt on going somewhere regional, which may be a 50 50 punt, or would you go for something say in the city that’s not perfect but… 

Charles: I would go with something like this, and I must say, and I mean no disrespect to you Chris, but I’ve heard that you think the western suburbs start at Centennial Park but I think it’s a little bit further ahead than that.

Chris: So purchase or pass on that?

Charles: Purchase for sure.

Chris: I don’t think it’s the best unit in the world but you get what you pay for. As an armchair investor, I would much rather a small unit in the heart of one of the best suburbs in the country, than to play the roulette wheel and take a punt on something bigger in the middle of nowhere where I probably don’t have any local knowledge. So, I’m going to go for a purchase as well.

 

To watch the episode in full, click here.

Tags: 
Residential Sales Bondi Beach

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