澳洲Australia property A unit in Sydney | Sydney
I am looking at listing one of the units in our portfolio for sale, and before signing up with an agent I thought I'd post it here and see how it's received, whether it looks like a good deal, etc. If nothing else I'm sure I'll get asked information which I may have to dig out for an agent or buyer anyway, so I might as well have it dissected now (during a wet long weekend).
What's for sale, and why am I selling?
I'm looking to sell a unit in Sydney, NSW. It's a one-bedder in a complex in Philip St, Petersham, with secure parking for one car. As for why we're selling, in short, we are overweight in property. Some years ago (last millennium...) we started to buy as much as we could then proceeded to hold for as long as we could, which has given us some good capital growth.
Subsequently, we have become clients of a financial adviser (who I won't name as I haven't asked his permission) who advocates a preferred asset class balance of property / cash / shares. On his calculations, we are heavily overweight in property, which in brief means the other two classes (and in particular our interest in a share fund) can't grow as fast as they should under the financial plan we've put in place with him. Hence the wish to sell. There's no pressure on us and we're not giving the unit away, but we do want to re-balance and move on with the next stage of our plan.
Why is it a good deal?
Firstly, let me say that as a solicitor and (to make matters worse) one who works in-house at a large bank, I would stress that nothing herein is intended to be financial advice, or indeed any type of advice, nor should it be construed to be so. I interpret the posting guidelines about whether something is a 'good deal' or not as implying a request for a personal opinion, which is expressly what these comments should be taken to be.
That said, we've held it so long because I believe it's been a good performing unit in a great location. Petersham is around 6k from Sydney's CBD - the unit is on a bus line to the city (which takes about 10 minutes), and there is also a direct train line to the city which runs through Petersham. The unit itself is about a 2 minute walk to Norton Street, which (for the benefit of non-Sydney residents) is the heart of the Italian quarter, with plenty of cafes, restaurants, bars and shops. Petersham itself also has a great selection of Portuguese restaurants, cafes, bakers, etc. Having lived in Sydney for over 10 years, it's true that there are some areas of Sydney which are not very nice, but this is not one of them! - it's a lovely little part of the inner west.
I'm not able to provide too much comment on the demographics of the Petersham / Leichhardt area, but being as it is in the inner west of Sydney, it's also within easy reach of Sydney city and the university. There's currently no shortage of tenants in Sydney's inner west, but in any event it's been tenanted pretty much full time (save for changeovers) since we bought it.
As to why its performance would make it a good deal, we bought in 2000 for $202k (through finance arranged by one of the brokers on this forum - although again I don't have his permission so won't name him). We had it revalued and refinanced via the same broker in 2003 for $340k - and stripped out the equity and put it into a share fund. Since then, in common with many Sydney properties, I suspect it's value has either stayed around that point or dipped and come back, and although we haven't had the unit re-valued again as we're not aiming to re-finance, our property management agent (who is also a licensed selling agent, and who obviously knows the property well) has given it a current market value of around $340k.
My personal opinion - and why we've hung onto it since 2003 instead of selling - is that when we do get another growth spurt it will make another impressive jump in value, and I've anticipated 2010/11 as a growth period, although this is a personal opinion, formed by reading a range of sources and having been through a few cycles.
A fair few of those sources I've read recently (eg BRW, Property Investor) say now is the time to move into property, and some have specifically mentioned Sydney units as ones to target as having good potential for growth. Added to that, my thinking is that the 'property clock' shows us at around 20 to the hour, and with interest rates now beginning a downward cycle, it may well be the right time and the right investment for someone out there.
As to what price I'm looking for, if I'm to sell now then I'm looking to be as near the $340k as possible - as I said, there's no pressure on me other than to re-balance and move onto the next phase of our financial plan.
The rent on the unit is $315 pw - and the current tenant has a lease until the end of March, so it'll be sold with a tenant in place. At a $340k purchase price that would be a yield (315x52/340,000) of over 4.8%, which is not spectacular in itself, but as the accommodation shortage continues and Sydney rents continue to rise I'd anticipate this return can only get better.
I'm not intending to discuss the respective benefits of cashflow+ versus cap growth strategies in this thread, and individuals can do their own calculations about how an individual position would be by applying their own deposit, tax figures and interest rates, however, I would say that this would be one to hold for capital growth - although in the meantime I don't think 5% is a bad return near Sydney's CBD.
As to more concrete opinion on its potential growth (instead of just my personal one), the Residex Property Guide 2008 gives Petersham an investment rating of 3 stars, which means a predicted growth of between 8% - 9.5% per year over the next three years. Even assuming towards the lower end of these two figures at 8.5% per annum, then on $340k this would take you to $434k in those three years - not a bad increase in anyone's books.
What other comparable product is out there?
I've been onto realestate.com.au to look at similar developments (and by that I mean new or relatively new similar sized blocks), and narrowed my search to units in Petersham.
The following link is for a unit in my complex, but is a three bedder and being offered at $650k - http://www.realestate.com.au/cgi-bi...r=&cc=&c=22052906&s=nsw&snf=rbs&tm=1221008051
(There's also a studio on the first floor which comes up on that search which I understand has little or no view at all, so it's understandably a lot less).
I've not been able to see another one bedder in my block to compare, but prices for one bedders in other comparable blocks in Petersham seem to range from high $300k to high $400k, so mine seems to compare favourably, and in addition the parking spot is definitely a plus in Sydney's inner west.
The attached link shows new one bedroom units in a complex in Petersham ranging "from $385k to $495k" - http://www.realestate.com.au/cgi-bi...r=&cc=&c=22052906&s=nsw&snf=rbs&tm=1221008051
I'm not sure of the quality of the other builds, but my block was built by Baulderstone Hornibrook, which is a very reputable and award winning builder (see www.bh.com.au).
So there you have it - how does that look if I'm taking this to market? Would you see it as attractive to investors?
Any thoughts, queries or anything that would apply to all readers you can share / ask in open forum. Anything pertinent to just you personally, please PM me.
Well I'm not a gynaecologist but I've had a look- as someone wittier than I often says. Because one of my IP's is a 1bedder I tend to keep an eye on that market. It has been my observation that more 1 bedders have come on mkt- could be because some first time buyers are frightened of prevailing conditons and want to exit .Corollary to that is that prices have receded -in particular one bedders in Elizabeth bay are slower to sell and have come down and you would have to agree that E.B is a better area in Sydney than Petersham. Your $360-$380k ask is comparable now to E.B asks so you might be a bit ambitious ATM.
Also putting a proposed sell on caveat Emptor you risk having anyone who might be in the market circling like a shark smelling blood
As much as we are all hearing how down is the Mkt in Sydney I saw a unit in Camperdown go for what I thought was a bit silly - at ask price - starry eyed young couple- Also one of my own family just paid ask price- for another place at Vaucluse- was I hoppin mad at him- LOL-- But I am just an old crusty- So maybe just get stuck in and put it up with an agent They will be glad of any Listings but maybe don't pay for any advertising - make them pay Being a solicitor you should be able to strike a deal- All the best - not advising just relating experiences-
I think its overpriced in the current market conditions.
I used to live a few hundred meters from your unit so know the area pretty well.
I'd say a 10% discount would be about right.
Great post by the way.
Thanks for taking the time guys - useful input.
Mizbuf - it's only up to $340k I'm looking to get - although your $380k would be nice And I agree, EB is certainly a better area than Petersham.
I guess I'll give it to an agent and see what happens. I had expected more dissecting and can't understand why no-one's game - anyone would think people don't want to talk to banking lawyers...