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Purchase or Pass? A more expensive three bedroom unit with Tom Panos and Charles Tarbey

Purchase or Pass? A more expensive three bedroom unit with Tom Panos and Charles Tarbey
Purchase or Pass? A more expensive three bedroom unit with Tom Panos and Charles Tarbey

In our Purchase or Pass segment this week Ingrid Willinge is joined by Charles Tarbey CEO and owner of Century 21 and Tom Panos head of real estate advertising at News Limited. Most of the time on Purchase or Pass we analyse two-bedroom investment units in the inner city but this week we’re going to look at a more expensive three bedder and see if it still ticks the boxes.

It’s a three-bedroom unit in a small block of nine, 7.8 kilometres from the Sydney CBD and just 600 metres to the local action. The property is pretty large for the area at 102 square metres and has a very large garage, which could potentially fit two cars in it. The property is in a great condition and not a cent needs to be spent.

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Ingrid Willinge: Lets take a look at this property; you can see the photos coming up there. What do you think, a lot of angles can be taken but I guess it comes down to numbers and strategy of the buyer, looks like not such a bad return for a safe investment. What are your thoughts, starting with the positive Charles?

Charles Tarbey: It looks like a great location from here, but also the size of it is also a really impressive part of it because most apartments 7.8 kilometres from the city with the return that this one is particularly showing are quite expensive and to get a three-bedroom unit, 7.8 kilometres and 35-square-metre car parking is really quite positive. I’d say the size, the car parking and the views are what I would say are three of the most significant positives features of the property.

Ingrid Willinge: With the carpark though, it really depends on location I guess to how valuable the car park is right?

Charles Tarbey: Well it does, but most of the inner city areas, and this has to be close to that, have street parking or they have parking that might not be undercover. To have 35 square metres of parking is quite significant in a lot of the areas.

Ingrid Willinge: Tom what are some of your positives on this one?

Tom Panos: Ticks location, the fact you have nothing to do, rental return of 5.5% that beats what you’re normally getting. It’s close to the city, which you would normally get 4 to 4.5%. If you lock it in at a 5% interest rate on a fixed loan, you’re talking about something that is revenue neutral. Small block of nine, love that. Light and sunny with a view, it’s all-good. Some people will argue in it being a three-bedroom unit that you’re going to have more difficulty in trying to sell and rent because you have to get three people to move into it. I actually think the opposite which is you’ll probably get a better quality tenant. You won’t get like, three guys or individuals moving in and sharing, you’re more likely to get a family, more established, stronger incomes which are more solid. I like it.

Ingrid Willinge: What about in terms of strata levies, given it’s a block of nine can we assume strata levies are probably smaller? Like no elevator in the building.

Charles Tarbey: It really does depend on the body corporate, there are so many places that are similar to each other but body corporates run differently, so it really does come down to the body corporate. Any buyer looking at it is going to ask the question, or you expect their conveyance for a lawyer to ask the question and to see information on the body corporate and see how they’ve behaving or how they’re working or what the sinking fund is like. I think it really comes down to that at the end of the day.

Ingrid Willinge: Tom, any negatives on it that you can see?

Tom Panos: My only negative is being a bigger unit it’s at the upper end for the average values in the marketplace and we all know that you want to be in the lower or medium area of a suburb, so you are aiming to go for top dollar in that market place. But at the end of the day, a good property that is giving you that rental return, someone’s going to sit there with a calculator and paper making their decision and it stacks up good, 5.5%.

Charles Tarbey: Yeah, three beds is pretty rare, its usually one bedders or two bedders so three bedroom, even though it might be harder in some respects like renting or finding the right tenants, it’s a very important part of it, that the capital gain side of it could be stronger because of the three beds.

Ingrid Willinge: Purchase or pass?

Charles Tarbey: Purchase.

Tom Panos: Purchase.

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