Join our investing community

Parramatta or Pyrmont?

Discussion in 'Real Estate' started by Sk3tChY, 11th Nov, 2010.

  1. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    In the market for my second IP and I'm after some opinions really on what suburbs I should take a look at.

    Originally I was pretty set on Parramatta, but since then my price range has changed a bit and so has prices.

    I'm thinking around the $300k-$400k mark.

    This could get me a fairly decent 2br place in parramatta or a comparably small 1br place in Pyrmont, although it would be a 1br, not a studio.

    Opinions? Any other suburbs perhaps?

    Also, just wondering how/where would I go about getting the best information on things like recent sales prices in the area and perhaps something to show me the growth in a suburb?

    Cheers guys! :)
     
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Pyrmont units will have very high strata fees
    I'd go for something further out.
    Have you decided to go for a unit?
     
  3. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Well I've had a look at a few placed in Parramatta and their strata fees have been from $750 - $1000+, so strata isn't exactly cheap there either.

    Another thing I'd be taking into consideration with a Pyrmont apartment is a higher rental yield, which in most cases would cover the higher outgoings.

    Any suburbs in particular? I'm personally thinking something that's close to a train station, main ones in particular.

    I've considered Pyrmont because it's a hop skip and a jump from Sydney CBD and I think in 10-20yrs time it will be almost impossible to buy/afford something so close to Sydneys CBD.

    I've considered Parramatta because it's NSW's second biggest CBD, there's a lot of development going on and I believe some larger corporations are considering moving to Parramatta because of congestion/costs in Sydney CBD. Plus it's still quite close to the city, about 30min train ride.

    Well I'm open to anything really, I don't really think my budget would permit a free standing house unless it was in an area way out west, in which case I don't think rental yield or potential for capital gains would be as good.
     
  4. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    It depends on how old the building is, what amenities it has and other factors. Expect to pay (as a rough average) anywhere between $400-800 for an older building and $700-1200 for a newer complex.


    Are you sure about this? I bought for a client in a Parra suburb recently for $305K returning $350 a week rent. I think you'd find a gross yield of 7%+ pretty difficult to find in Pyrmont, as well as many other suburbs.

    Rail is good but don't discount bus routes. Suburbs like Lane Cove and Gladesville (where you can still pick up 2 bedders in the sub $400K price bracket) still yield well and are relatively close to cbd.

    I like Parramatta but if you're going to spend $400k why not look further afield and consider houses further out along the western rail line? Check out the historical numbers if you don't believe that cg and yields haven't been as good. It's a myth that only property close to the cbd outperforms the rest. Buy a copy of API mag and check out the back tables to see what I mean. You may well be very surprised.
     
  5. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    It depends on what you're comfortable with.
    These days I'm chasing good yields so I've been looking at houses in outer west where the rents have really taken off. However I don't know if you're comfortable with Blacktown/Mt Druit suburbs.

    I think you'll be surprised when you see how much the rents have gone up in the west.

    As for capital gains, I think timing has a lot to do with it.
    If you look at CG in the western suburbs since 2004 it won't be much. But if you looked just before 2004 prices doubled in a short period of time.

    Sydney consists of many markets and submarkets and they've all increased at different times.
    It will be the same next time around
     
    Last edited by a moderator: 12th Nov, 2010
  6. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    True, places out west and their rental returns seem to have increased a fair bit since I was looking years ago.

    What suburbs would you consider to be good to buy in at this point in time for my price range?

    I've personally been thinking if it were to be a suburb that's a little out from the city I'd go something like Parramatta, Westmead, Granville, Lidcombe? Possibly even Liverpool.

    Parramatta/Lidcombe would probably be my top 2 choices right now.

    I even like the idea of Sutherland, it's a fairly nice area, its got a main train station, it's not too far from the city, close to Cronulla beach etc. However my first IP is in Caringbah, so I'm thinking of diversifying a little.

    Anything closer into the City seems to be a little out of my price range right now, at least for what I'm after - Which is a half decently sized 2br apartment with a balcony + LUG that's within walking distance to some form of public transport, but I'd even consider a smaller 1br place if it were close enough to the city.



    I've had a little looks at places like that, places like Lane Cove seem a little out of my price range, a 2 bedder in places like that seem to start at $400k+ see.

    I'd be very interested in getting my hands on some sort of good property investment material giving all these figures, where would I get this sort of thing? Would all API Mag issues have these sorts of statistics? Or would I be best off getting them from somewhere else?

    Well I'd personally feel a little more comfortable with something a little closer to the city, but I have no real issues with Blacktown/Mt Druitt.

    I'll definitely take a look, thanks.

    Yeah, a little hard to determine when/where I suppose. Parramatta and anything that's a little closer into the city seems a fairly safe bet to me.

    I mean you can only build so much in a certain area, eventually people are going to have to expand out and eventually as the population increases placed in the city are going to be harder and harder to get.
     
    Last edited by a moderator: 14th Nov, 2010
  7. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Ok but you need to be happy with the suburb as well.

    How about the suburbs going south from Parammatta and towards Hurstville? I mention these because the yields will probably be higher (you'll need to confirm this).

    Suburbs which come to mind are Auburn, Lidcombe, Yagoona, Birrong, Regents Park, Punchbowl, Wiley Park.
     
  8. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Well Lidcombe was definitely a suburb that I've considered and am interested in.

    I've taken a quick look on the web and it looks to be fairly decent value for money with fairly good rental returns and it has a main train station, the only thing I don't know about Lidcombe is how the actual suburb is in general and whether it has a main shopping centre nearby.

    Auburn I'm less interested in because trains are less frequent, I just think if you were to consider Auburn you'd be better off going with Lidcombe.

    Yaggona, Birrong, Regents Park, Punchbowl and Wiley Park are admittedly not suburbs I've thought of, largely because they're very unfamiliar suburbs to me, but also because they're quite close to Bankstown.

    Hurstville does interest me, however a decent 2br there looks to be starting at around $400k - There looks to be a couple cheaper, but it might be a little out of my price range.

    I also quite like Wolli Creek, but again - Too pricey. :(

    The top suburbs right now that I'm considering would probably be:

    • Parramatta - I think long term, parramatta will become like a mini-sydney, so it would become quite valuable.
    • Lidcombe - Seems to be around the same sort of price and value as parramatta, but closer to the city.
    • Sutherland - Seems great value for money, <$400k gets you a very nice 2br apartment, much nicer than in parra/lidcombe, has a main train station, isn't very far from Sydney CBD and is also quite close to Cronulla beach.
    • Westmead - Potentially might be a little bit better value for money than Parramatta and still be quite good becuase it's quite close to parramatta.
    • Granville - Have heard a fair bit that people think Granville will boom, location wise it's pretty good, the suburb itself though I'm not too sure about.
    • Pyrmont - Can prob pick-up a half decent 1br place for <$400k which could potentially become very valuable in 10-20yrs because it's basically in Sydney CBD.
     
    Last edited by a moderator: 15th Nov, 2010
  9. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    That's a good start.
    Please come back and let us know how you went.
    Cheers
     
  10. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Hey guys,

    I managed to find a place I feel fairly confident about, I'm just after some opinions.

    First of all, it's a fair bit more than I was hoping to spend on my second IP, but after some number crunching it seems to be worth the extra capital.

    I was originally hoping to only spend around the $350k mark and grab a 2br apartment in one of the areas I mentioned above, particularly Parramatta.

    It seems however if I do that, I'll be pretty hard pressed to find something that will give me above a 6% gross return.

    Now - I've come across a place that's around the $450k mark, it's a 3br place and ticks most, if not all of the boxes with some very minor downsides.

    This place has a potential for a 6.43-7.01% gross return with a 5.63-6.21% return after all outgoings (strata, council, water).

    Aside from the rental return alone, which seems pretty good to me I'm just wondering what peoples opinions are on 3br apartments?

    Are they fairly easy to rent? Or as easy as a 2br place to rent out?

    Capital Gains wise, I've always thought generally the more you spend and the more rooms you have the better your chances of getting good gains are, for example if yours place/area went up by 5% or whatever, 5% of $450k is more than 5% of $350k.

    Also I'm just wondering - Would it be worthwhile getting an independent valuation done? how much do they generally cost? I'd like to think that at the price I'm buying at with a gross return of 6.43-7.01% it's very well priced.

    I was thinking of using RPData and buying this for $50, is it at all accurate or just a waste of time?
     
  11. Babi

    Babi Member

    Joined:
    14th Dec, 2008
    Posts:
    8
    Location:
    Coogee, NSW
    Yield vs Capital growth

    Hiya Sk3tchy! Wondering what the final rationale/decision was?

    Just came across this SMH article that suggested focusing on capital growth - http://smh.domain.com.au/home-inves...nts-no-investment-bargain/20101028-174x5.html - which provided me with a new perspective. I've been wondering why inner city Sydney units were so expi, with only mediocre rental yields, but that explains it!

    Your thoughts?
     
  12. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Still in the market and largely concentrating on acquiring a 3br unit in parramatta CBD.

    My fundamental thoughts are that that Sydney CBD can only get so dense and as a result people have no choice but to live in other suburbs and/or develop in other areas.

    Certain areas are always going to have certain appeals, one of which is only going to get rarer with time and thus cause capital prices to increase.

    This appeal I'm referring to is proximity and ease of access to Sydney CBD.

    I think this appeal has always been an underlying factor of a booming suburb, amongst other things of course, but I feel this always plays an important part and gives a good chance of steady capital growth as the economies population increases.

    In the long term, you'll always hear people predicting that living in Sydney CBD will be unaffordable, in fact a lot of people already say that now. As a result I think it will be the major suburbs outside of the city with ease of access to Sydney CBD that will show good gains in the long term. Public transport hubs especially, many of which I mentioned above.