Buying Apartments Good Call/Bad

[Weiterbot23]

Bit of a hypothetical

Say you were looking at downsizing the family home to an apartment, what would the best way to go about it.

Option 1 - Sell the family home - roughly 1.5mil and buy a nice apartment for roughly the same price

Option 2- Buy 3 houses in different areas for $500k each and use the rent from those house to rent an apartment?

Option 3 - Something else?

 

[Lyyynnnchy]

Bit of a hypothetical

Say you were looking at downsizing the family home to an apartment, what would the best way to go about it.

Option 1 - Sell the family home - roughly 1.5mil and buy a nice apartment for roughly the same price

Option 2- Buy 3 houses in different areas for $500k each and use the rent from those house to rent an apartment?

Option 3 - Something else?

Lots of questions need to be asked and answered. Will this be a home for the foreseeable long term? As in will the increase/decrease in price be a worry? Is there any debt in that $1.5 million that needs to be paid back? Do you want to be making capital gains on the property/s or is that a bonus?

 

[Weiterbot23]

Lots of questions need to be asked and answered. Will this be a home for the foreseeable long term? As in will the increase/decrease in price be a worry? Is there any debt in that $1.5 million that needs to be paid back? Do you want to be making capital gains on the property/s or is that a bonus?

Yeah long term.

The folks are looking to retire in the next 2-3 years, no morgage.

I've just heard bad things about buying apartments, plus after 15-20 years they won't be able to get up the stairs etc,. They want to live in the Elwood area.


I'm of the opinion that if they bought 3 houses for 500k, you could get $400 rent from each and rent a bigger apartment plus the houses would increase more than the apartment.

 

[JohnW]

If you are looking at trying to get some government assistance/pension (which all people should try to do). Option 1 would be preferred as the family home is fully exempt from those calcs. Where the house are investments and would be counted towards any assets/income test.

 

[sabre_ac]

Bit of a hypothetical

Say you were looking at downsizing the family home to an apartment, what would the best way to go about it.

Option 1 - Sell the family home - roughly 1.5mil and buy a nice apartment for roughly the same price

Option 2- Buy 3 houses in different areas for $500k each and use the rent from those house to rent an apartment?

Option 3 - Something else?

Some good advice has already been given in this thread, JohnW makes some very good points regarding pensions.

It ultimately depends on if there is enough investments/money outside of the house to maintain their lifestyle.

If it was my parents....

Option 1. Sell the house and buy a nice apartment in a good area for the proceeds. They have worked hard and should enjoy the lifestyle benefits of a 1.5 million apartment (location, no maintenance, modern facilities etc). Plus based on their age they're not really too concerned about capital appreciation.

Option 3. Sell the house, sit down with a financial planner and discuss putting the proceeds into a balanced portfolio (bonds/shares/cash/reits) for a very good cashflow and then renting wherever you want. The logic here is the cashflow will be better than the rental with less hassel and my parents could then rent where they wanted and move whenever they want.

Option 2. I'd want my parents to think very hard about if they wanted to be a land lord in their golden years, its a hard slog and the return isn't as good as it sounds. Perhaps the idea of having rentals is a good one because it can be something to keep then busy (Doing the maintenance themselves etc), then go nuts.

 

[Power Raid]

Bit of a hypothetical

Say you were looking at downsizing the family home to an apartment, what would the best way to go about it.

Option 1 - Sell the family home - roughly 1.5mil and buy a nice apartment for roughly the same price

Option 2- Buy 3 houses in different areas for $500k each and use the rent from those house to rent an apartment?

Option 3 - Something else?

buy land in areas where urban sprawl will continue or where re-zoning for higher density will occur

 

[JoondalupJ]

Some good advice has already been given in this thread, JohnW makes some very good points regarding pensions.

It ultimately depends on if there is enough investments/money outside of the house to maintain their lifestyle.

If it was my parents....

Option 1. Sell the house and buy a nice apartment in a good area for the proceeds. They have worked hard and should enjoy the lifestyle benefits of a 1.5 million apartment (location, no maintenance, modern facilities etc). Plus based on their age they're not really too concerned about capital appreciation.

Option 3. Sell the house, sit down with a financial planner and discuss putting the proceeds into a balanced portfolio (bonds/shares/cash/reits) for a very good cashflow and then renting wherever you want. The logic here is the cashflow will be better than the rental with less hassel and my parents could then rent where they wanted and move whenever they want.

Option 2. I'd want my parents to think very hard about if they wanted to be a land lord in their golden years, its a hard slog and the return isn't as good as it sounds. Perhaps the idea of having rentals is a good one because it can be something to keep then busy (Doing the maintenance themselves etc), then go nuts.

Land lording is indeed a hard slog , there are benefits, but also pitfalls.... and MAINTENANCE , yes maintenance!!!

At the age of the parents I would suggest a lovely well earn' t lifestyle with no worries.

Imagine an up market, lovely apartment , good life to retire too. Not many can , seems a good idea to me. All paid for, gaining value all the time, so when ever it gets left in a will, family too, get some benefit from it. Win ...win!

 

[JohnW]

I hate the idea of paying strata fees personally

 

[Deliverance]

Bit of a hypothetical

Say you were looking at downsizing the family home to an apartment, what would the best way to go about it.

Option 1 - Sell the family home - roughly 1.5mil and buy a nice apartment for roughly the same price

Option 2- Buy 3 houses in different areas for $500k each and use the rent from those house to rent an apartment?

Option 3 - Something else?

Are you wanting to know about the best outcome for them or for you?

 

[Weiterbot23]

Both.

I just reckon an apartment is a bad investment.

Eg. If there's a water leak above you and as a result an ugly water mark, you can't fix it until the body cooperate sorts it out.



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[Power Raid]

Both.

I just reckon an apartment is a bad investment.

Eg. If there's a water leak above you and as a result an ugly water mark, you can't fix it until the body cooperate sorts it out.



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which takes a whole day

 

[Weiterbot23]

which takes a whole day

Nope


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[Power Raid]

Nope


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you clearly have a crap strata company and strata manager.

Simple photo, description and detailed work order emailed to the strata manager, forwarded to the chair of the strata company and approved. work order is then released and the tradesmen is on site the next day providing you can provide access.

if that's not happening, call an EGM and make it happen.

 

[Weiterbot23]

I don't live in an apartment. I considered it as you can basically live in any location, but after a bit more research (including some good advice on this board) it seems to me to be a lot worse of a decision financially. I'm currently looking at a house in the outer East.

I've started working in the construction industry the past year and it common belief that apartments are built poorly (just slapped up).

There's also issues with PPL subletting apartments where 8-10 ppl are living in 2 bedroom apartments which is a safety risk.

From what I hear daily through my work, body cooperates aren't always as responsive as you suggest, plus the fees can increase rapidly without warning.

My olds are looking at premium apartments in port melbourne so I guess it would be less of an issue with sub letting etc.

However I reckon making other investments such as buying houses and renting them etc then renting an apartment would allow them to
1- be better off finically
2- rent a better apartment
3- be able to move (if there's a sh1t body cooperate, psycho neighbours etc)



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[Power Raid]

I don't live in an apartment. I considered it as you can basically live in any location, but after a bit more research (including some good advice on this board) it seems to me to be a lot worse of a decision financially. I'm currently looking at a house in the outer East.

I've started working in the construction industry the past year and it common belief that apartments are built poorly (just slapped up).

There's also issues with PPL subletting apartments where 8-10 ppl are living in 2 bedroom apartments which is a safety risk.

From what I hear daily through my work, body cooperates aren't always as responsive as you suggest, plus the fees can increase rapidly without warning.

My olds are looking at premium apartments in port melbourne so I guess it would be less of an issue with sub letting etc.

However I reckon making other investments such as buying houses and renting them etc then renting an apartment would allow them to
1- be better off finically
2- rent a better apartment
3- be able to move (if there's a sh1t body cooperate, psycho neighbours etc)



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you're right on all accounts

In the west groups like Mirvac, an older company Fini and a couple of others are put together really well. Many others are just slapped up. One simple question is "did they use european standard plumbing?" if no, you will here toilets flush a mile away and with 20 toilets within X metres, it will be like living in a public toilet.

By-laws limit the number of people living in an apartment. Just pass a by-law, if they do not comply change the locks, shut down the power, cut off the water, shut off the gas, close access to the car park and hum dixie until they comply. Repeat the same for noisy neighbours etc.

A good functioning COO (body corporate/ strata company) is a must. Do not leave it to the strata manager. It is easy to do, save thousands (~50% savings) and deliver better results.

 

[rdhopkins2]

A general warning on apartments: do your research on similar property values and if buying off the plan beware of sunset clauses.

 

[Deliverance]

I don't live in an apartment. I considered it as you can basically live in any location, but after a bit more research (including some good advice on this board) it seems to me to be a lot worse of a decision financially. I'm currently looking at a house in the outer East.

I've started working in the construction industry the past year and it common belief that apartments are built poorly (just slapped up).

There's also issues with PPL subletting apartments where 8-10 ppl are living in 2 bedroom apartments which is a safety risk.

From what I hear daily through my work, body cooperates aren't always as responsive as you suggest, plus the fees can increase rapidly without warning.

My olds are looking at premium apartments in port melbourne so I guess it would be less of an issue with sub letting etc.

However I reckon making other investments such as buying houses and renting them etc then renting an apartment would allow them to
1- be better off finically
2- rent a better apartment
3- be able to move (if there's a sh1t body cooperate, psycho neighbours etc)



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Heard from a friend of a friend once that he wanted some cabling work done in his apartment, but the cable wouldn't feed through. Turned out the spaces behind the plaster were filled with rubbish from the building phase. Is this common or even likely to be true?

 

[Pykie]

Heard from a friend of a friend once that he wanted some cabling work done in his apartment, but the cable wouldn't feed through. Turned out the spaces behind the plaster were filled with rubbish from the building phase. Is this common or even likely to be true?

There's a chance there's going to be some building rubble in the cavity, what's the major issue with it?

As for apartments, if you want a sure fire way to burn your money in the next 24 months, go for it.

 

[Mootsy]

Depends...

Do you want an apartment to live in to downsize, low maintenance living or as an investment??

That's it. It's that simple..