City apartment vs. suburban unit

LEternal sunshine on 27/06/2016 - 08:52

My first post. Please excuse if this has been discussed anytime already.
I am looking for a unit in one of the highly demanded school zone suburb. I searchd surrounding suburbs but any liveable unit costs minimum 850k to 1.1 mill.
Whereas rent in the school zone is in $500-520 per week range.

I can get a 3 bedder in CBD (closer to my and wife's work place and closer to kids current schools) for $700-720k.

These apartments can fetch rental income of 700-750 p/w and have an expense of approx $8000/year in body Corp and council charges.

If I buy this apartment and after living in it for six months (owner occupied condition) move to my favourite suburb on rent, Will that be a good plan? 150-200k lesser investment will also reduce my upfront amount and help better cashflow.

Any loopholes in this logic?

Financial

Comments

  • dasher86 on 27/06/2016 - 09:11

    Are you planning to negatively gear the property?

  • Eternal sunshine on 27/06/2016 - 09:22

    Yes,after six months.

  • abb on 27/06/2016 - 10:15
    +1

    "3 bedder in CBD for $700-720k"

    What city? If you've got such a deal in Sydney, hook me up please!

  • Eternal sunshine on 27/06/2016 - 10:18

    It's in Melbourne. I reckon Sydney is much more expensive.

  • cuteseal on 27/06/2016 - 10:18
    +3

    Which state?

    Generally, if it was a unit with its own land, it would increase in value much more than an inner city apartment. That 100k difference now might be a 500k difference a few years down the track.

    In VIC there's a glut of inner city apartments at the moment, I would stay away given the choice.

  • JimB on 27/06/2016 - 11:56

    I'd never buy an apartment.

    Jesus - $8000/year body corporate and that will only go up.

    • tonyjzx on 27/06/2016 - 12:13

      Pick your poison. If you own a home you still have to pay council rates.

      $8k is a tad on the high end but typical for luxury apartments.

      Running costs on suburban units are much more reasonable.

      • JimB on 27/06/2016 - 12:33

        I'd take the much less toxic poison at ~$1,000 - $1,500 for a unit.

        And I'll smash the apartment on capital gains when I sell it.

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