A buyers advocate for The Block, who has bought four finished apartments for investors, says all properties acquired have performed well. Most of the purchases have been rented fully furnished, and tenants have been easy to secure. Many of these tenants are long-term and euphoric with their abode.
39 Cameron Street, Richmond
Completed in 2011, Cameron Street was a winning renovation. Taking out The Block title, renovators Polly and Waz sold their unit for $855,000. This property is still the best valued in the series. Buying in a market downturn, the new property owners leased the property for $975 a week. The property now makes a yield of 5.9 percent.
Recent unit valuations estimate its value to now be $1.1 million. Other properties in the same Block development have also made substantial gains. For instance, 43 Cameron Street, renovated by Rod and Tania sold for $922,000 at auction. The property sold for $1.038 million in 2013, a 23.4 percent gain on its original purchase price.
201/ 142 Park Street, South Melbourne
An apartment in the Sky-High Block series, renovated by Matt and Kim, sold for $1.455 million. Purchasing the apartment to live in, the owner then moved and rented it out for $1,600 a week. Thus, the owner made a 5.6 percent return on his investment.
1/ 47 OGrady Street, Albert Park
Renovated by Steve and Chantelle, this property sold for $2.470 million at the end of the series. Notably reaching $636,000 over its reserve, the property was the most expensive sold on the series. An owner-occupier bought the property.
4/ 125 High Street, Prahran
Selling for $1.9 million, Simon and Shannon renovated this property. Today, the property earns $1,900 per week as a rental. Furthermore, depreciation for the assets totalled $69,000 for the first year.
Why Block Renovations are Attractive
Realtors suggest that The Block properties are attractive to investors because of their high yields and capital returns. All Block purchases made by the buyers advocate have secured a yield of over 5 percent. Melbournes current rental yield is 4.5 percent.
Reduced costs are an added reason for buying a Block renovation. Firstly, buyers know that a building team has scrutinised all properties. So, anything that does not make the grade must be redone to pass inspection. Secondly, all Block renovations are from the ground up. Therefore, a buyer knows they will not have to replace any items within the property for some time. Hence, maintenance costs lessen, and an investor can spend their money elsewhere.
Another drawcard is the depreciation. New or fully renovated property attracts the greatest depreciation, which boosts the owners cash flow. As a result, many investors claim more, and then use these deductions to reduce tax when doing annual returns. For example, buyers of 2016 Block apartments can claim over $80,000 in depreciation in the first year of ownership. Additionally, these dwellings can attract tax depreciation of over $2 million after 11-years of ownership.
The 2016 Block – 164 Ingles Street, Port Melbourne
This years development was a rundown former soap factory that set The Block producers back $5 million. However, the gamble paid off, as the unique Art Deco development sold for over $7,000 per square metre. Subsequently, apartments fetched over $2.25 million each, some sold for $2.75 million. Thus, the buildings five separate dwellings of 200 squares, raised over $11.25 million when sold.
Overall, the Blocks buying strategy is sound. The series only buys in bulletproof suburbs. Their investments are blue-chip but in need of loving. So, their formula is successful. The Melbourne series of The Block have been in Prahran, Albert Park, South Yarra, South Melbourne and Richmond. These are some of Melbournes top suburbs for growth and demand.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!