TPC Gold | Buying as an Owner-Occupier in a Changing Suburb

0:00Next question here is from Frez. Let's have a little listen to that one now. Hi, Bryson Ben. My name is Frez. I'm asking this question here from Melbourne and I'm hopefully a soon to be first home buyer. My question to you guys was would I be crazy to purchase a home as a owner-occupier, so at home that I'm going to be living in when the address to the left and to the right of me are filled with two or three units. The address in front of me is, you know, a compound with four townhouses and it's pretty much the same story up and down the street or up and down any street within that suburb. So the suburb I'm talking about is an area called Lavinin and the Western suburbs of Melbourne. Lavinin North was traditionally an industrial area but I think recently with Wem's landing popping up, Trogadina popping up and Taini further down the road with all these house and land packages. It seems the Lavinin has been all the more appealing, purely because it's established homes,

1:01much bigger blocks and they've actually got public transportation which these are the areas like two train stations closer access to the freeway and an actual bus network. But driving through a few weeks ago prior to the restrictions, I noticed everybody was tearing down these houses in the amount of construction for unit after unit townhouse after townhouse. Should I avoid buying in this area as an owner-occupier? Yeah, I just wanted to know what your thoughts on it were. Thank you for the podcast, thank you for the content. You guys have been an absolute godsend since I discovered you considering the stage I'm out right now. Thanks for everything. Lavinin, Ben, just for those folks who are not familiar, it is about 20k to the west of Melbourne and as Frez commented, there is a train line that runs through it and has established. So would you buy as a first home buyer, Ben, with units up and down the street? Yeah, I know the area fairly well brass. There's, you know, come off the freeway.

2:03There's a lot of change going on in there. There will be a lot of refill and backfill of land and potentially the ripple effect and gentrification coming through. Frez is right in the sense that you don't want to be caught in a market place where there's no house-proud people, right? Now, you know, when you, you can sometimes drive through even some of the better sort of, better suburb, maybe like a footscrazen example, but you just got rows and rows and rows of apartments and there's always a, you know, always not enough car spots on the street that the bins are hanging out the front. There's no love and so you can get that sort of, you know, unappealing view for now. Now, obviously over time, that may change and gentrification will come through. So, but it's a natural gut feeling to sort of say, do I feel comfortable in sort of owning a home in that area? Whereas if you're in a,

3:03you know, a nicer street and there's a little bit more, you know, a house-proud and and that's our first impression as a buyer coming into a street where I will like, oh, do I feel a lot, you know, that's why we don't like high busy roads and noise pollution and we potentially don't like that. So, it's the right type of feeling that it's that it's bringing up in terms of concern. The reality is, as if you've got the only free standing house and everyone else has got over time, your land is probably going to be a little bit more prized over time, especially if some developer wants to take it off your hands into the, so there is a next factor to potentially that block of dirt and I think the best illustration of that and we probably should put it in the show notes or even on the Facebook channel is that classic picture of that single free standing house that's in the middle of a CBD, you know, all the other buildings are around and that's just a little house sort of made it, you know, what's that land worth for that particular piece. And now, but I as a conservative advisor and someone who's trying to guide people, I would still be looking at Lavitan closer to the train station is fine, but I'd be trying to be careful

4:10about not getting into a location where it is all rental stock. I don't necessarily like that in up and coming areas, whereas in sort of like a south hour or some of the more traditionally high land value areas, you know, you can potentially still get a blend in that 50 or 60% in Melbourne, Elwood and those types of areas, Coalfield, you know, inner areas, that that's okay, bondage probably exactly the same in Sydney as an example and you're probably new farm to a degree also or fortitude value or something like that as an example in Brisbane. So that's where it is, that little extra factor. So come back to the first principle thinking, have a look at the demand and supply, why are you buying this? I love the idea that you want to get into the property market and get on the ladder, but just be particular about your selection because I think it's important for you to be comfortable that you're going to be able to live there and for the tenant who,

5:16you know, if it's a stepping stone property and going to retain it and build again and buy again, then ultimately, you know, that's what you've got to be considering. Makes some good points. I want to remind Frizz here that within each sub, you're asking about Lavitan, but you're not buying Lavitan, you're actually buying a particular street, a house in a particular street, right? So the question is there's A streets, B streets and C streets, so where are you in the scheme of the A's, B's and C's within Lavitan? But I also think, and you made a really good point before being around, if some of those units are being bought by owner occupies, even though they're not a house, they're still they're still house proud about what they've got. So that's at a very important point that Ben made before about determining what are those attendants versus what are those are people that are buying because in a big city like Melbourne congestion is a massive issue and you made points about Williams landing and some of those more subdivisions as you go further west. So people will still place a value on being closer into the city. So Ben also made me as a buyers agent, when I do walk into when I do drive

6:21down a street, it does actually impact me. If I'm looking at a house and it has too much medium density, I'm I'm less likely to want to buy it than if I could find a street that doesn't have that, which could be two or three streets away. So your question is should I buy it as an owner occupier? Well, depends on what lifestyle things that you're chasing because we can make an assumption that your question is about growth, but quite often buying your own home is more than growth. It's about being around with your friends. It's being around with your community. It's about a bit of self-esteem of being able to have your own castle. It's having a patch of dirt, right? So there's a lot of stuff that comes with being an owner occupier that we wouldn't consider if we give an answer as an investor, but Ben's made some really good points. So for me, I just want to just remind all of our listeners about A, B and C streets to just to see where the street that you're looking at ranks in terms of that. Be mindful of not getting yourself into a street that's full of rentals. I'm OK in a street that's full of townhouses as long as there is that pride that Ben was talking about before. And just be mindful that townhouses and medium

7:26density stock does grow. It just doesn't historically, it doesn't grow as much as you would a free standing house just because of the value that's placed on the land and the freedom and the privacy that comes from it. So to just sort of put an acute point on that, we sometimes build a plan where the client only needs 5% growth or 6% growth rather than 7 or 8 or 9. So if that's the case, then it serves a purpose. Well, then if it serves the purpose for you from a lifestyle perspective, and it serves a purpose from you from a modest growth that you're chasing fine, but we haven't seen any evidence from back testing hundreds and hundreds and hundreds of properties as myself and as a collective team where you don't you generally general rule here Ben, you generally don't see that type of stock outperforming. It's generally modest sort of performance on capital growth if you buy the right ones. But first home buyer might be price point, you might not have enough

8:28money to have an alternative choice. It might just be a stepping stone onto your dreamhouse. There's a whole bunch of stuff that's going on here for us, but generally speaking, hopefully there's a couple of things that Ben, a couple of wisdom bombs, Ben dropped there as well as some points that I've made there to hopefully help you around whether or not that's a viable option for you. And that's my boss.