Investment proposition

Something that is important to remember is that you don't have to invest in the major cities if you don't want to.  It's not the only way to wealth creation.  Don't let anyone tell you any differently.  As you point out, if you can't afford to make up the difference between the rent and the mortgage, the plan ain't going to work anyway.

I will however encourage you to read up on "depreciation schedules" if you haven't already.  Basically the building, carpets etc depreciate over time, and a quantity surveyor can produce a depreciation schedule to give to your accountant that will result in tax refunds for the next bunch of years, which often converts a property that is "bleeding money" into a property that is NOT bleeding money.  Generally you'd be after something as new as possible, as the depreciation benefits are higher.

All that said, there is infrastructure coming Ballarat's way (I believe a new train line so the Ballarat folk commuting to Melbourne do not have to share a line with the Melbourne Metro trains….. check on this, it's something I've heard on the grapevine).  And it is always to invest by means of leveraging new infrastructure that makes an area more convenient to live in.  It is also intended that Ballarat will become a satellite city, since as the Melbourne population explodes, sooner or later it will not be possible to ferry everyone into Melbourne each day for work.  So some people will be ferried to Ballarat and Geelong, which will have major employment centres.

I'm all over Geelong at the moment, leveraging new freeways, train services, and the forthcoming upgrade of Avalon Airport to become an international airport.  Ballarat is next on my list.  I'm thinking 2 bedders close to the hospital and unis, so that rentability will always be there.

Without trying to hijcak this thread, i have just built a house, and was going to see if i could get a depreciation schedule organised.  as my parents have had a bit to do with the loan, they have some sort of interest in the property too.  i suggested getting a depreciation schedule, and they waffled on about it not being worth it because i wouldnt have much to depreciate.  out of curiosity, how much could i be looking at getting back in each of the first five years, the cost of building the house (townhouse) was 230,000 (ie, land is not included).

as for the original post, ballarat isn't a bad place to invest.  what you must do first is develop an investment strategy and see if buying a house in ballarat will be in line with your strategy.  one positive with ballarat is that it is not reliant on one industry like many mining towns are.  therefore if one of the industries goes bottom up, there is less of a risk of the town turning into a ghost town.

Hi Matt

I don’t know why your parents would suggest that. You can get the most depreciation out of a new dwelling.

Cheers

Jamie

In regards to Ballarat, it has been on my raydar for the last 18 months and I’ve actually just purchased 3 IPs there.

I believe it ticks all the boxes in terms of yields and cap growth. It has good infrastructure – rail, hospitals, unis, quality schools etc. As mentioned above, the regional rail link which is in the pipeline at the moment will enhance the journey to Melb from B’rat by reducing travel times..

Areas like Soldiers Hill, Ballarat East, Newington,pockets of Wendouree and Ballarat central are where you want to invest. Stay away fro
From Radan, Sebas.

The govt has promised $60 m on roads, $5Bn on rail and plus upgrades to sporting stadiums to allow for afl games at B’rat..budget night will confirm the true position on these promises..

Given Ballarat is the largest regional centre in Australia it has plenty of potential and is very undervalued.

Thank you JacM:

Areas such as Soldiers Hill, Newington, Ballarat Central and Ballarat East (north of Victoria St) are where you will find Ballarats prime real estate which are close to the major facilities and you are more likely to get a better quality tenant in these areas. Drummond St North (Ballarat Central) is extremely sought after, particularly by medical professionals and middle class families as it is situated in the hospital precinct of Ballarat.

In regards to Wendouree, it certainly is not in the same league as the above mentioned areas, however pockets close to the lake will do well from a capital growth perspective as it will receive flow on effects from the Soldiers Hill area which a joins Wendouree. Yields are very healthy and vacancy rates are low (1%), achieving 6.5 – 7% yields are very doable.

Investing in Redan and Sebastopol did not fit my strategy, which was around remaining central to Ballarat whereby employment rates were solid. These 2 areas have the highest unemployment rate in Ballarat, subsequently you’re dealing with a socially disadvantaged demographic.

In spite of this, I acknowledge that both these areas have experienced CG, however it will never be at the same rate as the blue chip areas mentioned above due to scarcity of land.

Finally, because Ballarat is still very modestly priced, you can quite easily afford to purchase well located IPs whereby the numbers work. Therefore, investing in second tier areas like Sebas and Redan did not form part of my strategy.

I read above that Ballarat is next on your list – good luck with your purchases!

Thankyou heaps for sharing Kris !!!

Hi guys,
Exciting post!
What about creswick north of ballarat, anyone got anything to say about that place?
Cheers,
Andy

Just came across this article which I thought I would share with everyone which outlines funding coming into Ballarat as a result of the state governments recent budget announcement:

http://www.thecourier.com.au/news/local/news/general/baillieus-big-present/2155790.aspx

There's a lot to be said for being able to pop over to your IP and take a look at it if need be.  For example.  Let's say a tenant trashes your property.  If you are going to let your property manager sign off on the insurance claim, you might find you are very disappointed in them missing lots of detail and damaged stuff.  They just won't care as much as you do, and such a situation could end up costing you tens of thousands of dollars.