Yes – Aberglasslyn – that’s what I meant by Rutherford. I always forget it has a different name, because Aberglasslyn was once just a few farms and a dirt road. McKeachies run is new as well, but seems a little more expensive than Aberglasslyn. (Although I haven’t looked in detail. It’s just a personal conclusion drawn from the daily listings that turn up in my email.)

Someone mentioned redeveloping…

1. Windale is cheap, but as I mentioned the reason is because it’s mostly government or ex-gov housing stock. So the other homes “hold back” any value gains. The exception to this would be something like the TWO homes I nearly purchased, right next to each other. I think they were about $160,000 each and I was considering living in one, renovating it, while I rented out the second. Then move into the other and do the same. In that situation, having two better-quality homes right next to each other *might* have dragged up the value of both. But of course, that opportunity is not going to turn up every day.

2. Newcastle (Lambton, Waratah, Mayfield, Kotara, etc.) property (that needs renovating) is often already priced as if it has been renovated! So not much scope to increase value. If you pick your suburbs and then have RE agents notify you of new listings, you might have better luck though. (I only get to see new daily email listings from domain and realestate.com.au.)

I think property in this area is priced at ridiculous levels. But someone else not so pessimistic, may find a way to turn a good profit.

The area south of Charlestown (Windale) has a large proportion of government housing tenants. The NSW Gov. has been selling them off for several years, but the area will take decades (if ever) to improve. i.e. If your neighbour is a drug-using, wife-slugging, foul mouth with a dog that never shuts up, children that always have swinging full nappies, that never wash their car, themselves, or mow their lawn… then even private owners/renters begin to to think, “What’s the point in taking care of the property I own/rent!?”

I read an article online a few years ago, that said something like Windale was the highest crime/drug/low income area – or a combination of all three… I forget exactly now. But just stand outside Windale shops any day of the week and note the number of druggies, no-hopers and people with mental problems that pass by.

The main difficulty I see in buying there is, you’d mainly get tenants who have been ousted out of their NSW Housing property. They can’t afford higher rent, and most of their “friends” live in that area. Most other folks avoid living there if they can. So it kind of perpetuates the quality of renter, and of course that stagnates rents, capital gain, etc. I certainly wouldn’t be counting on land banking in that area… but someone has to raise the bar some day I guess. May as well be you?

Gateshead is better. Probably a little more so too, since they split the two suburbs with the bypass. Keep in mind though, it’s just up the road from Windale, and many homes are built in the same 50s/60s style. (Although more do have weatherboards, rather than the typical government slum two-sheet asbestos cladding.) I’d be concerned that most Windale addicts know the people in their own suburb are home 24/7 on welfare – so they’ll go “shopping” to support their habit just outside of their own suburb. I do know a guy that lives in Gateshead though, and he reckons neighbours watch out for each other and everyone knows everyone.

When I was in school in the 80s, Gateshead High had one of the worst reputations of any school in Newcastle. (Yes, I’m biased. I’ve lived in the area forever.)

Adamstown/Charlestown… Property older stock again like Gateshead/Windale. (No new land that can be released, unlike Rutherford.) High (ridiculous in MHO) prices, but mostly employed city workers looking to live there.

Rutherford… Not impressed with how they’re destroyin… er… developing – farming land in the area. But there’s no comparison with Windale/Gateshead. Mostly new homes on the eastern side of the highway. So yes, plenty of opportunity for depreciation. No, not near the beach, but lots of industrial and residential development in the area. Just be sure not to buy at the lowest point. i.e. Take a drive past Maitland hospital (so it’s on your left) and bear left over the old bridge. That huge valley beneath the bridge was flooded nearly to the top a couple of years ago, and wasn’t all that far from reaching the bridge. It subsides quickly once the rain ceases though.

I think it would be a good idea to view depreciation as a "bonus" as opposed to a reason for investing.  What would it do to your financial position if 6months after making your purchase, the government suddenly stripped investors of the right to claim depreciation?  Better that the property can stand strong even without depreciation, in my opinion.

Tenant "quality" issues are of course a consideration, but remember that the lower socio economic demographic is a big part of the tenant population on account of being unable to finance a mortgage themselves.  Be sure to get yourself not just building insurance, but also landlord insurance with tenant protection to cover you against rental default, malicious damage etc.  I use AAMI where possible.

I also don't think that you are limited only to these 4 options.  There are plenty of suburbs in Western Sydney where you could actually buy a house (as opposed to a unit in a body corporate), close to transportation etc.  Seven Hills is a great transport junction and offers property for under $350k.