mba422 wrote:

Click on the link http://www.realestate.com.au/property-house-nsw-west+kempsey-116806983

Price 100K
Rent PW $210
Yield 10.9%

A very good example of the need for due diligence – and personal knowledge. That is enormously appealing BUT I would suggest a drive through and inspection of the surrounding area, and then a chat to the local coppers.
You will get that return, and probably will always be able to rent it, but the tenants will most likely not be long term – the good ones won’t want to stay in the street long and the others will just trash and move on.
The old adage of worst house in the best street applies to regional areas as well.

I have a number of rental properties in Tas and NSW, all have been cashflow positive from day one, with gross returns between 10.3% and 7.75%. More importantly the net return is around 7% at purchase date.
My strategy is:
look for desirable locations – where there is a mix of services and industries- and within that a property market where there is strong rental demand at the lower end and good solid properties also at that end ( ex public housing properties are often good)
Buy mortgagee in possession and distressed properties that have been renovated (new kitchen /bathroom, air con etc) make sure they are well presented.
Target the pensioner/govt benefits market, through a good local agent. Properties that are affordable on benefits and that people can move into and keep as a home forever if they wish are always in demand.
Keep the maintenance up to date, keeps the tenants happy and avoids big bills.
Don’t get too much exposure to any one region or town.
If something looks too good to be true it usually is
Always pay less than replacement cost. Never buy new for investment.