Hi, i’m new to the forum.
Not too sure why so many people are investing outside of the big cities. I don’t understand how the tenancy can be good in these places. Is it?Regards,
GiladGilad Katz
Gilad,
As for me personally I don’t that much money to invest in City coz it is -vely gear and now I believe high vacancy rate. Country, I don’t know, haven’t got one yet.
Some where between City and Country sound like a better idea.
Warm Regards
ChanDollars
[Keep going, you’re nearly reach the end of financial freedom]Hi Gilad,
I guess you must be new, Welcome to the forum. The reason why people are investing outside the big cities is, that there are opportunities to be able to purchase property, that are +ve geared and also provide +ve cashflow at the same time.
This allows the person to be able to purchase a property, yet have no out of pocket expense to keep it. The other reason too is that Big Cities/Metropolitan areas are -ve geared and are costing you x amount of dollars every week to service the loan.
Hope this helps and explains,
Cheers,
sisHi
Just bear in mind the positive cash flow (rural) comes at the expense of asset growth (metro properties). In the long term its asset growth that allows you to retire and increase wealth.
Some of us invest outside of the big cities as we don’t have enough money to invest in the big cities.
I bought my first IP in a city, and realised I would propbably never have enough money to do so again. so now it’s regional for me ;O)
kay henry
hi gilad
the demand for rental properties in regional cities and towns in the markets i know, Vic and SA, is very strong (probably lower vacancy rates than the city).
there has been a major demorgraphic change recently with many people moving back to the regional areas, no days regional cities all have Universities and small towns offer a lifestlye many seek.
Yacks comments about capital growth has been true up until a few years ago. in this past couple of years country towns have shown better capital growth than even the best performing areas of the major Capitals. And funny enough it has been the lower priced homes that have grown the fastest. i know a guy who just retired at the age of 39 because he purchased enough of these cheap regional houses. so consider regional areas. personally i would consider Ballarat in Victoria as one place to invest.
what about future capital growth in Regional areas ? the victorian government has recently started a million dollar campaign to encourage people to return to regional cities, if more move to these places the laws of supply and demand tip a price increase.
regards westanI, too, am interested in regional investment.
My main concern is that a house in a small town might have a high vacancy rate. That would obviously be a real cashflow killer.
Does anyone know if there a method to determine the likely vacancy rate for a particular town?
Not dead yet.
Lo there do I see my father.
Lo there do I see my mother and my sisters and my brothers.
Lo there do I see the line of my people back to the beginning.
Lo they do call to me, they bid me take my place among them.
In the halls of Valhalla.
Where the brave may live forever.Originalsin, the method i’ve found is to ask ALL real estate agents in the area what the rate is – either by ‘thinking about moving to the area’ or as a purchaser.
Cheers
Melalso ask the property managers how many vacant 3brm houses do they have on there books, and how long have they been vacant ? and why are they vacant, sometimes it’s because they are dumps.
westan
Well the government is trying to help us now by pushing for requirements for new immigrants to spend at least 2 years in regional areas [
]Regional areas- low growth but good cash flow..
The tenancy issue is a problem, but conduct your research, and i remember people like Minimogul, buy a place, then renovate and increase the chance of having a quality long term tenant..
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
i don’t think the tenancy thing is a problem in Victoria, certainly not my experience
westan
Westan
Smaller towns here ( WA ) and the further north you travel the longer the distance between towns. Fly-in-fly-out distressing ‘some’ of the smaller mining towns.
Had a chance to buy some + geared properties but the prospect of the town winding down ‘worried’ me a bit so didn’t go ahead, so…. still looking : ( for something i’m comfortable with.
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
hi all
sorry i should have mentioned i’m talking about towns in Vic. of at least 5,000. not saying that smaller towns are bad but everyone needs to be looked at on its own merit.
regards westan
marky mark
i started using 10,000 as my rule, but soon realized that 5,000 and sometimes smaller was not a big risk. the Town i lived in untill 2 weeks ago had 7000 and rentals were always in demand.
regards westan
Hi Gilad,
Properties can be divided into 3 areas.
Metropolitan Areas -ve cashflow
Regional Areas =neutral cashflow
Country Towns +ve cashflowMajority of the time, this is how the categories will fall.
But if you want best of both worlds invest in =neutral geared properties, either way you can gain one or the other or gain both.
Cheers,
siswestern,
I would have thought that towns of 5000 would be way small and a very high risk. I’ve been looking at 50 -60 000 population size and have not even bothered with anything under 30 000. Maybe I’m being too conservative.Regards
Hi all
SIS i hear what you are saying but i disagree, that hasn’t been the situation recently, town of say 2,000 to 100,000 have not only been cash positive (up untill recently) but have shown massive capital growth. even more growth that Melbourne and Sydney. i have many properties that have doubled in valuie in the past 12 months that are in towns of about 10,000 (Stawell and hamilton in Vic).
the real key that has worked for me is Cash positive with capital growth. That will really msake you a winner. they can be found.
regards westanI find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
Hi gilad,
Thought I might jump in on this one for my first post.I am located about 100k from Melb, (not Ballarat) and bought an IP some 4 years ago – didn’t know the 11 second rule then but it would have come in a bit on the low side, however enough deposit put it in the +ve cashflow arena – now the value has grown by a net 100% and rented at $175 p/w it has been easy to get tenants on lease. So I guess the point is that regional areas are a good source of suitable properties if you do some local homework.
Cheers
Redbak[]I Agree, by the way what’s the 11 second rule again ??
WF
>either by ‘thinking about moving to the area’
I dont believe this is a good tactic as it gives a false impression to the agent if your the tenth person that morning to ring up a say “I am thinking about moving to the area”
I dont believe you are lessening your buying power by being straight up and asking about rental vacancies, as I dont think there is a R/E agent in Australia who doesnt know that a phone enquiry is a ‘out of town investor’ .
To the people who are concerned about smaller towns having high vacancy rates I would suggest you do a bit more research (and be a bit more open minded).
BC
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