Positive cash flow in very poor towns. Ideas are:

May be it will work if you buy the whole town and then, when you need your money you can just place a signpost at the entrance of the town saying: Town for Sale.[:o)]
But seriously, I don’t know if it will work, you obviously have more local knowledge of the town than any of us, you understand how these people live, this is a new world to me (and most of us) so I don’t feel that I could be of any good help.
I still find it risky in my opinion, but then again, I am not experienced myself and still learning. Just I personally wouldn’t buy in really small towns.
Let us know what you decide at the end![]

I lived in such a place for about 12 mths when I was 6.

30km out of town, no mains power, walls blackened by local ‘itinerants’ who’d turfed out the gas stove and lit fires on the (concrete?) loungeroom floor.

Power was either by an unreliable 32 volt generator or hurricane lamp. The radio was battery powered and the fridge and heater was kerosene.

As a kid at the time I thought nothing of it as I knew or remembered no better. Other people we knew were in a temporary tin shack. But it would have been tough on mum, especially during summer.

My tenants are housed better than I am. But the bit in Steve’s book is pertinant about the lady who loved living near a noisy busy road because it helped her sleep.

People have different priorities and what might be hovels for those with middle-class sensibilities might be an accepted way of life for others. (consider that city slum clearance programs were not necessarily a success for social reasons)

Peter

Lawrence,

Just one thing…have you checked that the population is actually static? Many of the small towns are slowly decreasing. Others like yourself have also left some of the small towns.

PK

Fortune Favours the Bold.

do you keep changing the topic?????[]
I keep losing the thread of it

must have lost it anyway……..

Are you? This was only in 1978. (But wait – that’s nearly 30 years ago, so that makes me same age as Steve!)

>Can I interpret your message as support for my theories.

Sort of but not really ; )

Afterwards we found somewhere better (nearer town and with MAINS ELECTRICITY!) but I speculate what happened to that house.

I suspect it’s become just one of the many thousands of vacant empty derelict houses that are sitting on farms around the country.

Your approach is more like a ‘slum lord’ (ie renting cheap but buying cheaper) whereas I’d rather have a smaller number of conveniently located and well-presented brick properties in regional cities that have fewer maintenance/tenant hassles and (in at least some cases) have growth potential.

>Anybody else.NOTE, small towns today of 2-3 hundred >people are not as bad as peters story. I have lived >in many towns less than 5 hundred with a central >school, shops pubs, bowling clubs, maybe a cafe.

But for how long?

The houses themselves are probably fine. But if the bank’s just closed, the train stopped years ago, and one of the farming families has sold up, taking their 3 kids with them. The school loses a teacher as a result and there’s less money to go around.

>Thats it. see what I mean, the people are content. >and content to pay your rent.

What if they get old and will need to enter a nursing home in the next bigger town? There’s no young people or migrants moving in to replace them as your tenants.

Your approach could work well but is risky unless you’ve done your research (like Westan). But I like the approach of SIS and have a mixture of high yield and high growth in the portfolio.

Peter

`Work for the dull` schemes? I am assuming (hoping) that was a typo…

I know many people who live in small towns- very small, less than 500 people. There are the usual problems for them- no doctors, no banks, and sometimes even the only shop in town closes- itäs a hard life for tenants, and I think some of them have to leave because the services and amenities just aren´t there and so they can´t stay- some become ghost towns.

But I do think that the houses are cheap, and that if one can provide housing to people and main tain the property to a decent level, then it can fit into your own scheme of investment.

In terms of looking after tenants… I think it´s pretty important to think of the history of the property. If it was being rented out at $60 a week for ten years and you decide to up the rent to $130 a week to maximise your cashflow, it´s likely that the current renting family might become homeless.

Lawrence, re Steve McKnight´s ideas on pozz cashflow, most of us would no doubt see the benefits of those strategies, and given that we were probably more aware of neg gearing, his ideas were a breath of fresh air. Steve has, though, changed some of his ideas since writing his book, and in the TV interview re the MAP Program, he was very keen to state that noe of the MAP participants used wraps to make their money.

kay henry

Just for my entertainment I thought about these statistics.
If, in a town of 400 people just 10 of them decide to move out, or die, or retire to another, bigger town, then that’s 2.5% of the population of that town.

If 2.5% of the population in Sydney would leave, we’d have about 100,000 people leaving[:0] (I think SYdney’s population is around 4 million now, if I’m correct.)
Of course, in a big city or large town, new people always flow in, but in such a small town/village this may very well not be the case.