Hi all
Im looking at both and south and central coasts of NSW for my first purchase. Budget is 220k.
Does anyone have opinions on the market in both these areas in terms of rental yields and vacancies firstly, then capital growth.
For the south coast Im looking at Sanctuary Point and central coast around Gosford and the Lakes areas.
I know both have been reasonably flat but more so Im curious about the rental situation as most important for me is to be able to rent it out with low vacancies and get a good yield.
Im interested in hearing from anyone experienced in either or both of these areas.
Thanks
Hi Longroad,
As a starting point, have a look at the API magazine. They alternate their statistics section between sales results and rental yields. It will give you a start on the prospects of each area. Also, if you call the larger REA's and ask about their numbers on the rent roll and their vacency periods you will have some more info. Just for practice, why not call for anything advertised as a rental. Have a list of questions to ask and you should be able to join a few more dots
Possible things to ask
– how long as a rental?
– current lease details (length, type of tennant, how long have they been there)
– REAs knowledge of rentals in that area (demand, vacency rates, average prices, high and low prices, can anything be done to this property to improve the return)Jump on google and determine if location to schools, transport, major roads, shops is determining the rental differences across a suburb. What I mean is a house on a major road will rent for less than the same house in a quiet street. Sounds obvious, but this is neccessary to know as statistics dont reveal this.
I realise you asked for an opinion on rentals in these areas, but I also note this would be your first investment. Whilst my investments are not in these areas, if you apply the above it will give you alot more confidence with an area, and at the end of the day only you have to wear a bad call.
All the best
Cheers
TammyThanks Tammy thats a great help!
I'll do alot more research and definitely ask agents all those questions.Hi,
With the Central Coast just check the local area throughly, the council has run rampant on development and not planned very well (I am thinking of Gosford itself here mainly). Also I heard some of the newer developments are so badly build that they already need new front doors, 5 months after being built, due to the building being out of line (no names I don't want to be sued). I know of this as I have relatives in Gosford. Also it is a low socio-economic area, a lot of Centre Link clients. You would do well to run addresses past the local cops and ask their opinion about the street. I don't want to put you off by any means, I also have housing in low socio-economic areas, it is just something to be aware of.If you want to be really confused head over to the Somersoft forum where a big debate about investing in the Central coast/Gosford is going on!
http://www.somersoft.com/forums/showthread.php?t=33362&page=2
Hi Longroad,
With te central coast generally looking at the history properties preform better than on the southcoast of nsw. This does not mean however if you found an area in south cost that after you done your research is very promising to get you appreciation and low vacancy periods then by all means buy your ip there.
if you are looking at the central coast have a look at terrigal, avoca area and the surroundings as the propertie prices will appreciate in those areas in the next boom.
Rental is good and there are low vacany rates when you pruchase in the good street/suburb.
hope this helps
Terrigal is already very expensive
I think wyong shire on the central coast has alot of great suburbs for investing,…
each suburb or town on the central coast has its own strenghs and weakness you really have to research each suburb separetly,…
as a whole though I think the future growth of the central coast is assured.
Hi
I’ve been looking at a couple of areas around the Central Coast. In general I think that market is right at the bottom of the cycle and is starting to go through the rental adjustment phase which is obviously well over due. So in summary not a bad time to buy but don’t expect great capital growth in 2008.
Areas I’ve looked at are Shelly Beach and Saratoga – mainly because they are close to the water and my main strategy is Capital Growth as opposed to Rental Yield (Not knocking rental focus – just doesn’t suit my circumstances).
I don’t know much about the South Coast.
Good Luck
Hi Longroad,
I agree with you that the prices might be too high for you budget but be rest assured that this is the best time to buy in this area.
I wouldn't advise you to look for the units in this area siply becaue there will be few more developments in the near future, they are too expensive as most have water views and the older type units won't get much appreciation in the long term.
Wherever you look make sure that you get your homework done becuase with your budget it is more likely you will purchase a unit or tonwhouse in a decent area vs a house with good land.
unless you strategy is geared towards buying +vs properties or similar.
good luck.
there has been a severe price reduction in central coast. The entrance has some appealing propositions.
I think the market might be ripe. It must be close to the bottom because some sales are under replacement costs
Michael4 wrote:Hi Longroad,I agree with you that the prices might be too high for you budget but be rest assured that this is the best time to buy in this area.
I wouldn't advise you to look for the units in this area siply becaue there will be few more developments in the near future, they are too expensive as most have water views and the older type units won't get much appreciation in the long term.
Wherever you look make sure that you get your homework done becuase with your budget it is more likely you will purchase a unit or tonwhouse in a decent area vs a house with good land.
unless you strategy is geared towards buying +vs properties or similar.
good luck.
I'd love something close to positive cashflow as the ones Im looking at for $200-$220k only seem to be renting for $170 or so.
Do you think a newer townhouse/villa is best or an old house on a large block?
Hi longroad,
If you want something to positive chasflow the you cannot look in this area as most yield are in 3-6% range which is not even close to being positvely geared. You need to look at regional areas of NSW preferably up the coast.
i wouldn't recommend you ever to buy a townhouse vs old house on a large block. here are the reasons:
1. Land appreciates = Buildings depreciate
2. You can buy a old house for cheaper and renovate and therefore imporve the value and rental you can get.
3. In area where land is now becoming more scarce the best thing is to capitalise on the opportunity short and long term.
4. Future resoning may be possible with the large blocks of land.
5. You have your own privacy and 1 title; there is no strata, joint land etcTerrigal especailly has too many townhouse and especially units that are for sale and some more are getting built.
the only reason i will tell you to buy townhouse or a unit is if you found a good buy or there is a great location/price/demand for the type of dwellings.
Hope this helps.
cheers,
michael
My budget isn't really showing me many houses though, only really rundown places which I dont have the budget and know how to fix up. Also dont want to be doing that on the first house I buy, it just doesnt interest me yet.
How about townhouses where there are only 2 on the block? Compared to a block of units it has to be a better choice?
longroad wrote:My budget isn't really showing me many houses though, only really rundown places which I dont have the budget and know how to fix up. Also dont want to be doing that on the first house I buy, it just doesnt interest me yet.How about townhouses where there are only 2 on the block? Compared to a block of units it has to be a better choice?
You will always have some people saying houses are better than units, and others saying units are better than houses,…. this is not really true as all land is not equal,….. land does go up in value but so does air space so zoning is also very important to look at,… for example a unit it an older three story aprtment block that has been rezoned to allow a 15 story development to go ahead wilbe more sort after than a large hertitage listed house on a back street some where.
the answer really lies in your investment stratergy,….. Don't look at a property and say "Can this property make money", Look at it and say "How can this property make money". you have to have a plan for how you are going to profit from the investment before you buy it,
you have to have a plan,…. whether it be buy and renovate,… buy and subdivide,… buy and hold,… etc etc,…. you then choose the property that will best suit your desired plan,…. for example I think you are looking to buy and hold more than anything, so you should be looking in areas that will have the best chance for growth and low vacancy,… so look for properties that would suit a range of demographics, close to jobs,transport and education facilities, and if you can look for one where you are going to be able to add value and increase the rent, this will move you closer to the positve income every one is after.
tysonboss,
i agree with you one all of your points. i was saying that generally that is the better option than units or townhouses.
Ofcourse if there is a resoning that could take place in the near future even though you pruchased units you will make even more money than if you just bought a old house, renovated it, and sold it few years later.
keep in mind that your strategy needs to be clear longroad. whether is buy and hold, wraps, houses or units, mixed etc.
if you know what your strategy is you will have clearer road ahead as you will have better concentration and reallistic goal.
for e.g. buy and hold negatively geared.
purchase a house with land worth $300k, put 10% deposit, owing $270k with weekly rent $250
Simple renovation such as kitchen, new shed, paint the outside/inside. After 1 year evaluate and if now worth $330k-$350k purchase another IP $150k 2 bdrm unit with 10% deposit from the equity or cash etc etc.
cheers,
michael
To be honest after reading about strata titles and others experiences with strata properties Im pretty hesitant to buy one. Ultimately I'd prefer to own the land and have potential to do more with it even if thats in another 5 or 10 years.
However in my price range, and this was just confirmed with a rea, its going to be a pretty run down house for that price which means immediate repairs… so Im kinda stuck.Really the only thing that attracted me to the villas and townhouses was that they are newer and mostly in better locations than the houses for 220k. Long term though I know Im better off with a house and land.
Hi longroad,
that is true but if you are looking at the long term hold 5-10 years land is almost always better!
what is your strategy? buy and hold?
Yes buy and hold for the most part. At least hold for 10 years.
Dont want too many heavily negatively geared properties though as my income isn't high. On most houses that Im looking at on the coast the rent is only going to currently cover around 40% of the mortgage… if rent has potential to go up almost every year Im ok with that but its a worry if the coast doesn't improve. Thats a risk everyone takes though isnt it..ok i understand. Do you want to invest in sydney only or anywhere will do if you get appreciation and ok rent?
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