Hi all,
As we all know, one of the golden rules is to buy in an area that has demonstrated consistent capital growth over a period of years.
I am guessing there was a time these areas where not good performers.
What made them good performers?
PJ
Location, infrastructure, employment……
Would it be fair to say then, buying/developing cheap housing in new suburbs where these things (infrastructure etc) are being created would place at the ground floor when it comes CG?
I am pretty sure a house will never be as cheap (at least in Oz) as when it was first built. Wouldn't this effectively reduce your exposure in the long run?
PJ
propertyjockey wrote:I am pretty sure a house will never be as cheap (at least in Oz) as when it was first built. Wouldn't this effectively reduce your exposure in the long run?
PJWhat makes you say that? I have friends that have bought houses (regional) for land value or very close to it. So virtually getting a house for free. You can buy houses for near $200K in Sydney. It would cost that to build it (after you buy the land). I've seen blocks of land less than 1km from established houses that cost more than the house and land nearby.
propertyjockey wrote:Hi all,As we all know, one of the golden rules is to buy in an area that has demonstrated consistent capital growth over a period of years.
I am guessing there was a time these areas where not good performers.
What made them good performers?
PJ
You'd be surprised what areas should have been good performers that werent. And the initial reasons for avoiding them were good. For instance in the late 70s to late 80s … St Kilda was too cosmopolitan for its own good. It had the location but it had drugs and crime and theft like it was going out of style. Elwood had a sewer issue that meant on warm days the outlet into the bay just STANK. Port Melbourne had industrial and toxic waste dumps that were cleaned up at great expense by the Victorian government to create a new area in the suburb. And finally Footscray 90s was vietnamese gang central. If you was a westie and wanted your various poisons ..u got them in Footscray. But like most areas, once the crime and/or problem was cleaned up, the area went thru a realisation of how liveable it was. It should also be recognised that at the same time there are areas that get worse. And their prices will suffer accordingly. The sheer idea that all areas go up or go down in sync is just madness.
Take a snapshot of the area you want to invest in. Walk the streets, look for new developments. Check out whats being built. Bad apartments eventually attract bad tenants because no-one else will live in them. New transport or industry can rebuild a dead area. Watch out for too many FOR LEASE signs appearing .. its a portent of danger. Grab the local paper .. ask for it at the real estate agent. Is it full with local ads? Are there signs of business .. or crime? Are new factories being built? Is there a new shopping centre? Talk to an agent in the area he'll give you a quick summary of how he sees things. Talk to a shop owner .. he'll give you what the agent wont.
Your best golden rule is to KNOW your market. If you were buying a car you'd ask about the brakes the seats the color scheme and the mileage. Buying a property is no different.
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