- Jamie M wrote:Catalyst wrote:goldies wrote:Bought in Hebersham, 4 bedroom house, single lock up garage and seperate carport also. 580sqm block. Bought it for $235k, spent $6k on a cosmetic upgrade… rents out for $380 a week, got a tenant in day after settlement….
$380 a week is top dollar. How did you manage that?
Wow, $380 p.w is quite impressive. Might have to make a trip up to west Sydney in the new year.
It can't be a standard 4 bed house for that money. It would have to have a granny flat??
You can totally get a 4br house for that price. It is simply that the land value is lower. To build a brand new 4br house costs under $200k last time I looked…
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
JacM wrote:You can totally get a 4br house for that price. It is simply that the land value is lower. To build a brand new 4br house costs under $200k last time I looked…I think he was talking about the $380 p.w rent.
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I reckon you're better off looking at a place in a not-so-sexy part of Sydney (or Canberra) than going fully country. Evernat, you might need to consider what's most important to you; do you want to feel good about the location of your investment or do you want to have the best possible numbers?
If you look only at the numbers then there is a chance you will buy an IP in a location you would prefer not to live in. You may find that you will rent out one of your properties to someone who you wouldn't necessarily want as a neighbour. You might find that they skip town without paying rent or stub cigarette butts out on your carpet, or (even worse) they decide to start producing drugs in the loungeroom. When they leave you might find that they've intentionally damaged your property. This is why you should always be insured and that you know your insurance policy fully.
If you want to feel good about the location then you will most probably not get as great a return dollar-for-dollar as you'd like. You might still find that your tenants aren't ideal, that they don't respect your property the way you would, that they stub their ciggies out on the (more expensive) carpet and that they might even manufacture a higher quality of drug from your living room. When the cops come they'll still skip town, but they'll do so in nicer cars. You still need to be covered by insurance and it probably won't cost too much different from a property in the first example.
The difference is that property in the second location won't have the same return and it possibly has more value to lose if the bottom falls out of the market. You don't often hear of the bottom quarter of properties losing 30% of their value!
I know I might sound flippant here, possibly even annoying, but I've had all these things happen to me and I've learned to go for the properties that add up. Look at the numbers – a location that might seem, in 2010, to be an ugly duckling might be, in 2015, the beautiful swan…
Good luck with your investing!Hi Evernat
It real depends if you after for CG or positive cash flow? Only you can answer this question.
Let's put into perspective: If you are after for CG then, using research material (e.g. http://www.residex.com.au) helps you find a suburb that has enjoyed strong CG in years. CG help you to built wealth but you have to balance your portfolio because you can only buy one or two negative geared IP before your bank would say NO MORE.
On the other hand, investing for positive cash flow regional area is mostly the place to find them but they are not that easy to find either.
Personally, if this is your first investment property to purchase, I would invest it in a high CG suburb, then use its increased equity for your next deposit for your investment property 2 which is probably in regional area – positive cash flow – to balance your portfolio so you can continue to borrow from your bank.
BTW, Mt Druitt has CG of -5.32 five years into the future hence you might enjoy a short time growth but since you look for long term, I would avoid this suburb. In the event of the market dip during the downturn which is every 7-10 years, i would select those suburbs have history of high growth, because during bust market, their CG slowdown but unlikely they go negative.
Cheers Leo
lpalad wrote:BTW, Mt Druitt has CG of -5.32 five years into the future hence you might enjoy a short time growth but since you look for long term, I would avoid this suburb.ooh ooh!!! Can I borrow your crystal ball so I know where I SHOULD buy?
BTW please name the crystal ball that told you this. Just curious. Don't worry I don't believe everything I hear.
lpalad wrote:In the event of the market dip during the downturn which is every 7-10 years, i would select those suburbs have history of high growth, because during bust market, their CG slowdown but unlikely they go negative.Cheers Leo
You mean like the last boom in Sydney where beachside properties tripled in price. Are you saying people should have bought those in 2004??? Anyone that followed that logic would have lost a LOT of money as things DID go negative.
the crystal ball called http://www.residex.com.au …you should be paying more attention to stats data for long term investment such as IP
Guess where the baby boomers are heading right now?????/ Beach side !!! Guess what's the CG in for Manly and Bondi in 5 years into the future? 46% and 22% that's more that enough to put a deposit for another IP.
I agree, you loose money if you buy in peak market then sell in bust market hence that's what probably happened….if you can hold on the market will regain hence CG will come back as it is right now because the trend in population is everyone want's to leave near the beach hence the demand for unit near beach side increases which out strip supply, basic economic hence pushes the price UP…that's what we are seeing right now.
Hi Ipalad,
Mate it is ok to say that my crystal ball is http://www.residex.com.au but which report is it, the name would be good there are so many reports on that site !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!.
Do you subscribe to it ?
If so how much do you pay !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Thanks karlmHey Karlm,
That site produces reliable stats data. You can either purchase the below or annual subscription – under the products heading, the residex report. I also use magazine such as "your investment property" which uses http://www.rpdata.com.au as source relating CG suburbs and vacancy rate etc.
Single Issue: $90Annual Subscription: $300
Cheers Leo
lpalad wrote:the crystal ball called http://www.residex.com.au ..Guess what's the CG in for Manly and Bondi in 5 years into the future? 46% and 22% that's more that enough to put a deposit for another IP.Why are you stating these things as fact? Just in case you didn't get my sarcasm "THEY DO NOT HAVE A CRYSTAL BALL". Read some other reports. They don't all agree. These are called "predictions"
How long have you been tracking suburbs on residex? Do you know what their track record is?
Go back and look at the predictions and report back on how accurate they were.
lpalad wrote:the crystal ball called http://www.residex.com.au …you should be paying more attention to stats data for long term investment such as IPI'm doing quite well actually so I guess I'm paying attention to what matters. Doubled my portfolio the last 2 years ($$ not IP's) How about you. Where you at?
If you are going down the IP path you need to stop believing everything you read. Read everything then decipher it for yourself.
Well said, Catalyst!
It might sound great when someone says to you, Ipalad, that an area WILL increase in value by 50% over the next five years but you must admit that that’s just opinion. Do some backtracking of their past numbers and verify their accuracy. I can assure you that these reports aren’t gospel and that nobody has a crystal ball.
Don’t buy a property that residex say you should buy – crunch the numbers yourself, analyse the area yourself and buy a property that YOU think you should buy!
And good luck!
Sorry that sounded a bit harsh (too much bubbly). LOL
I found with the few residex reports that I read that with a lot of areas they seemed to predominately look at past performance. So if an area went up by 20% in the last 5 years they predicted a similar growth in the next 5 years. That doesn't cut it with me.
It's like the tipped "hotspots". Sure they are going to be hotspots because millions on newby investors just read it in a magazine. So guess what? They believe it and the rush is on. Self fulfilling prophecy.
I have many friends that do their research and have bought into these hotspots before they were hotspots. When everyone was saying "why are you buying there?"
That's called doing your research. Not just relying on someone elses predictions.While reading books is a great start it's not everything. It will give you the basics but it won't do the work for you. Read magazines (even old ones- it's great to read what was said 5-10 years ago) and network with likeminded people. That was the catalyst (haha) that got me moving. I've bought more in the last 2 years than my entire life.
Again I agree (and I hope you enjoyed the bubbly!),
Just because an area has enjoyed strong capital growth over the past five or ten years does not mean it will continue to do so. Look for growth drivers such as increased infrastructure, a wide variety of employment opportunities, high levels of owner occupancy, close to major centres etc. An area which had a lot of infrastructure improvement between 2000 and 2005 may not have anything slated for the next ten years and therefore can't be expected to increase in value like it did five years ago.
Now, let me assure you, I'm a numbers man. But you've got to look beyond the numbers and see what's causing the growth or decline in a certain area. Look for consistent patterns which have caused growth in several different areas and then see if there are any areas which have the same patterns emerging. It is reasonable to think that the numbers will therefore follow.
As good as residex or hotspotting are, they're not gospel. With a bit of clever analysis, you might get in on an emerging area before they do – then you're in for some REAL capital growth!
Good luck!
Thank you all for your great comments (even the heated up ones) lol
I suppose I could buy as many reports as I could but it really comes down to been comfortable with where I buy and doing my own home work on locations.
The only suburbs really that came up in this post is the Mt Druitt area, so is that all that's left in Sydney for under 300?
I have been lucky enough to live in Sydney for the past 11 years and in my first 6 months of been here I know of the stigma of Mt Druitt, I don't feel that stigma going away for a long time. (And I don't mean that about the people living there).
So am I better off looking for a unit in Sydney even though they drain your funds in strata fees.
Hope everybody has had a great new year and xmas
$380 a week is top dollar, i was even surprised!
A few factors:
A damn good property manager
There werent any 4 bedroom houses available for rent in the Mt Druitt area at the time
The tenants marriage had broken up and she needed somewhere to live asap
We allowed a pet
Complete new paint carpet and floors so it had a new house feeling
Single lock up garage which alot of the older houses in Mt Druitt dont have.I am looking for my second IP now…
Its a 4 bedroom house…. on a 580sqm block. Not a granny flat.
Hey goldies,
Congrats on your purchase you have done well!
Can u recommend a good real estate agent you use when looking for properties to buy in the area?
Cheers,
Jac
Good to hear that you’re happy enough with Mt D. A few similar areas around Liverpool eg Green Valley’
I think will be hard to get people on the side of Nowra here. Nowra would be relatively unknown. Where would I buy. Well Nowra for Starters because I live here. It’s not a little country town as some suggest and it has much going for it now and into the future.
It’s affordable and has an average rent return approaching 6%.You could do a lot worse. But compared to Sydney it’s hard to pick. Massive market compared to a smaller one.
Hi Jacqui,
I bought through Eliot Shiner, First National and they have a great reputation. The agent was Helen. No crap from her, just straight down the line. Emily is my Property Manager. Their property management is brilliant.
I find Hilton Parkes First National are overpriced.
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