Investing in low income areas

Hey v8, where's your place in NW Tassie?  The Tassie market is all over the shop at the moment!

Hope things go well with your inspection this week – yes we're in Tassie.

Just in keeping with the thread – there are some great properties in Tassie, not necessarily in 'low income areas' nor previous housing areas nor mining towns, able to be purchased under $200K well with tenants in place showing 6.5 – 7% returns.

We have 'low income' tenants in some of our properties and have no arrears –  those on Centrelink benefits have their rent deducted from their fortnightly Centrelink payment.  With the job market being patchy it certainly gives me peace of mind having some tenants not relying on paid work to pay their rent – Julia is a pretty reliable source of income.

Sure thing. I only focus on the Northern part of Tassie as that's near where we live and I can't be fussed travelling further when there's good stuff close to home.  Check out suburbs of Launceston – Trevallyn, Riverside and Newnham in particuar are ones that I like.  Also, Devonport and Ulverstone are hiding some gems.  I haven't explored Burnie myself. 

There'll be properties in any of these areas selling at a price that will work for investors looking for that sort of return.  It's a matter of talking with agents to dig them out.

Even though the Pulp Mill is likely to go ahead near George Town, many workers in that area actually live and commute from Launceston so I don't expect to see George Town boom like some mags have suggested…I may be wrong on this one.

Cheers,
Tracey

A few of my associates are working on some deals (undisclosed locations in sydney metro). Deals will return over 10% irr with little risk to the investors. If anyone wants details send me a PM & contact details.

Deal value is around $300k & will work inside a smsf.

Hi Catalyst,

I re-read all the thread, I don't think anyone suggested that low income equates to high risk.  Everyone simply stated, truthfully, that it depends where you buy.

As for me, I have investment in high end places like Avalon and Cammeray in Sydney and Tea Tree Gully in SA..  But I also have properties in Richmond NSW, Smithfield Plains and Millicent in SA.

It's really not whether its low income areas, it's about picking the right houses in the right location. 

I only wondered why he picked low income areas that's all.  There was no suggestion of high risk.

My next project will be likely in the Eyre Peninsula of SA.  Not high income, is it?

Take care.

Angelina

Low income areas like high income areas have good and bad patches, good and bad streets and good and bad neighbours, which can be worked out quite easily by thorough research. We are fortunate in Australia that with our capital cities almost all areas tend to get better over the long run, or at least don't turn into no go zones, nothing yet like Detroit in the USA thankfully.

There are a few areas in the greater Brisbane region with some choices in the under 200k price bracket, Logan most people know about already but there are others, In 2010 I saw a 3br brick house sell for a tad over 200k in a beach side suburb (small poetic license used here, but it's technically so!) 30k from the Brisbane CBD, reasonable condition and a nice block of land as well. Property was on the market in the morning and sold by the time I called just before lunch Someone walked in off the street and asked for cheap property and bought it straight away.

Hey guys, didn't realise there were some Tasmanian investors on the forum. I'm from north west tassie myself currently looking into buying my second IP. Regaurding the original question there are also a few mining towns on the west coast of Tassie. Rosebery, Zeehan and Queenstown, you can pick up positively geared properties down there for under 100k.

Tasmania is a beautiful part of the world but I’m just not convinced on the economic drivers as Jamie suggests that drive growth. Are the younger generations staying in Tasmania or are they migrating to the mainland in search of work? From memory, demographic statistics suggest they are. You may see the shift of baby boomers migrating to Tassie in retirement or perhaps they would prefer to down-size and move from cities such as Sydney to the central and southern coast of NSW or the Fleurieu Peninsula from Adelaide and remain close to their families ie. grandchildren.

IMHO I’d prefer to put my money elsewhere. If your looking for high yields then I’d prefer the Western Suburbs of Sydney, Orange, Bathurst where the economic and the underlying fundamentals are solid. Or alternatively, if you are a believer in the resources story you can chase spectacular yields and cap growth in the resource rich states like WA or QLD and soon, SA.

Just my opinion guys but food for thought.

JT7

I’d want more security than exploration work beyond 2020!

Some of the area’s up in Central Queensland such as the Bowen Basin and now Galilee Basin not only have a coal resource expectancy of 100 years but strong cattle and agricultural industries as well.

Many of these areas offer strong cashflow with cap growth. Simple supply and demand.

You can still get into areas like Collinsville and parts of Rockhampton for example for sub $200k with much stronger fundamentals.

Jack

Fair call jim beam.

However, my argument would be that states on the mainland have far greater prospects for economic growth, infrastructure investment, population growth. Even though Hobart may have had the highest cap growth over the past decade of any capital city in Australia, there are other markets within markets on the mainland that have had stellar cap growth in the last 10 years.

Don’t get me wrong mate, Tassie is a beautiful part of Australia but I can’t see the economic and population growth that would warrant me to put my money in the Tassie market. If I was looking for a low entry cost I know I could go to Adelaide with the lowest entry cost of all mainland capitals cities but huge potential with a burgeoning resources industry and huge spending in infrastructure.

Jack