Hi I’ve found a positively geared property , in very good condition with a current ( good) tennant that wants to sign another long-term lease. BUT… it is 30 ks outside a large regional center. This town has aprox 6000 residents and it relies heavy on one industry type – am I haeding for trouble??????? Or should I go for it?
Hi Deanna,
With the limited amount of info provided, I really am unable to advise either way. 6000 residents isn’t a huge issue (I personally live in a very rapidly expanding suburb, full of new homes which has a population of about the same) however the employment opportunities are greater due to it being only 20K from CBD and surrounded by broad range of industrial/commerical buildings.
Do your homework; search the net for this area and depending on the state your in, try http://www.reports.rpdata.com.au (as long as your not in Vic as it’s not available to us here any longer).
All in all, you need to research it thoroughly before deciding whether to invest your money.
Best of luck,
Jo
Hi Deanne
i’m with Jo on this one- that the info is a bit short for an informed comment. On what you have told me that alone wouldn’t be enough for me to walk away from a good deal.
regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Deanna,
If the IP is in good nick, as you’ve stated, with a good tenant who wants to sign a long-term lease… well, it sounds like you might be onto a good thing. If the town is only 6000, then that’s a really small town. If the regional that it’s 30km’s from, is a satellite centre, then it’s possible that the regional centre will provide employment, even if the town itself loses it’s main industry.
On the kind of detail you’ve provided, I would risk 50k- it’s not so much to lose, but I wouldn’t spend 100k. 100k, in my world, goes to buying an IP with a greater population.
kay henry
Deanna,
As I said, 6000 people is a small population but depending on WHERE it is, it needn’t be an issue. I live in a suburb which has a population of just under this number and being 20km for Melbourne’s CBD (direct line) makes it a very worthwhile place to invest.
Kay Henry wrote:
On the kind of detail you’ve provided, I would risk 50k- it’s not so much to lose, but I wouldn’t spend 100k.
I am sorry but I WOULD NOT RISK ANY AMOUNT OF MONEY without doing my due diligence FIRST!!! To a seasoned investor EVERY CENT lost is felt, and as such would never make such a suggestion based on the limited information you have provided!!! 50k may not be a lot of money to some, but it is certainly a lot of money to lose!!!PM me directly if you like and I’ll be more than happy to see what information I can come up with, especially on smaller population towns in Melbourne worthwhile investing in.
Cheers,
Jo
Hi monopoly
You said
“especially on smaller population towns in Melbourne worthwhile investing in.”
Oh those Jeff Kennett days are hard to break, the days when Victoria was Melbourne. i think you ment to say smaller population towns in Victoria ?regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Thank you all for your great advice. The town is in WA ( I’m in Victoria) and it is 30km outside the largest regional center in Australia, so I agree that future employment should not be too much of a problem The town has been going for as long as I can remember ( I’m pretty old) and it has certainly had its ups and downs. Currently it is in an upswing but this could change if Nickel and Gold prices drop (which is the towns life blood). However in saying that my stock brokers feels that for the next 5 – 10 yrs, gold in particular should be strong ( lots of ifs I know). The property is priced just under 50K and rents for 120 per week.
I’ve only been looking for positive IP for about two months and they seem to be really hard to find and the ones I do find I’m usually out priced – anyway I think I’ll go for it the building inspection has come up trumps, I’ve reseached as much about the local industry as I can and its strong ( however reliant on the Stock market – but what country town is’nt reliant on the elements, wool prices etc. Which me LUCK! The first time always hurts the most.
Hi Westan,
Guilty as charged!!! [lmao] You’re absolutely right; my situation does not (and cannot) compare to “smaller towns in Victoria” – definitely my mistake!! However, depending on where in VICTORIA Deeana is referring to, will make a significant difference in being able to make a judgement call on the feasibility of investing there.
Nevertheless, as I have said repeatedly in this thread, the information provided is severely deficient, and pure common sense would dictate that making an educated call is near impossible, and to imply risking good money is extremely irresponsible!!!
Jo
Thanks Deeana,
Your information changes things, try the link provided in my first post, as WA is accessible in the rpdata reports. Seems as though you have done some homework already; good to see.
Good luck on your investing!!
Cheers,
Jo
Personally I’d work out my worst case scenario, decide whether I could handle it, then either buy it or leave.
Hi Deanna,
I suspect the town in question is very cyclical – if my map reading is on the mark.
Cheers
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Deanna
If my map reading is of the same standard and if it is where I think it is be carefull.
Drove through there 6 months ago and the local word was not good. People were selling up and moving to greener pastures.
Later………..
If you think you can you can, if you think you can’t you can’t.
Deanna,
Check out the town you are looking at, and type in “blahtown population decline”. That will tell you if there has been any significant change. I think it’s important to distinguish between anecdotal evidence, and more statistical evidence. Even if people are moing out, it’s possible that others are moving in, so it could be equalising.
Sounds like the place has nickel/gold mines… you can find out the longevity of the mines by doing some research, and it sounds like you have. Broken hill, for example, with a population of about 20-22k, has about 6 years left in its existing mine, from my reading. This info is increasingly publicly available.
I mean, even if a mine does close down, sometimes families and individuals still stay…. or the place becomes a “ghost town”. It’s hard to make a call on this stuff… but if people want to buy 50k houses… then there are many risks for these towns.
kay henry
Hi Deanna,
The more I read these posts, the more I am convinced that you need to look deeper into this area; it sounds way too risky for my liking!!!
I personally wouldn’t throw good money on a whim; 50k can work better for you in an area which has more potential; of course you may need a bit for funds, but it doesn’t mean you risk losing it all if there is a mass exodus!!!
Don’t misunderstand me, I am not doing a 180 on you here; I said it was too difficult to call in the beginning, and even after you have provided us with a bit more info, I still think it is a hard call to make, although I am now more leaning towards the GIVE IT A MISS side of the fence!!!
Pay particular note of HotRod’s post; getting on the ground “talking to the locals” is a very valuable exercise for the savvy investor; buying site unseen is fine (and can work well) however, nothing can compare to seeing things up close, and what better way, than to drive through the streets and talk to your neighbours!!!
Either way; it’s your money, and ultimately, you’re decision.
Best of luck,
Jo
Hi all,
Just deleted a couple of ‘off topic posts’ and one that became redundant after the deletions.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by DEANNA:Thank you all for your great advice. The town is in WA ( I’m in Victoria) and it is 30km outside the largest regional center in Australia,
Hi Deanna – if you meant to say ‘the largest city in outback (or inland) Australia’ I think I know the one!
As others have pointed out, there are considerable risks there. However if you’ve done your research, don’t let that stop you.
I have two IPs in that particular city. Their yields are 9 and 10.2%. Both are 3br unfurnished villas or duplex halves and were built post ’87. One is located 10 min walk from the CBD and the other is in a newer suburb about 6km from the CBD. I deliberately avoided buying newer 1br fully furnished places in large complexes (pitched at investors) as their prices weren’t much different to my 3br places and I suspect tenant turnover would be higher, which I didn’t want (the tenants for my #1 recently signed up for 2 years!).
I knew I could have got higher yields by going to surrounding towns, but being aware that the area was volatile, I opted for fairly ‘safe’ choices within the city, with additional benefits being proximity to property managers, tradesmen, and ease of access when I visit.
I also assumed that vacancies would be lower in the city than in surrounding towns. Assuming a recession, I’d imagine the surrounding towns would be hit harder than the city, which has a more diverse workforce. Also assuming tenants want somewhere convenient, they’d choose the city property.
Thus though I was buying in a potentially risky area, I was ensuring that my choices were as safe as possible in that context, and not ‘risky risky’.
Yours would probably be cf+ before tax, but you didn’t mention if it was new enough for building depreciation or not. If it is, I would regard it as a good deal, provided other research stacked up. If it is an older property, it could be OK, but could easily be cf- if there are maintenance expenses and you don’t get building depreciation.
Regards, Peter
Perter- heya,
I think it’s a good point about buying newer units/apartments in those areas- particuarly larger ones. Often, land in the outback can be worth only a few hundred bucks, or a few thousand. I think it was depreciator (please correct me if I’m wrong, depreciator) who said he was concerned people were paying too much money- even if they were cheap properties, when one thought of the value of land in remote areas, and the houses accompanying the land.
I think it’s all about getting more value for your buck. In these instances, buying newer IP’s, with fewer possibility of repairs, certainly makes good sense.
Peter, I would say that it seems to be very good value to get a post-1987 3-bedder that is CF+. I’d undertake that strategy myself… but I’m still concerned about areas that are too remote/isolated.
kay henry
I think it’s a good point about buying newer units/apartments in those areas- particuarly larger ones. Often, land in the outback can be worth only a few hundred bucks, or a few thousand. I think it was depreciator (please correct me if I’m wrong, depreciator) who said he was concerned people were paying too much money- even if they were cheap properties, when one thought of the value of land in remote areas, and the houses accompanying the land.
Agreed. The better 4×2 houses in this particular city might cost $250-300k and fetch maybe $400pw rent. I’d imagine the land component would be in the $20-50k region. This gives big building depreciation benefits (if it’s newish), but for me was too much to tie up in one IP in a regional city (when you could buy in a capital for that). But a well-located and presented unit or duplex half around $100k and getting a higher yield than the above is a different story.
Though the city would be considered risky, the high rents and the high number of post ’85 properties (in various sizes) made it attractive.
Peter, I would say that it seems to be very good value to get a post-1987 3-bedder that is CF+. I’d undertake that strategy myself… but I’m still concerned about areas that are too remote/isolated.
Wasn’t it Paul Keating who said ‘if you don’t live in Sydney, you’re just camping out’?!
But you can balance your remote or mining IPs with IPs elsewhere. Between the two mentioned above I bought a 2br place near the beach in another major regional city (with a more diversified economy). This is my ‘growth’ IP as it’s pre-85 & -ve geared because it only gets 8.3% yield.
So far (mainly due to maintenance probs) cashflow has been poorer than expected (though still manageable) but growth has been much better than expected [biggrin]
Despite modern household trends, ideally I’d prefer to buy stand-alone houses, but my budget and my desired pace of buying mean that units or duplex halves will have to do for the time being. However at least with duplex halves there’s no body corporate, so there’s more control than with a strata unit.
Regards, Peter
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