Investing in dodgy areas

Ok. JacM good thread I'll bite. lol.

I lived in Frankston North years ago. I was paying $150 pw rent for a 3 bed 4 car garage house a street back from the shops. This is when I was 21. Being obsessed with property I cornered the neighbour and asked about the house. He told me it had sold (we were first tenants in) for $114,000. So you tell me? Sounds like a good return. Same properties are now anywhere between 220-240k.

Then later after moving back from Perth I lived in West Footscray. The guy had a 2 bed house and we were paying $220 a week rent. The housing in that area at the time were worth nothing.

I have to say living in dodgy areas keeps your heart beating. I have not had any problems (robbed etc) in the dodgy areas but after moving to a "nice" area friends of ours a couple streets away were broken into and had laptop etc stolen. I think with dodgy areas the people around know they have no money and are not worth robbing

Also there are people who have grown up in those areas and will stay on, you get elderly people who have lived there all their lives (when it used to be a nice area and then through the bad times, like when the pub was called the Gundowner) and when I lived in Frankston North it was full of old people, I was the one with the noisy V8.

And just for anyone who would like to know I have lived on three sides of Melbourne, in Perth and in Sydney. Gypsy lol. Maybe Queensland next??

D

No probs, JacM, opinions are free . R U coming on Friday?

D

I am looking at investing in both Corio (geelong) and Moe. Both long considered dodgey areas. I know with Corio homes are owned and occupied for a long time with people largely having working in the oil refineries or car manufacturing.  With the expansion of the Geelong Road long time OO's are now trying to realise some capital growth and perhaps downsize or move to what maybe considered a better part of Geelong. Although prices are increasing in Corio there are still deals to be had. As far as Moe goes, people are definitely aware of what they consider a dodgey town but there are a lot of CF+ properties available there if you look and dont let the real estate agents get too carried away with recent forecasts that Moe is a place to buy. Am heading off this pm for the conference and hope to learn a lot from the event and the attendees. Should be great

Oh my.  This is an interesting topic!

We bought a 1×1 apartment in the WA suburb of Osborne Park a couple of years ago.  While OP is not that bad overall, the apartment block itself was a bit of a blight on the landscape.  Extremely high proportion of tenants, most of whom were very dodgy types (we heard the block recently referred to as 'Heroin Heights', which seems appropriate.)  The unit itself was beyond revolting, but this was one of the reasons we went for it – structurally fine, just needed a complete reno throughout, which we did.  We bought for $172K, spend about $15K on renos (we did a lot of the work ourselves) and today, it's worth about $230K.

Interestingly, over the last two years, the tenants have changed from drug addicts etc to young families…. it's definitely cleaned up, in terms of residents.  It has a completely different vibe compared to when we first bought there.

We've had mixed results with this one.  Good points:  excellent capital growth, due to a combination of OP's proximity to the city and the renovations we did; very manageable mortgage due to the low purchase price.  Bad points:  extremely poor/inactive strata council, meaning very little is actually done in terms of exterior maintenance (gutters peeling incredibly badly, lots of other stuff I won't go into here); the apartment itself is too small (45m2), which we should have worked out ourselves before we bought it; and as we bought and locked in to a high interest rate at the time, it's CF-, despite getting $300/week rent for it!

Really my key concern from an investment perspective is the fact that it's a one bedroom.  We are looking at selling this and our other 1×1 (also in OP, although a nicer area) to buy a 2×1 instead.

Anyhow, that's been our experience.  Mixed, basically.

Fatboy,

I have bought a number of my properties in ex housing commission areas. I have been reasonably lucky, one tenant has been in the property from the day that I settled over two years ago. The other haouse had a tenant who looked after the property, however, she had ongoing fights with the neighbours, police being called etc.

Unfortunately we can't control neighbours in area and/or the interactions of our tenants with them.

I agree that i would not have been   able to get into the real estate market without being able to buy these lower priced higher return properties.

Sonya

One of the other 'benefits' of investing in lower socio-economic areas is if the tenants are on some type of Centrelink benefit then have the agent set up a direct rental payment, this avoids the tenant falling behind in rent. Costs 99c a fortnight, claimable and money well spent.