I am considering investments for positive cash flow outcomes in regional centres where yields are high and vacancy is low. I know growth won’t be there, but something that can return $2-3k a year with “nothin down” in the equation, brick and aluminium windows (low maintenance) etc can’t be such a bad idea?. Stawell is looking OK with crocodile mining suggesting they “may” go to open pit at the mine in town now.
Any thoughts or advice?
Hi there
Have you taken into consideration all of the costs of holding the property? Including but not limited to – PM fees, insurance, maintenance, strata fees if applicable, etc.
Are your cashflow projections based on todays rates?
What are you aiming to get out of property investing?
If there's no growth (or ability to manufacture it) – then I personally wouldn't buy a property for a return of $2k per year. You could have a HWS blow and there goes that years profits.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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I am only just starting to get into the investment property game, although I'm still a few months off being able to buy one, I figure it doesn't hurt to start researching early. One of my techniques is to look at the census data for the area. The census data that is of concern for this town is the population is slowly decreasing.
Since 2004 the population is down 1.7%, (which admittedly is only 150 people, but in a community of only 8800). The population is also a couple of years older than national average. It's possible this 150 people is deaths and no one has arrived to keep the population steady.
I'd probably avoid it but others will be more informed than me-
I would stick to other regional towns in Vic. For example Bendigo or the Latrobe Valley. These are areas where population is on the rise and future job prospects look ok. This should equate to better growth than Stawell.
Tread with great caution. I don’t think it is wise to invest in a town for the first time without going there and using your eyes to see what the situation is. Go to opens, see how many people show up, etc
Jacqui Middleton | Middleton Buyers Advocates
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Homemade wrote:I am considering investments for positive cash flow outcomes in regional centres where yields are high and vacancy is low. I know growth won’t be there, but something that can return $2-3k a year with “nothin down” in the equation, brick and aluminium windows (low maintenance) etc can’t be such a bad idea?. Stawell is looking OK with crocodile mining suggesting they “may” go to open pit at the mine in town now.Any thoughts or advice?
My thoughts – bad idea.
What is the point in investing without growth. The biggest problem is that this eats into serviceabilty reducing borrowing capacity and uses up deposits which could be better used elsewhere.
Have you factored in costs related to borrowing the stamp duty etc. Repairs? – every 8 years replacing the hotwater service, every x years replacing the carpet etc.
What about rate rises?
Without growth there is absolutely no point in investing. What about shares instead? Some good high yielding shares would achieve a better result. You also get franking credits.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Indeed, you are absolutely right to state that low vacancy rates and high yields are of key importance when considering investment choices. There is yet another crucial factor that determines the success of your investment, namely buying in the right place, one that shows sustainable economic growth.
In my opinion, NT is the perfect place to invest in, as Darwin is experiencing economic boom, leading the property market since 2004 with gross rental yields of above 6% for units and vacancy rates as low as 1%. Delloite forecasts a 4.6% annual economic growth, massive gas and mining projects will continue to inject capital into the area’s economy, so everything is pointing to a bright future. With gas and mining attracting multi-billion projects, tourism flourishing, defence force growing, I would say that you couldn’t find a better place to invest in.
Cheers,
Emil
I can think of several regional towns with good growth prospects and cash flow properties without having to invest in a town with such a small population.
You need to consider your financing options will be limited in such areas and especially if LMI is involved.
One day you might want to sell the property so remember that potential purchasers may also need finance.
As i said i can think of several areas which would be better to start your investing portfolio.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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