Hi all,
I have a portfolio of properties which as a whole is running at about a $50/week loss.
I'm looking to find an easy location to get positive cashflow properties in a location of 30,000+ population (to make it easier for financing).
Specifically high 6% yield would be great. I have looked at some rural locations (Mildura, Dapto, Albury) and considered the capital cities:
Brisbane looks good on paper but has high insurance costs due to floods, and Cairns units had unbelievably high body corp fees.
Sydney's west is too hot right now,
Melbourne – forget it,
Adelaide – possibly good growth if jobs pick up, but hardly any high yields around
Perth – don't really know it. Open to suggestion.
If anyone has any suggestions i'd greatly appreciate it. Or at least good tips on how to find these locations.
Thanks.
Matt
7%+ yields in Adelaide are easy, you'll just be buying up old housing trust stock. Playford council will fit your needs.
Alternatively for a slightly lower yield in the 6's you can get in around Hackham, which some may argue is slightly less 'feral'.
I've been purchasing Adelaide properties at 8-9% yields personally.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Matt sorry have to disgree Brisbane insurance prices have not gone up because of 2011 flooding.
In saying that you will not be getting 6% yield in Brisbane.
We are buying for our clients in other areas.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
u36ma wrote:Hi all,I have a portfolio of properties which as a whole is running at about a $50/week loss.
I'm looking to find an easy location to get positive cashflow properties in a location of 30,000+ population (to make it easier for financing).
/quote]
^ Try not to restrict yourself with a pop of >30,000 as not a lot of suburbs would even fit in this criteria…espeically positive geared properties!
A lot of positive properties i buy are in decent areas and some are in a pop of 5,000- 10,000 and i can still obtain finance at 90+ LMI no issues..
If you want to make sure the area is "finance friendly" stick with Post cat 1 and Cat 2 as per the Genworth or QBE location guide. – http://www.genworth.com.au/lender-centre/tools-and-resources/location-guide-australia
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
I invest heavily in albury region. Prices have grown a little but I think thats more due to investor activity(thanks to low interest rates). Depends on budget but there are plenty of opportunities there. They don’t have any major infrastructure work planned but they have a large number of smaller projects in the pipeline
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
In smaller areas the question of where your next tenant will come from becomes harder to answer. And your 5% property now could well be a 6% property in two years, keep your long term eye open.
The Northern Suburbs of Hobart are offering high yields 7-8% plus is achievable, around 10% if you buy the old government housing stuff in the rougher areas however no growth for the foreseeable future down their.
The Dark Knight wrote:I invest heavily in albury region.Why?
Catalyst wrote:The Dark Knight wrote:I invest heavily in albury region.Why?
Hi Catalyst,
I know its not going to be a massive hot spot or boom overnight but its an area that has plenty of potential for medium to long term growth also all the properties I have there are 9.8 or higher yields(good cash flow with current interest rates)and the pricing fits my critera. Its got a lot of minor infrastructure projects happening with a 65million dollar oncology centre been built and ready for completion in 2015(most likely 2016 knowing goverment projects) also they are predicting the population to grow by 30% in 20 yearsTony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Thanks.
I actually have one there and contemplated selling it. A few years ago there was no population growth predicted so I couldn't see what the driver would be for CG.
I guess the new infrastructure has changed that.
It is CF+ and I never hear from the tenants so I'm going to wait a little while. See what happens.
It's much easier to find properties that fit your wishes if you look at mixing a lot of strategies together, rather than expecting one strategy to do the job all by itself.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
My suggestion would be to look at focusing on one strategy for growing your portfolio and become an expert at managing that.
I like a simple balanced strategy, by getting the benefits from a combination of a strong rental market, property growth and tax credits.
Look at sourcing property in areas that tick the following boxes:
- High rental demand areas. In the early to mid phase of the life of a portfolio I just use yield to maintain the debt (focusing on high yield areas that turn out to have low long term growth can be a wealth building disaster)
- Areas that have major growth drivers to create long term capital growth to build equity and wealth
- New assets to access maximum tax credits to maximise your after tax income (and to keep your accountant happy)
Even with 100% debt, you can find all three of the above giving you positive cash flow in the current market and a $20<>p.w. negatively cash flow if you are fixing the rate for 3-5 years. These areas have the ability out preform the national and state averages, putting you at the head of the pack.
Modernity Investing
Email MeI agree with Jacqui in mixing strategies.
When we work with a client especially one still in the acquisition phase we try and mix a combination of buy and hold's with some VF or a raft of other positive cash flow strategies.
We use the surplus income to pay down any non deductible debt on their PPOR and then look at debt recycling so they can re-use the funds for further cash flow opportunities.
Tax credits are a bonus and as we don't focus on overpriced new property directly from developers we find that true cash flow is more important than mystical theory.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
In more compact areas the question of exactly where your next lodger will come through becomes more difficult to answer.
Thanks all for your responses…. all of them rung true with me.
In the end I bought a 5 year old property in Waterford, a southern suburb of Brisbane. The market is sluggish there but it has strong pop growth and good infrastructure investment with one of the highest funded councils in Qld (Logan). Yield is about 6% so not too fantastic, but I figured after depreciation it will be well and truly positive for many years to come owing to the property age. I asked rental managers what was in most demand (4 bed, 2 bath, 2 car, 2 living areas) and cross checked that with ABS stats to see what was the main family structure there and how many cars they owned. It matched, so I bought.
Rental managers told me that Waterford is considered “nicer” than other newer suburb areas like Crestmead and Marsden, and could acheive $10/week more. At only 35 mins from Coolangatta and 20 mins from Brisbane CBD I can’t see anything wrong with the area, but the demand is low at the moment, so it’s definitely a buyer’s market. Looking at buying another there soon.
By the way, I worked out that insurance prices are calculated on each property based on its address. If it’s in a flood zone, it’s high, otherwise, it’s normal.Cheers,
MattI am looking to buy there myself. good luck with it all.
astroboy71
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