All Topics / General Property / Would you buy in a dodgy area?

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  • Profile photo of Kara47Kara47
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    @kara47
    Join Date: 2012
    Post Count: 28

    Hello All,
    Just looking at my local area, best returns on IPs are all in areas with reputations for high crime/ housing commission areas. Range from 8-11%. Would you buy in these areas( with tenants in place), knowing you may have difficulty selling down the track? My plan is to buy & hold long term.
    Thanks.

    Profile photo of Corey BattCorey Batt
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    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    I own quite a few properties in low socio-housing trust areas and happily continue to expand my portfolio with these properties. Yields are certainly higher, but you also need to make sure the are has the right long term fundamentals – ie, decreasing numbers of housing commission houses, increasing owner occupier numbers, increasing population etc.

    After all, the big money made in capital gains are general made by areas in transition, as the demand outstrips supply.

    I’d be way to say that ‘dodgy’ areas are harder to sell – just look at the fast pace in which houses are selling in Wilmot in NSW, Frankston in Vic and Logan in QLD.

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    Profile photo of JoJo
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    @jodyt
    Join Date: 2015
    Post Count: 23

    I too was wary about buying in a dodgy area.
    But purchased a house in a fairly high housing commission area a few years back which has so far proven to be my best investment.
    I advise to look for an area where the government is slowly selling off the housing commission homes and be fairly picky on tenant selection.

    Profile photo of RE FreebiesRE Freebies
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    @refreebies
    Join Date: 2015
    Post Count: 5

    I have held an IP in Logan for 6 years and it has been rented out from day one without any real hassles to date.
    Properties around the $300k sell the quickest in the marketplace so that shouldn’t be a concern, which is similar to Corey’s comment who has answered the post well.
    On another note it would be handy to get hold of a suburb list showing housing commission houses on the decline!

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    Profile photo of CatalystCatalyst
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    @catalyst
    Join Date: 2008
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    Have done and still do.Have not regretted any purchase I’ve made in My Druitt or Blacktown. All have doubled in price in less than 7 years (love you Sydney!!!).

    As long as you do your research and are not buying in the dodgy streets in the dodgy area.
    Also a dodgy area in a smaller town might not be any good. It’s about more than type of area.

    What dodgy area are you looking at?

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    Absolutely happy buying in dodgy areas. While it is a generalized comment to make, folks happy to actually LIVE in the dodgy area (ie as tenant) are not always aspiring to buy their own home (tenants for life which is good for you the landlord) but rather spend available income on luxury items such as a new tv.

    Jacqui Middleton | Middleton Buyers Advocates
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Don NicolussiDon Nicolussi
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    @don
    Join Date: 2005
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    Absolutely not! I would look for an aspirational suburb next to and similar in price to your so called “dodgy area”. Some areas are just not great. Find your dodgy area and then look at places where people who live there aspire to live in (realistic people).Price will be similar and yields will be the same if you work hard and finding the right property.

    Lets face it some areas are in decline. They have problems that can’t be fixed. Avoid and avoid. Some area’s a set to change with concrete plans for change.

    Long story short, your spreadsheet is going to tell you around 10% of why you should invest in an area.The other 90% will come from contact with actual human people and research. Dig and talk.

    You will win if the area people think is dodgy turns out to be a “hidden gem”. The only trick is you have to trust your gut and do it before the herd.

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
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    Profile photo of Kara47Kara47
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    @kara47
    Join Date: 2012
    Post Count: 28

    Thanks all,
    The area I’m looking at is in Kempsey, NSW. The areas concerned have a long term reputation for being difficult to sell, you can buy 2 houses here for the price of one in a better area. I think I’ll steer clear & go for slightly lower return with the promise of some growth.

    Profile photo of CarolinaCarolina
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    @carolina
    Join Date: 2015
    Post Count: 2

    Sounds like you know the area well so you can what is not dodgy … What areas in Blacktown do you recommended … I’m thinking of taking my first plunge and buying a 3 bedder house or townhouse in Blacktown…. And have just posted a message there as well ….. Thanks

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
    Join Date: 2005
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    The problem with doggy areas in often in a boom market these areas are over priced they are often the first areas to fall.

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