SA Regional SA

Hi all,

Has anyone bought in regional South Australia?

I've just had a look at this house (https://www.realestate.com.au/property/67-mcleod-st-bordertown-sa-5268/) in Bordertown SA and it looks like you can get a lot of house for your money? It looks like it's cash flow neutral so it would just pay itself off over the course of the loan, and I don't think it would be unreasonable to expect that it would double in price over the next 30 years.

I have a couple of properties already (one in Toowoomba, another in Brisbane), and have around $225k additional borrowing capacity, so buying something like this looks very appealing.

Does anyone have experience buying properties like this?

 

why not to park in offset or super or ETFs?

 

I would be buying with equity as my deposit. If it was possible to borrow using house equity to invest in an ETF that's what I would do, but that's not an option.

 

it is certainly an option. talk to your broker.

 

Are you sure it is cashflow nuetral, on what metrics ? Have you had advice from your accountant he should be better able to advise than any-one here. They should be the first step and can shoot the figures to a broker. Depending on tax rate I would think it could be tax flow positive now. If not it soon could be with rent rises or reduced interest rates one or the other or both will probably happen. I think it is a matter of when, and not if the mines get approval and you will get way more than a doubling in way less than 30 years. Goschen may be the site of the biggest rare earth deposits but I believe the clay around border town is the easiest to extract from. The greenies want electric cars but object to mining the required materials. A doubling will mean you have gone backwards in real terms. Adding a bathroom may increase your yeild. Growing and excess rent can be sed to buy ETF's which could be used draw on property growth to grow share portfolio, tax loss harvesting can be used to reduce loan for opportune investing or risk free return or simply to increase cashflow. Most people over estimate what can be acheived in 3 years, but under estimate what can ne acheived in 10.

 

@igor1234 interesting, I wasn't aware that was an option. Still looking at the asx history I'm not sure if borrowing to invest in stocks is the best option. Good to know though, thanks!

@Ruby Tuesday that's very interesting regarding the rare earth mining. I've just done a bit of research and found that they're doing exploratory testing in the Bordertown area (Mining for rare earths is vital for renewable energy, but SA farmers fear for the future of their land). It looks like there's some push back from the local farmers, and it doesn't surprise me that the Greens are also pushing back against it despite the fact rare earth minerals are required for renewable energy technology...

It's definitely a very interesting proposition for investing... if only I had a crystal ball!

 

@CountingCents if you are so adventurous and don't want to invest into ASX etc. and prefer property, check Whyalla or Port Augusta. You'll get some kind of cash flow (depending on your deposit), but buy something that won't require more of your cash to flow into repairs/maintenance, and be prepared to stick there for quite some time. This is, of course, up to you to do due diligence on any suburb.

 

@rook2017 I've looked at Whyalla previously, but I'm not sure about the future of steel manufacturing in Aus so because of that I'm not sure about its future economy. I just had a look at Port Augusta. It's bigger than Bordertown which is a positive but the rental yield doesn't look as strong as the property I linked above. A purchase price of $215k with rental return of $350/week looks feasible for the property I linked.

Do you prefer the properties in Port Augusta/Whyalla because most of them are solid brick homes? I must admit I'm partial to character homes myself. But yep getting repairs and maintenance completed in a town like Bordertown could be an issue.

 

I'd rather consider a larger location, especially with the budget you mentioned.
There are plans for renewables push/development in Whyalla:
Renewal SA to unlock strategic land for Whyalla city growth • Renewal SA

and one can argue that release of land will provide more stock, but it will take time and new houses prices would be higher than establiahed ones I would have thought. I do not know the area well, but if there's push for more jobs and development, why not enter now, as long as it fits your budget and risk appetite.
Cheers

 

I was listening to a YouTube interview with @PK Gupta posted 5 months ago and he briefly mentioned Regional SA so I am interested to know as well if any experts here quietly looking into RSA now?