VIC Does anyone invest in cheap property? Low outlay, low socio-economic areas?

Just wondering,
Does anyone here invest in cheap property in low socio-economic areas. I'm looking under $150K.
I would have loved to buy into areas 5 years ago that is for sure, as these low priced properties are certainly climbing up towards the $200K at a rapid rate now. Is there a ever growing market for homes that have low rent? rental affordability? If the price of the homes are so low, I think it might make good sense, and often the rent is over $200 per week, but I worry about the homes getting trashed.

On a similar note- HOW does one make the homes rental 'proof'?

Thinking of the Moe/Morwell/Churchill areas. Expanding just that little further down the Eastern suburb spread. Which area would be your first choice?

 

Pinging @TMNT

 

personally I would look at Warragul or Trafalga first than the mentioned surburbs.
I was looking at buying a property in Morwell last year as I got offered a job there and wanted a place to stay during the weekdays and then travel back home to the SE melbourne suburbs over the weekend. From memory a 3bd decent house was around 180k mark and rental demand was somewhat high at that time. But times have changed Hazelwood is closed and there have been no other jobs created in the area.

As a solid investment I would not buy in these areas.Instead why not look at a more established regional town?

 

Most of my properties are in areas like the that including 5 (if you consider my two duplex halves as two) for under $150,000 each in Elizabeth SA.
More problems than other places, but in my opinion, well worth it as long as you have a very good PM!
Don't buy for capital gains there though, buy for cashflow. Mine are around 7.5% gross.

 

Yes, I'm agreeing with Wellknown... I would love to buy in at Trafalgar or Warragul, Druion ect... but ummm... that is hardly low cost buying! These towns sit in a whole other category at the moment. I don't think you have been able to pick up anything there in the 100's for 5 or so years.

Morwell is still pretty cheap. And Hazelwood closing has not had the economic impact on the area as first thought. I believe there will be some major investment in the area. Very few people who worked at Hazelwood actually lived in Morwell anyway, as they were earning a lot more money and moved out to lifestyle blocks and towns with better reputations.

I'll have a squiz at Elizabeth SA.

A good PM would be great, great tenants and a good PM would be my preference.

 

I’ve got 4 at that end of the market, I’m presently selling 1 and looking to off load 2 more to invest in another project. Yields great but maintenance costs are high, sometimes you can strike it lucky with great tenants, other times not so much...

Tenants on welfare can be a nightmare, trips to the tribunal can be a waste of time as trying to get an order to garnish welfare payments for arrears, damage and cleaning is impossible. It’s essentially theft but it’s only a greedy landlord so that’s okay and the cycle continues.

Stay away from the absolute bottom of any market would be my advice. It all depends on the median price for the city. $250k in Adelaide will get you a place in a reasonable northern suburb with a good yield and potential tenant. $150-$200k in a large regional NSW centre may be okay depending on the PM. Some are really slack and very slow chasing arrears unlike capital city PMs.

Most important factor is a good PM who stays on top of arrears and can smell a rat.

Just my opinion.

 

I bought in Moe 12 months ago. 800 SQM block, $150k, $210 per week rent. Perfect tenant, not a single maintenance call out in 12 months. The question is, at what point will Melbourne’s urban sprawl touch Moe? Might be 30 years.

 

Well I think you got in at the right time Harry30!
Personally I have to be careful about Moe because it carries some nostalgia for me, as I spent my childhood growing up in a housing commission home there. I kind of like it But I don't own property there & I find it hard to be objective about the place.
Played in the park there with my two little ones today. Rather peaceful, overlooking the mountain range
Which street did you buy into?

 

Broken Hill is very cheap and has very good yields... for a reason.

 

Mt Druitt. 45 kays west of Sydney. You got to look past the bongs, thongs and commodores to see the pot of gold at the end of the rainbow.

 

If that's actually you, Muriel, you're terrible!

 

Just off Moore st. On the town side. Always like that side v ‘hill side’. Yes, prices are cheaper given reputation, but things change. Anyway, there has been little capital growth to date, so prices still cheap. Good house to be had up to $175k

 

Only have one such property in Rose Bay, Sydney.

 

I put regionals into different categories. Towns 2-3 hours from major cities are one category. Suburbs being mentioned above are 1.5hrs from Melbourne CBD and 1/2 hr from ‘edge’ of city.

 

Rose Bay! Would not go near there. For me, anything south of Point Piper, well,you may as well be camping out

 

I like you already.

 

Once ventured south of Wolseley Rd (or was it Wyuna Rd) and I was completely lost.

 

I tend not to venture too far from Frank and Malcom. Anywhere in between is safe.

 

Oh Frank and Malcom. Bump into them all the time. Close personal friends of mine. And John Symons. He is just up the road. Was not impressed with the house he built. But just shows, mortgage broking, that is the business to be in.

 

More over, what is the opportunity cost of your money over that time! Action of buying a property doesn't result in being an 'investor'