500K Long term investment - Adelaide vs Perth vs Canberra

I wouldn't buy in a state housing suburb, that wouldn't make any sense. I bought in an desirable pocket of an OO suburb. If it does appear to be going nuts in the future I'll definitely sell. Love the area though and could live there in another life..

 

Thanks for the reply.

Couple of questions

- How do you know that they are gentrifying - do you happen to come upon that type of information while reading the regular news? Or do you look somewhere specific for that information?

- Does development consist of building a new house (ie subdivide-and-add or knockdown-rebuild) or is there other means of development such as adding to an existing house or something else?

 

Yes, suburbs changing, infrastructure improvements, zoning changes, demographic changes etc.

You may find this thread of interest
Why Gentrification Matters....

 

A couple of Melbourne suburbs that have/had a fair bit of state housing have gone pretty nuts, so I am assuming with gentrification and pric

Oh yea I don't need convincing, I'm aware of the gold mine that is gentrification.
I am wondering more how you come upon this information. Is it just already in things you read like standard news articles, or do you search somewhere specifically for it?

 

I'm sure they have but I wouldn't buy there as opposed to neighbouring suburbs unless there was a good reason. If those suburbs go nuts then other surrounding areas that may have less issues, albeit at a higher price point will be doing the same thing. Dealing with state housing areas isn't my thing.

It's interesting to look at the demographic profile of suburbs to get an idea of gentrification. M TR mentioned Coolbellup. I've never been there but if you look at that suburb it has a large proportion of single young people and single older adults living there as opposed to surrounding suburbs which have a higher proportion of families and mature couples. You'd need to look further but it doesn't suggest gentrified suburb at first glance. There doesn't seem to be increasing demand to buy or rent there.

I always flick through the online local news and fb pages in areas I'm interested in. That's where you're going to find out about new facilities or infrastructure going in and get a sense of what the local council is doing. Check council pages for strategic plans, regeneration, rezoning.

 

Re agents can work well

Last Perth boom cycle Government rezoned many State housing suburbs and offloaded as they were relatively close to city. These areas went nuts

I just buy wherever I can make money that makes sense at the time

Broadmeadows was another gem area on the nose with locals

 

As you said above, end values may not make development viable. It depends on point in cycle, demand. So personally I wouldn't be buying in one of these suburbs using the hope it goes up in the future strategy if there are other options. If demand hasn't started to pick up it could be a very long wait.

 

My strategy was purely growth as these suburbs were moving fast, never developed property in these suburbs, once investors realised rezoning was on the cards prices just continued to rise. Its also hard to do the numbers on suburbs with new zoning as there are no comparable sales

The Broady property was purely a DA and flip to builder, so within 12 month period.

Sometimes you don't need to develop/build easier to churn and burn when its hot. My accountant looked at the numbers and pretty much said the same, why develop just flip

 

I know. Sorry I think we're getting off track. We were talking about suburbs in the south corridor and I said I've bought there in an smsf as I also see the potential and wanted something with land to add in potential with a long time frame (smsf). Then you mentioned Coolbellup and said development wouldn't stack up there. I've never heard of the place but just 5 mins of online research I thought it wouldn't be my pick of suburbs to buy or develop. Then you said state housing suburbs can do very well (which I agree with). I'm not sure where this is going. Yes if a market is rising it's good to buy if possible. If you're holding long term an area with a lot of state housing around may not be ideal. Yes if you're just going to trade it then no problem. If this is all your budget allows then jump in anyway because long term you'll do okay but may have some bumps.

 

This article may interest some here. Hamilton Hill and Ashfield both State housing suburbs and both went nuts.

State housing quality/stock can vary significantly dependent on the infrastructure, zoning and proximity to city and the prices of surrounding areas as to the potential.

I don't specifically target State Housing unless I can see upside. As far as a buy and hold it could be a mixed bag as @ellejay mentioned.



Perth’s new hot spot suburbs for investors

 

great article! will do some research on the suburbs mentioned.

 

Spearwood is interesting, blue collar suburb not State Housing, I would look at development sites close to Phoenix Shopping centre. Though the numbers wont stack up today its more about the opportunity down the track to add value.

MTR

 

From I've read the type of construction used in Perth is more expensive as well. You might think you can go get a bargain in Perth but even when it does bottom out it'll still be pricey.

 

We build in double brick but cost of build is very much dependent on supply vs demand.

In Perth we are also spoilt for choice of builders, not like East Coast, which means you can bargain hunt and we also have some very good, price competitive project builders. I much prefer to build in Perth than Melb, but it makes no sense at the moment.

For example Melb is booming when I was developing in Melb as the market started rising so did the building costs. Builders can throw silly numbers out there because they can. When there is a slump then you have much more opportunity to negotiate prices down.

MTR

 

Seems to me you have no Investment Strategy, perhaps some learning required?
If my strategy is say for 3 cities say, SYD, MEL, BRI and then for inner or middle ring suburbs, then to add renovation potential, then I would stick to that.
What is your SMSF investment strategy? Are you in accumulation phase, for how long, or closer to pension phase? That would dictate to some degree your SMSF investment strategy, it should differ in SMSF! Do you plan to hold forever, is it only one IP in SMSF, will liquidity suffice, can you combine with personal funds for investment? So many things to consider. Can you buy next to other IPs you already hold for future redevelopment?
Each trust in QLD with borrowing has it's own trust hence new land tax threshold limits up to $350K. Why not borrow with 100% offset and park the funds into offset then, can help with liquidity.
Perhaps take a top down approach first, and once you know what your SMSF investment strategy is it may make it easier the where and to what to invest?

 

What areas in Canberra would you suggest? for around 450k ?

 

What do you guys think about Ganguhlin region in Canberra, few new suburbs Moncrieff, Throsby, Taylor.

And with light rail to commence in early 2019, theoretically it should put Ganguhlin suburbs on track for property boost, as the route will commute passenger from Ganguhlin to CBD for daily commute.