*Advice Required* - investing in regional towns near horse racetracks?

Hi all,

I came across an interesting article while searching for my next investment property purchase in line with my goals and reflective of my current purchasing power, and wanted to obtain your thoughts and advice on whether or not my line of thinking is on track, or is way off.

To start with, my current situation is as follows:

* 250k in available funds;
* Borrowing power is tapped out for the time being. Can access approx $300k in additional equity from existing IPs but this can only be accessed with additional income;
* To achieve additional income, I am starting a side business at the moment however this will need to run for 1 year before I can use the income earned from the side business to increase my borrowing power;
* Therefore, looking to purchase as high of a cashflow positive property as possible, ideally using as little of my own funds as possible. Hence I am looking towards a unit purchase in regional areas in Melbourne, example Echuca, Pyramid Hill, Gunbower, Cohuna etc. Purchase price 50k-60k for rents of $100pw.

The article I am referring to is shown below:

Suburbs near our major racecourses could be just the right place to take an investment punt

Also came across the following site which showed a list of racetracks:

Australian Horse Racing Racecourses and Tracks | Racenet

With this in mind, Echuca came up as a potential target, owning a racetrack there and being a decent amount of activity overall, as generally the horse racing industry requires a fair amount of people to be present at the tracks to look after the horses, dogs/greyhounds, and therefore this would translate into a consistent stream of people wanting to live or around the area. Plus the industry itself is not going to die any time soon.

There is a direct train line running from Pyramid Hill to Bendigo and then to Melbourne (total time of transport 3.5 hours from the likes of Pyramid Hill to Melbourne) - but - are these regional areas TOO FAR out of town for any significant capital growth to happen in the next 5 years?

I can understand people may be leaving the CBD areas due to lockdown, but with the world gradually returning back to normal and people are heading back to work, could people decide to leave the CBD areas and flock similar to a mass exodus to the regional areas? unlikely in my opinion, but thought I would ask on here to see what everyone's general thoughts are when it comes to investing in the regional areas of Melbourne.

My thoughts on the pros:
* Cheap entry point
* Provides stable income (esp if one is able to pick up a couple of 1bedroom units at 50k-60k each and rent for $100pw). Purchase 4 units for $200k total and receive $400 pw?
* Using the rental income from the purchase, this will allow me to unlock additional equity from my existing IPs to be able to fund the next property puchase.

My thoughts on the cons:
* The suburb is in the middle of nowhere.
* Far away from civilisation (3hour+ train ride to Melbourne).
* Unlikely room for capital growth in the next 10/20/30 years.
* Not much of an industry in these regional areas.
* Vacancy rates are low but there is barely any stock appearing for sale and for rent in the markets.
* Population for these towns range between 600 people to ,000 people. Not that much.
* Population drivers are highly unlikely to grow in the next decade.
* Speaking with agents in the Bendigo/Mildura areas, their tone of voice over the phone indicated they had seen some greater interest due to the virus, but this did not necessarily translate into an increase in sales.

Aside from horse racing, there is no real industry around these parts of town. So what essentially will drive prices up in the short, medium and long term? Government spending and infrastructure? Google Maps shows a lot of green / bushland at the moment.

Also some research on government budget and spending has revealed these areas are practically getting ignored - see below:

Peter Walsh responds to Victorian Government's budget - Shepparton News

Just by typing out the above, I feel there are way more negatives than positives. But I am keen to hear any thoughts, opinions, suggestions and everything else (PG rated please) in case I am missing something glaringly obvious.

 

Maybe you have just answered your own question.

 

horse racing and small towns aside

the biggest issue with your plan is that you are targeting properties that will only rent for $100 a week?

you would basically be subsidising other peoples housing

$100 in rent a week is about 5k a year after vacancy
4,500 after property management
4,000 after insurance
3,200 after water
2,500 after council rates
1,500 after maintenance

these properties can be good cashflow investments but a lot of their success hinges on the property managers in the town and their own personal beliefs