Any good regional cash flow stories?

Discussion in 'Investment Strategy' started by Mr Properties, 9th Jan, 2016.

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  1. mja

    mja Well-Known Member

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    It's all very well to say "create cash flow in metro areas", but you need the capital to do that.

    Regional allows you to start with a low base, relatively low risk and build up. Is it better to save $50k to use as 10% deposit + costs for a metro property or start earlier on a regional? Depends on your strategy; I'm not advocating one over another.
     
  2. Steven Ryan

    Steven Ryan Well-Known Member

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    I walked through multiple properties today with clients 20 mins from Brisbane asking sub-$300k which will need no more than $10-$15k work to be cashflow positive (and that's assuming 105% of purchase price is borrowed).

    Friends have purchased stuff returning >7% in similar areas right off the shelf in the last couple of months. No work needed.

    The deals are there if you look for them :)

    There's something to be said about getting going sooner, sure.

    However, if my goal is to cross the pacific ocean and a bloke in a row boat says he can give me a ride today, I'd still wait a few weeks until my friend's super yacht is ready to depart and board it instead.

    Another point to consider, if you're carrying $150k of debt on a regional IP that is doing nothing, you have just taken an axe to your borrowing capacity for no gain.

    If getting on the ladder sooner was a priority, I would be looking at a 95% lend on a metro property or waiting, personally.

    I'm a wuss when it comes to investing and aim to minimise my risks.

    Not saying there isn't money to be made, but I'm not game.
     
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  3. Elives

    Elives Well-Known Member

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    which suburbs are you talking about that are positive with 105% finance? if you don't mind me asking
     
  4. skater

    skater Well-Known Member

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    I understand what you are saying, but some investors just can't afford a $300k property. They can, however afford a $150k property. Also, if on a low income, that $150k property might be bringing extra cashflow each month, whereas the $300k property might be taking a small amount each month.

    I'd rather have one regional IP and feel comfortable that I can afford the repayments, than stretching too far & having financial difficulties.
     
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  5. Steven Ryan

    Steven Ryan Well-Known Member

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    Hence the "or waiting, personally". These comments are what I would do based on my personal risk profile, not advice on what others should or shouldn't do. :)

    The question is can someone who can't afford a $300k metro property, afford a $150k regional property?

    A lot would need to happen for me to feel comfortable that I could "afford the repayments" and avoid "financial difficulties" were I a low income earner with an asset subject to risks like extended periods of vacancy, pest infestations, structural problems, hot water systems going, ovens going (all of which are a disproportionally high amount of the asset value/rental income), rate movements, economies not supported by dozens of industries.
     
  6. beachgurl

    beachgurl Well-Known Member

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    I guess we'd have one less retired investor on here if she had waited until she could afford 300k+ properties in the 'right' areas
     
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  7. skater

    skater Well-Known Member

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    EXACTLY!!!

    At the very beginning, we were broke! Really, really broke! But, even so, we built a portfolio. We started with a little equity in the PPOR, and went from there. Nothing fancy, and most crappy old places that cost very little, but brought in cashflow. Reno's helped!

    If we had waited, we'd have been waiting for over ten years to get enough equity for something more mainstream. By that time, we had built equity in the cheapies & were on our way.
     
  8. Steven Ryan

    Steven Ryan Well-Known Member

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    @beachgurl, you appear to be assigning someone else's result with my risk profile :)

    I have said regional stuff can work (and also offered alternatives to the original poster who appeared to be solely interested in cashflow). It's just not for me.

     
  9. MTR

    MTR Well-Known Member

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    yes larger regional centres
     
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  10. skater

    skater Well-Known Member

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    And that's what's great with property. You don't have to do what someone else does. Do your own thing, whatever works for you.:D
     
  11. Steven Ryan

    Steven Ryan Well-Known Member

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    Absolutely :) We all have our own goals and methods of their attainment.
     
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  12. skater

    skater Well-Known Member

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    And income levels, financial stability, family situations, fears, preconceived ideas....etc, etc....
     
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  13. Gockie

    Gockie Life is good ☺️ Premium Member

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    Thanks Skater and the OP! This thread has been a very interesting read for me. I appreciate it. Just wondering how has the annual capital growth been for the regionals in general if you were to compare it to a capital city?
     
  14. Tony Fleming

    Tony Fleming Well-Known Member

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    I've got a mixed bag of regional and metro areas. Great way to balance it all. Value adding is a must if you end up buying regional!
     
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  15. Chilliblue

    Chilliblue Well-Known Member

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    Nowra 2541: 10.2 % and Bomaderry 2541: 12.4% last year alone and prices are still climbing.


    If you brought well these figure increase significantly.
     
    Last edited: 10th Jan, 2016
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  16. skater

    skater Well-Known Member

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    Over around ten years of holding, give or take because I'm not exactly sure of the timeline, I've had the following:

    Purchase Price $67k, current $200k
    Purchase Price $59k, sold $159k
    Purchase Price $225k, current $380k
    Purchase Price $69k, sold $179k
    Purchase Price $25k, sold $40k
     
  17. Gockie

    Gockie Life is good ☺️ Premium Member

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    Those purchase prices... man... cheap as chips!
     
  18. skater

    skater Well-Known Member

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    :D

    Told you I was broke!.......AND they were all cf+ too!
     
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  19. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    @skater - those are amazing. Goes to show that you need to get started to make it happen and make it work however you are able to. Inspiring!
     
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  20. the world is your oyster

    the world is your oyster Well-Known Member

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    Great job
     

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