Assets, Duds & Liabilities.. Where to go from here?

Discussion in 'Investment Strategy' started by Clayton, 28th Nov, 2016.

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  1. Clayton

    Clayton Well-Known Member

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    Hi everyone, this is a super forum and really enjoying building my knowledge base, thank you!
    I was motivated to begin my investing journey after reading rich dad poor dad many moons ago & dived into many other property books, assuming like they say rents should continue to increase over time so the hardest is the first few years, values would double every 7-10 years if not sooner. Initial goal was to buy 2 property's.. made it happen then stepped up the goal to 5 property's. Strategy was after the first property cycle starting to sell 1 off to pay off another. Then again, to end up holding 2-3 property's debt free living off good rental returns contributing to the dream house. Sounded very realistic and worked my butt off to make it a reality! Well unfortunately the end goal hasn't come close, appears I've made some unwise decisions acquiring dud's & liabilities rather than CG assets. Living overseas I thought properties that I could just hold & let them stress free do their thing was the wiser option. Anyway what's done is done, my circumstances are I'm currently working overseas and looking to review my portfolio while I have secure employment and can bare the costs of selling or restructuring if need be before eventually moving back to Aus. I have listed my properties below and hoping I can get any suggestions as what you would do in my situation, anything at all on any property would be so very much welcome. The main one is the development potential western Sydney property.

    Property 1 Lynbrook Townhouse (3/2/2) (Purchased 2007. 260k now 375k) . Low entry just to get into the market, should have bought closer into the city.. Chadstone when I had the chance well over this one. Value went up okay in the few years after but since then hasn't moved, Rents haven't moved in 4-5 years. After almost 10 years I'm looking at only 100k increase so definitely not close the doubling in value I was looking for. Not much I can do to add value besides some new paint & carpet, enhance the rear courtyard. The area has too many newer townhouses being continually built. So after taking into account purchase fees & if I sold really not making great return. Luckily the equity was used toward deposit on Property 3.

    Property 2 Pakenham H&L (4/2/2) (Purchased 2011 365k now 400k). Not a great decision buying OTP in an area with continual land releases, lesson learned.
    Had some pretty frustrating tenant issues with continual VCAT tribunal cases the first couple years, has now settled and taking care of itself. Value looks to have moved slightly the past couple years, rental hasn't moved also since purchase. Continual cycle of a rental increase, a tenant moves out a year later & reduced to get a tenant in. Purchased using 20% deposit so selling would basically mean getting my funds back and kissing goodbye to 5 years.
    Property 3 North St Marys (3/1/1) (Purchased 2012 310 now 500k). Happy with this one!
    Purchased using a local buyers agent (I actually found the property), an early 60's 680m corner block zoned 2B meaning from my understanding that a duplex can be built. I've had no issues at all, it's always rented out and as we know the area has seen a nice equity increase in the past few years. The plan was to hold for the long term and possibly in the future develop as a means of either selling the duplex using the equity to build the future family home, or instead gaining good rental returns. Used the equity gain toward the deposit on the following nightmare unit.
    Property 4 Gladstone (2/1/1) (Purchased 2013 240k now 100k) Worst mistake of my life!
    Used another buyers agent, intention was for a cash flow property to give me greater serviceability for future purchasing. Have seen my rent go from almost 400 to just over 100. As much as I'd like to sell that doesn't even look like an option. Easy in hindsight but it was clear the market was heading backwards in a big way, buyers agent did nicely by their own end buying the complex and selling them all off to investors. You would think however paying 10k for a fee there would be due diligence done for me as an investing client, as well as the other investors who bought into the complex. I looked at the numbers at the time & they looked okay, lesson learned to do your own due diligence, look at the direction of the trends, especially the trending vacancy rate! I was told the building was built in 1995 & turns out it was 1985, again do your own due diligence. There have been nothing but major issues with the complex & I guess I'm stuck with this for the foreseeable future. I do see positive signs of the vacancy rate coming down and the market bottoming out. Some of the investors are considering if we should put the whole complex on the market but unsure that would attract any interest at this stage of the market.
    Property 5 Morningside Townhouse (2/1/1) (Purchased 2015 375k now probably the same if not lower) Unsure on this one!
    Researched, researched researched! Wanted the next one to give me equity to dig myself out of the Gladstone nightmare, Brisbane was set to become the next market to take off after Sydney going through the roof. Threw even more money at another buyers agent to use their on the ground knowledge, advised to buy within a 5km radius & staying away from the outer areas, I expressed my concern of the soon to be flood of inner city units. I couldn't afford a house with land within this 5km radius and to avoid the unit market thought the next best thing would be a townhouse. Morningside looked like it was located well, anyway the property was just vacant a month after numerous inspections so I'm nervous I have made another poor investment decision. See no option but to hold for the medium term.
    My goal was to acquire 5 property's, I've done that but I think most would agree the only real investment I made was the 1960's outer Sydney property. In hindsight I would have purchased differently, established properties as close to inner city as budget permits, has a land component, development / renovation potential, better located to transport options. I am close to saving funds for a future deposit, however unsure I want the extra stress of another property & instead use funds to help minimize my financial outlay & remain to keep a good buffer.
    Options I'm considering:
    1 Sell Lynbrook, leave North St Mary's as is, use the equity to put into the Gladstone loan, or possibly take the big hit loss and sell Gladstone as soon as possible. Although I'd prefer not to sell Lynbrook while overseas as I believe I'll forfeit the 50% capital gains discount?
    2 Build a granny flat in the North St Marys property to gain the rental upside and balance out the loss of funds, in the longer term develop with a duplex.
    3 Renovate and add and extra bedroom to North St Marys potentially increase the equity and rental return.
    4 Sell Lynbrook with the plan to start researching the best duplex option for the North St Marys property, I need to check whether I could sell duplex units separately or I don't have that option. Anyone on this forum aware of whom best to discuss the duplex option for Western Sydney or the related costings? (Costs of demolition, costs to build eg. 2x3 bd attached dwellings etc?)
    - I wonder if the 680m2 block would be sub-dividable in future and just worth holding the property until then?
    5 Hold all property's and wait it all out, enjoy a nice quiet drink on the weekend taking my mind off the Gladstone burden.

    Sorry for the long post, I'm sure there are other details I could add but any guidance would be so very much appreciated!! Thanks in advance, Clayton
     
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  2. Sackie

    Sackie Well-Known Member

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    Hi mate,

    Without going into the whole post, that was your problem. Had the wrong goal set. Number of properties is not important, rather how each property will get you closer to your goal based on their merits, is. I think now you realise this and have a better plan when you say " In hindsight I would have purchased differently, established properties as close to inner city as budget permits, has a land component, development / renovation potential, better located to transport options".

    If I were you I would stop, have a complete rethink of what your goals for investing are and then take stock of your portfolio. Get rid of the dead weight and keep the good ones/ones with potential. While your doing that I would start to educate yourself on property investment via forum, books, pod casts etc. If possible try to get yourself to a Property Meet Up and 'pally' yourself with an experienced investor near you :) . To be honest, many of the mistakes you made could have been avoided with 3-6 months of some good property education imo. But all is not lost, your aware of it now. Stop, regroup, lighten your portfolio if need be and then educate yourself so you wont be reliant on listening to someone about where or what to invest in without your own informed opinion.

    Good luck and don't give up. It's only a small road bump on what will be a long (and hopefully rewarding) journey ahead.
     
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  3. Marg4000

    Marg4000 Well-Known Member

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    Look ahead, not back.

    Assess exactly how you see each property increasing in value. If you want to sell, get rid of the one with the bleakest outlook. For my money that would be Gladstone, if you can get a buyer and cover any shortfall.

    The granny flat idea may give you a good return on what it would cost. Worth investigating.

    Or, as you said, sit tight for a year or two.
    Marg
     
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  4. Clayton

    Clayton Well-Known Member

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    Cheers @Leo2413 Wise words & great advice! As much as I was trying to make educated decisions I realize now I should have purchased better, painful is the expense of using BA's and ending up with under-performing assets.. couldn't agree more I should have looked closer at how each property could achieve the end goal rather than just accumulating and assuming time in the market would do its thing. I can deal with the pain of temporary financial loss but definitely not worth the lack of sleep! I would say all of the portfolio other than the Western Sydney development potential appears to be dead weight. Definitely wont give up, I'm learning from my many mistakes & can hopefully use that knowledge going forward for the bigger and better picture!

    Thank you also @Marg4000 Going to start investigating the granny flat option, as well as see what info I can find on the duplex development option, what pro's & cons I can come up with both. I'll also see if the council can answer the minimum land size (corner block) for sub-divisions query.

    I want to offload the Lynbrook townhouse, but all signs keep saying the Melbourne market has a good ways to go the coming 12 months so maybe next year might be a good plan to look at that option. By then I'll have a better idea of where the Gladstone market is heading and decide whether I take the massive hit or wear the financial outlay in the short term & hopefully minimize the losses in a future sale. Cheers again guys!!
     
  5. Do Androids Dream

    Do Androids Dream Well-Known Member

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    Hi Clayton,

    Looking over your post, honestly... I don't think you are doing too badly, really. Can I ask how old you are?

    I think you have some nice properties in your portfolio with of course North St Mary's being your top performer. However, it's probably unfair to compare the remainder of your properties (Vic and Qld) to this Sydney purchase. As we all know, Sydney just went nuts.

    As a newbie myself just in the midst of purchasing my second property in Pakenham, I'd be quite happy with your portfolio. You have some great potential to add the granny flat to the North St Mary's property.

    There are some things you could've done differently, sure, like the OTP for Pakenham, perhaps the timing of the Lynbrook TH rather than a house and the Gladstone property, but... you did what you thought was the right thing at the time, as did many others and used a buyer's agent to help you out in the process. In retrospect, you'll take everything you've learned and re-apply it to your next purchase and may make a few more mistakes again in the future, but at least you tried and have learned. At the end of the day, no one knows for sure about CG but through education, we try to minimise the risks of not having some growth.

    Regarding Lynbrook, I would be holding onto this property for dear life. I wouldn't sell it, as I suspect over time this one will become an equity gem but rent may continue to lag.

    Honestly, the only property I'd want to be offloading if I were you would be the Gladstone property but only if you can't afford to hold onto it and perhaps reassess in the near future?
     
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  6. ellejay

    ellejay Well-Known Member

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    A really great guy on this forum said to me once that we always think everyone else is doing better than us. He was dead right. Most portfolios are a mixed bag from what I've seen because if it was that easy to pick winners we'd all be rich.

    Add value and/or cash flow where you can. Hold Gladstone if it makes sense, or if you can't sell. Lack of liquidity is the minus and positive of property investing. Great work by the way, you're way ahead of most people I meet. :cool:
     
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  7. WattleIdo

    WattleIdo midas touch

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    Since Gladstone is the one which is weighing you down, you really need to give it some intensive attention.
    Seems you were a bit too trusting on this one? That BA was perhaps off-loading with very good timing and you were the bunny who bought at the wrong time, paying an extra 10K for your trouble?
    But it sounds like you have a pretty good income/saving skills and one option might be to sit tight, since selling Gladstone is almost pointless, and not spend the extra funds on anyhting atm.
    As for the other properties, it's still early days. Time in the market could well pay off as mentioned wisely above.
    Time now to think about how you can work with timing and also pacing. Less emphasis on accumulation and more emphasis on getting back your SANF.
    I like your honesty and modesty. You're probably doing better than you think right now.
     
  8. Clayton

    Clayton Well-Known Member

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    Hi @Do Androids Dream, Sure, I’m in my late 30’s.. still feel like 25 but sadly others probably don’t see it that way haha! Cheers for your thoughts on holding Lynbrook, I’ll look to redo the courtyard and some internal paint refresh with the aim to increase rental then assess. It’s funny how the best performing property is the 50 year old one in a less-desirable area, goes to show when land becomes tight in a city your on a winning thing.
    @ellejay yeah seems like my mixed back of lollies (properties) I’ve picked a few black cats which I’m forced to eat for the time being. Only reason I may be forced to hold Gladstone in the short term is sadly some of the properties are cross-collateralized (another novice lesson learnt) and not sure it will be worth the hassle of the negative equity mess it will cause to the other loans. I want to untie the loans but I’m sure the bank will have the do a market value and may not be a wise move.
    Hey @WattleIdo .. yeah Gladstone certainly has weighed me down financially & emotionally, not worth the literally hundreds of emails dealing with the dramas but trying to see myself lucky that my purchase was low & nowhere near as affected as others by the resource downturn. I’m an idiot spending 10k buyers fee on a mid 200k purchase.. Ridiculous thing to do in hindsight! There has been quite a lot of negative stories of others purchasing through this BA, let’s just say how this person has made their big way into the property ladder isn’t how their selling their products to clients. Cheers for putting a positive light on the portfolio, here’s to marching forward in 2017!
     
  9. highlighter

    highlighter Well-Known Member

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    Absolutely. Try not to focus on anything "lost" as much as possible. Also try not to be so hard on yourself - investing isn't about accumulating properties as you say, it's about really considering where your momentum - your growth - is going to come from, and it's about knowing when to hold 'em and when to fold 'em.

    Assess each property based on its current performance and likely performance in the next few years. If you've got under performers (especially in areas where wage growth is low and new development has pushed many areas into oversupply) it might be worth pruning while the market is still high. Consider the prospects for growth in your suburbs in the next five years - especially with rising rates.

    Pakenham at a glance has an awful lot more listed on allhomes (370 properties) than have sold in four weeks (115). Not a terrible ratio, but there is a lot of new development on offer in an area without an awful lot of infrastructure, so as oversupply builds you will potentially be competing a lot of other new development stock. In Ireland, not to be alarming, but as the market slowed this is exactly the sort of location that performed badly and never recovered. While urban sprawl will eventually get there, if there is a downturn on the horizon these sorts of areas could be left in the cold in terms of attracting residents.

    Lynbrook doesn't look as bad in terms of supply (though its sales to stock ratio is actually lower with 5 sales to 33 listings - quite a few recent offers though) but it's in a similar urban fringe area.

    For North St Marys I'm not sure, it's another fringe location, outer outer Western Sydney in a low socio-economic area that has been the target of a lot of speculative investment. St Marys itself has seen a lot of development too, and has 97 properties on offer right now with 17 sold. Not the worst imbalance but not great.

    Morningside is another very oversupplied area - 145 on offer to 22 sales, but it is a very nice very central Brisbane location. I'm biased, living in Brisbane, however I feel it's one of the least "bubbly" major cities in that price-to-incomes ratios have remained barely in the bubble zone. Brisbane will likely be affected by oversupply but at the same time, I don't think it's at risk of falling as far as Sydney or Melbourne if there's a correction. There's not too much "correcting" to do, so to speak.

    If it were me personally (and bear in mind my advice might sound bearish as I lived through the Irish crash) I'd be dumping anything right now that is either an apartment or situated in a new outer urban fringe development. These are a dime a dozen in most cities, are often poorly developed with tiny yards and poor quality, they're usually extremely inconvenient, and buyers and investors are only choosing them because it's all they can afford. If prices do correct, these places will immediately lose all appeal - that's exactly what went wrong in Ireland. Prices there lost 50% overall but the vast bulk of this was in exactly those categories of housing - outer fringe development built and bought at the peak. A lot of developers went broke in these areas, leaving abandoned half-finished homes.

    So - could you consider selling some of those properties while the market is stronger and instead purchasing something closer to the city? I personally feel it is the time to buy quality over quantity. Even if there's no correction, quality is a far better investment. Generally this means good, well built detached family homes in established suburbs. Even if these drop in a downturn, they tend to attract strong rents and retain value pretty well (in Ireland these are the homes now growing rapidly in value - the "survivors"). I'd maybe avoid Sydney and possibly Melbourne which are right now seem madly overpriced but cities like Brisbane, even Perth, Canberra, Hobart - there will always be demand in these areas.

    So - to summarise. I think you've gone for quantity over quality. To be blunt I think most of your current holdings are on the risky side as they are on the outer urban fringe. If it were me, I'd dump the lot (except perhaps Morningside - even if the area is a bit oversupplied right now, it is going to be preferential to a lot of townhouse and apartment development much further out, and Brisbane isn't too overpriced. Remember too if the market corrects, a couple of years in will likely see rents start to spike sharply - common in a recession). I'd consider cutting your losses on Gladstone if you can sell. I'd also strongly consider checking out of either some or all of your fringe dwellers, as these will be garbage in a downturn and those markets are still doing ok for now - rates though might tank them, and rates are already rising. If you can consolidate any equity I'd perhaps look for a new high quality investment in a quality capital city suburb.
     
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  10. TMNT

    TMNT Well-Known Member

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    take it from someone who was half in this mindset, I tried to buy as many as possible, although I didnt have a number in my mind, I was buying as much as Icould possibl afford
     
  11. Sackie

    Sackie Well-Known Member

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    HI mate,

    Have you changed/adapted your plan moving forward?
     
  12. larrylarry

    larrylarry Well-Known Member

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    I think the above views are sensible. hard to argue. a personal decision for you really at the end of the day. you're young and can still recover.

    I'd like to buy more but has to fit my personal criteria and what I hope to achieve. quantity not equal to quality for sure.

    Keep us posted of your thought process as I think the above posters pretty much cover it.
     
  13. Do Androids Dream

    Do Androids Dream Well-Known Member

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    Hi @highlighter , thanks for offering a different perspective. I'm hoping to pick your brain a little bit more as I'm a newbie with almost my second property under my belt and would love to hear more...

    Are you basing the above recommendation (to sell all properties) in the event that there's some type of GFC? Significant interest rate rise?

    There are a lot of houses for sale in Pakenham, but how does the very low vacancy rate of 0.8% (source: SQM) with roughly 30% renters in the suburb stack up? I'm guessing one interpretation is that renters may have more options and more room to negotiate? But eventually those properties are rented out, as there's a population of about 30, 000+ in Pakenham itself which is expected to hit almost 40, 000 in 10 years.

    But even the above - greater housing stock availability and still some land - does not seem to have hampered growth of the suburb? 56 days on the market from memory and still CG avg is above 5% pa (8% this year), not far off Cranbourne. I think CG has been no less than -2% over the past 10 years for 1 year only from memory, but otherwise 5-15% pa (new housing sales probably added a bit here).

    When you say that there is not an awful lot of infrastructure, what's your interpretation of great infrastructure? Are you referring more to the presence of hospitals and possibly a University?

    Within Pakenham itself, it seems quite established to me with 2 x train stations, Vline to Gipsland, 6 x bus routes (925-929, 840) running throughout the suburb, roughly 5 shopping districts (Cardinia Lakes, Lakeside, Central market place, 4 X Woolworths, Bunnings, 4 X Coles, Aldi, McDonalds etc), 8+ schools, a community centre, YMCA, etc., so I thought this was quite good infrastructure??? :confused:

    Happy to hear your thoughts to help me understand ;)
     
  14. dabbler

    dabbler Well-Known Member

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    I do not think it is a disaster.

    I would sell in Sydney if it is IP, re buy when less demand.

    I would wait for Gladstone, it should improve, slowly, if it is a real pain, make a plan on what point to sell, can you go and live in it and work locally ?
     
  15. gman65

    gman65 Well-Known Member

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    Thank you for sharing your story honestly. Lot to learn from this.
     
  16. 2FAST4U

    2FAST4U Well-Known Member

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    Sounds like you got screwed by BAs every time you used them. Even the St Marys property you found yourself...I'd try and keep Gladstone despite the poor rental return and loss of equity. I haven't researched the area but surely unless the place became a complete ghost town it would have to increase in value in the future?

    I have a friend in Perth who has lost around 60k in equity on a Forrestfield purchase that he bought last year. He would only realise that loss if he sold though. Forrestfield is a suburb only 15km from the Perth CBD. He bought a nice 3x1 on a 700+sqm block and the Kalamunda Council had just made changes to the zoning making it more developer friendly and opening up subdivision potential. The area is also slated to get a train line/infrastructure upgrades in the future. Despite all that if he was to sell tomorrow he'd lose a lot of money. With time it should turn into a good purchase as population growth increases, rental vacancies reduce and the economy adjusts to the end of the mining boom and this era of low wage growth evaporates.
     
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  17. highlighter

    highlighter Well-Known Member

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    I believe Australia is in a bubble; really every possible measure indicates this is so e.g. price-to-income ratios, owner-to-investor ratio, price-to-rent ratio, debt levels, measures comparing house prices to income growth, rental yields, CPI, physical housing supply etc. Bubbles always unravel because their own internal pressures bring them apart. There are two kinds of housing demand. Firstly, as an investment, and secondly, as a residence. The latter acts as a sort of tether for the former. Investors (in a late bubble a lot of inexperienced investors) engaged in manic, speculative buying can push prices up quite rapidly in a bubble but eventually you reach a point where buyers (new investors and occupiers) can no longer afford to buy in, banks tighten their belts etc). Reduced population growth and oversupply also place a lot of internal pressure on the whole thing.

    You don't need a GFC - you just need people to stop buying into the market, because they can't afford it, because they can't see where growth will come from, because population demand is falling, because banks aren't willing to lend and so on. Rates will probably play a role if the market corrects, but even the actual GFC came after the housing market crashed in Ireland, USA etc.

    Basically in Ireland the situation was almost identical to the situation here now. Investment was extremely popular and every man and his dog within five years suddenly wanted on the investment train. It was called the Celtic Tiger. New developments popped up like daisies, and people (investors and occupiers alike) did buy them because prices grew so much they had little choice for affordability. Unfortunately, when price growth rapildy slowed through 2005 investors began to drop underperforming assets. In 2006 prices stalled and in some areas began to fall. The next year was also flat, and significant price growth didn't begin till 2008 - prices were already crashing, investors were leaving the market, developers were going bust, all well before the GFC hit. The GFC was a consequence, not a cause.

    We could debate the housing bubble here till the cows come home, but it's not necessarily a prerequisite to my point. Even if I'm wrong and there's no bubble and our market can keep growing rapidly forever, many of the locations the OP owns aren't ideal and are risky in a correction (keep in mind even without a bubble corrections are a reality of markets - we've gone unusually long without one in Australia, but we will not escape one forever).

    Investors and buyers who purchase apartments and city fringe dwellings are riskier than those who purchase established dwellings. These locations are usually cheap because they're tiny (in the case of units) or way out in the sticks. Their buyers are more likely to come under financial stress when the market turns. They're usually heavily indebted, so vulnerable in that respect. City fringe suburbia is often lower socio-economically because people who earn more tend to pay a premium for homes in "better" suburbs closer to the CBD, and wealthier groups are also less likely to be forced to sell in any recession as they tend to have both higher job skill levels (and thus employability) and also greater financial stability. Recessions tend to hit the blue collar workers much harder.

    City fringe suburbs like Pakenham can have some infrastructure and can be quite comfortable, but they are usually at least an hour's commute from the city (which makes for up to three hours of travel time a day if you work in the CBD, as a huge number of people do). These locations are far from beaches, entertainment, popular schools, popular shopping areas, universities, nightlife, events etc. Many people live in these sorts of suburbs not out of choice, but out of necessity - they do it because it is all they can afford. So if supply ticks up (due to the construction boom) and this puts downward pressure on prices or simply makes more homes available in closer suburbs, these closer areas tend to be preferential. Areas like Reservior for example that have seen a huge amount of development but are much closer to the city so if prices come down in some of those areas, they'll be much more likely to attract buyers.

    I don't have a crystal ball and can only speak from personal experience, but I've seen outer fringe suburbs exactly like Pakenham go belly up in a crash. A good one we were discussing the other day was the Irish suburb/ghost development of Belmayne - there were many newly developed suburbs out in the same area, but though they were very nice and "luxury developments" they were far from the CBD, developers went bust as demand for houses dropped - all the demand shifted to inner suburbs where, due to oversupply, there was suddenly a lot less competition for homes. It's possible Pakenham will do well, but if you look at Brisbane - up here we're already starting to see buyers snub outer suburbia. New developments in Caboolture, Ipswich etc are really just doing badly - because there's a lot of stock in Brisbane generally. Buyers have more choice, and the middle of nowhere is an unpopular choice when there are convenient, affordable alternatives offering the same lifestyle closer to the action.

    Given the likeihood of rates rising and the market being quite pricey, I personally wouldn't want to be holding anything in those sorts of areas, because in Ireland they lost almost all of their value. Areas like Belmayne turned into ghost towns and while prices are recovering very rapidly in Dublin (with some areas regaining all of their lost value) those outer fringe suburbs are still very unpopular a decade on and have barely budged since the GFC. As an investor, I wouldn't want to be holding them; I'd want the security of quality, popular suburbs that are always going to be competitive and will attract comfortable rents in an oversupply or downturn. Even if a downturn never happens, those areas don't have great prospects for growth, as the OPs discussion suggests. To residents they are suburbs of last resort, unattractive to those who want to "get away from it all" as they are easily as far as half of idyllic country Victoria (hell if you're going to commute for an hour why not live in Healesville or Kilmore or Yarra Glen instead of in the middle of an urban sprawl suburb?), targeted mostly by families who can't afford to live anywhere else; if the opportunity for those families to live elsewhere emerges, fringe suburbia will be the first on the chopping block.
     
    Last edited: 1st Dec, 2016
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  18. MTR

    MTR Well-Known Member

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    Reduce stress and move forward positively....

    I am going to be radical and I would sell the lot and basically off set capital gains with the losses and get a good accountant on board.

    I would then start again and keep learning, absolutely no rush with this one. Look at properties where you can add value, start with small development sites, older home where you can build at rear, sell front, keep rear and it will probably be cash flow positive+? that would be the goal. Or sell the lot and make small chunks of money and keep looking for opportunities.

    Don't worry about accumulating debt, oops......... I mean properties the goal is to increase your net worth and to upgrade skills so you can continue to invest in any market conditions. Some markets are now close to peak, this is where the unskilled lose their shirts...

    Don't build g/flats only buy properties where there is already a g/flat otherwise too much cash is required and harder to access all the equity, this may slow you down

    Keep learning and keep striving to fine turn.

    MTR:)
     
    bamp, Piston_Broke, Perthguy and 2 others like this.
  19. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    @highlighter Ireland seems to be a different animal to here, the last boom in Sydney I was thinking this has to be it for quite a while, but here was are discussing the latest one, and if I think back, same every time.

    I agree to a point, but a lot of the places have been there for a long time, are well established, however I am not that familiar with QLD regional, the mining towns do own thing.

    Often when things have been tough here, the upmarket Eastern suburbs got it in the neck, because if business did not do well, less people could buy these places, similar with boats, they sell the toys when business is doing bad.

    Anyone who probably bought 3-4 years ago is going to be ok, but like you, I would not want to be one of the ones last on the investing bandwagon or maxed out Mcmansion in any spot in Sydney, nor any of these fringe areas that could find more desirable established locations pull back and all of a sudden be a similar price to what they paid on the fringe.

    Syd and Mel have to be in for a correction.
     
    Perthguy and highlighter like this.
  20. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,741
    Location:
    Sydney
    @highlighter, I agree... its the fringe properties and anything poorly located that will suffer in a downturn. People with money will upgrade to live closer in.
    Few people want to commute 3 hours or more each day if they can help it.

    Where I am, a huge number of residents have been there 30 odd years. It's a forever home type of place. Everybody has paid off their homes. No mortgage stress.

    The new estates on the other hand have lots of homes with high LVRs, and have the double whammy of being far away from everything. If interest go up and/or there's high unemployment these areas will suffer. Friends moved from Stanhope Gardens to Artarmon... its just better located.

    Another friend moved from their townhouse in Prestons to rent a unit closer in as the commute drove them nuts.

    Of course, if your far out located place has something going for it, that's an entirely different story. But if it's cookie cutter, no differentiation, I think you'll suffer the most in a downturn.
     
    highlighter likes this.

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