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Buying in areas of high public housing concentration

Discussion in 'Where to Buy' started by markson, 26th Mar, 2016.

  1. markson

    markson Well-Known Member

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    Hi Everyone,

    What are everyone’s experiences with buying in area's of high public housing concentration? Obviously once you start to get over the 50% rate the housing becomes quite cheap and most of these areas are already established close to suburb CBDs and transport.

    If the CG for the suburb grows by 5-10% then I am assuming the public housing areas would still be growing?

    Might be harder to sell?
    Lesser quality of tennants? But are still paying the same management fee's as the "nicer" areas in the suburb.
    Rental yield in these areas is often 6%+

    Just gauging everyone's experiences?

    Thanks
     
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Do you believe that you'd get a discount because it may be harder to get good tenants?
     
  3. markson

    markson Well-Known Member

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    Sorry what I meant was I would be paying 7% management fee and so would an investor on the opposite side of town with lower housing commision houses. Both our management costs would be the same.

    More chance of property damage or rent default due to the lower standard of tennant, however thats what insurance is for.
     
  4. MSD

    MSD Member

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    If your goal is CG, I think the HC properties can be good prospects.

    For yield and attracting tenants, some that I have inspected are better than others, but generally they are solidly built. I look for a good floor plan and hardwood floors.

    What are the neighbours doing - building new houses? Renovating?
    Is the government selling them off in bulk in the area?
     
  5. TMNT

    TMNT Well-Known Member

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    A couple of key points from me

    If its hc then it will be (or should be) cheaper than non hc

    A tide lifts all boats
    Greater possibility of cg % than non cg
    Riskier property management

    Risk vs reward vs timing
     
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  6. markson

    markson Well-Known Member

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    Thanks @MSD and @TMNT.

    I have been looking at suburbs with a < 1.5% vacancy rate. Properties in areas with a high housing commision percentage are going for the $250k mark and a rental yield of 6%. Not an area for a PPOR but could provide a cheap IP.
     
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  7. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

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    I have found it depends on what the area is or where the area is i suppose you could say .
    Mount Druitt in Sydneys West a mix of housing dept has risen very fast , doubt you can get a private house in the mix for less than 450k nowadays.

    Then go about 25 minutes South to Liverpool and they are a lot cheaper.Claymore etc

    I bought in a mix of Housing Commission at Lake Haven on the Central Coast of NSW and its rising steadily .
    On the other hand Windale in Newcastle is going down on price i have noticed.
    Same as Ashmont in Wagga Wagga.

    I guess it depends on crime statititics, and who are the houso tenants, are they senior citizens predomitially or young families, single mums or people with mental problems.

    Is the area full of graffitti, cars with no wheels , ciltural gang violence etc

    Obviously quality of tenant is lower depending again in the area .
     
  8. Xenia

    Xenia Adelaide Property Manager Business Member

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    Spot on. In all areas where there is continuous release of land you get low growth and low rent increases over time compared to the nicer areas where there is scarcity of land.

    It's the simple supply and demand formula.

    Also more difficult to rent, more difficult to sell in those areas.

    I see investors purchase these types of properties at the same price they were sold 5 years earlier.

    Keep in mind, cheap to enter, cheap to exit.
     
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  9. Xenia

    Xenia Adelaide Property Manager Business Member

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    Land release in what you are talking about here, is just building upwards. It works similar to releasing land
     
  10. Seal

    Seal Well-Known Member

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    I just looked and it looks like windale has been increasing?
    did you get some other data? upload_2016-3-27_15-16-11.png
     
  11. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

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    Yes last year prices in Windale were medium 300's now there down to 300 and below.
     
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  12. markson

    markson Well-Known Member

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  13. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

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    Im not interested in silly graphs... I live by the old way .. House prices were rising last year in Windale now they 're not , same with Surry Hills and Darlo ... Now my apartment is selling less than it could of 12 months ago.
    I dont need graphs to look at .

    I dont look at graphs i just look at what i saw ... Commonsense.. Thats why i dont need a uni degree .


    Same with the ********s whose job it is in the public service to look at graphs on crime .. Rather than look at graphs far better to get off your big bum and go out to meet the locals i told him and ask them.
     
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  14. hash_investor

    hash_investor Well-Known Member

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    Is there anything for sale in claymore? I can't find it.
     
  15. Azazel

    Azazel Well-Known Member

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    How do you know without looking at the data? Do you look at each individual sale personally?
     
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  16. Chilliblue

    Chilliblue Well-Known Member

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    I would err om caution as each area has its own unique points and risks.

    For example Orange in NSW. Plenty of people got in and crowed about their fantastic HC property buys a few years back. Today, many of the towns agents do not take on certain areas on as managements and there are properties that have been vacant for months.

    Those great buys are not so great now.
     
  17. Azazel

    Azazel Well-Known Member

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    Sounds similar to stories in Wagga Wagga and Tamworth.
    Depends on the area as well, there are some really good spots in Tamworth - and really bad.
     
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  18. Antos

    Antos Member

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    I think it's getting redeveloped and should be coming up soon. This area will do well with the amount of demand, but will probably come on at market value without the re gentrification upside.

    My old hood. Next level back then. An arsonist was setting vacant houses on fire, then moved onto burning a family of 5 while they slept.

    They will have to change the name.
     
  19. Otie

    Otie Well-Known Member

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    I went to an auction inFawkner (Melb) yesterday. Non HC houses on same sized blocks in this suburb go between 530-600k plus. The auction I went to was in a street where every house was HC. There was rubbish everywhere as it was hard rubbish week, which could have had a bit of an impact, however the nearly every house looked like it could be on the show "hoarders"- couches on front verandas, rubbish thought the yards etc. I would have bought this house if it only a handful in the street were HC, but it just looked like this street could take 20 years+ to improve, none of the homes looked like the owners were house proud. Every single house was HC. It got passed in at auction for 380k, which is a bargain I guess but I just couldn't do it personally. I bet in 20 years I will be kicking myself but anyway!
     
  20. melbournian

    melbournian Well-Known Member

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    i walk by back from work everyday and pass the supesized block of housing comissions flats off cecil and park street in south melbourne. Just next door is a complex of townhouses which were sold for 1.1 mil in 2008. one recently sold for 3 mil. I believe they do no affect buyers esp in inner city suburbs (like within the 10 km mark). Richmond is full of housing commissions yet also can be sold for millions.