Join Australia's most dynamic and respected property investment community

SA DAVOREN PARK ADELAIDE advice please

Discussion in 'Where to Buy' started by Barny, 16th Oct, 2015.

  1. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    Hi everyone, It would be nice to hear your opinions on Davoren park Adelaide and in general.

    I have an investment property there for the past 3 years and it's been renting well and gives a good return. Price hasn't moved in growth and I don't know if it will anytime soon, I purchased it with the idea of keeping it and using it as an income for life through rent. I was also hoping the area would improve in time and perhaps be a more liveable area which would hopefully attract some growth. I'm not sure this will happen, and with Holden closing soon, I'm sure it's another set back that will affect the area.
    My tenants have been ok, I have read many horror stories with bad tenants in the area, damaging properties, and I've had this happen to 2 of my other properties in other states in much better areas in the last 12 months so I understand what it's like.
    My biggest concern at the moment for the first time in 18 years investing is the economy, and perhaps where Australia is headed. This has lead me to perhaps offload one IP property and better safe guard myself. It's hard not to get caught up with doom and gloom news continually, and looking further into it. I'm not confident with the way things are heading.

    So I guess I would like to hear your thoughts on daveron park, do you perhaps see this place improving in the future? Do you think it will get worse, have I just been lucky with a good PM selecting good tenants? Anyone else have property in these areas surrounding and happy with it?

    I'm really trying to get everyone's feel for this area, to help make up my mind whether I offload it now, or 6 months time when the tenants lease is up. or keep it and stick to the original plan.
    Some figures that may interest some, purchased for 217k, rents for 270, getting it valued but from my own research it's between 210-230 sale price today if anyone buys it. 9 year old home 3 bedroom, 1 bathroom, garage and lock up boat shed out the back on a 470sqr block.

    I would really appreciate any feedback you have, I hope it's not just my current head space influencing this decision. Thanks heaps.
     
    Last edited: 16th Oct, 2015
  2. Nemo

    Nemo Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    265
    Location:
    Somewhere
    I can't comment on Davoren Park in particular as I don't know it well... But I have seen a lot of development in the area.

    Across the road they are building the Playford Alive subdivision which, in my opinion, will do good things for the area. Lots of shops and businesses opening up and families moving in.
     
  3. joel

    joel Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    783
    Location:
    Adelaide
    Davoren Park is probably the worst suburb in SA. Whether that means it will be lifted up by the development in the nicer (relative term) neighbouring suburbs, I don't know. Moving forward, I don't think Holden's closure will have much of an effect on prices there and you are lucky to have secured a good tenant - hopefully they renew their lease.
     
  4. Nemo

    Nemo Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    265
    Location:
    Somewhere
    What were your original plans for the property?

    Seems like a lot to spend in Davoren park... Particularly when it's a new property without much scope to add value.

    Not sure buy, hold and wait for growth is a great strategy out there.
     
  5. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,621
    Location:
    Sydney
    That area has quite a reputation on this forum as being a really rough place. Most stay clear from it. That fact that your tenant is good and paying every month is nice. But also consider when your lease is up, can you get another quality tenant? No CG in the last 3 years isn't a huge concern relative to the area. Not much has really skyrocketed. So don't be too worried in that regard. CG takes time especially if you miss the right time in the cycle for that market. Doesn't mean it isn't going anywhere. Just means you have to wait longer for the next upswing. If the yield is good for you and the purpose is to LOR later on then cashflow seems to be the objective.
     
  6. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    Original plans were for the rental return, to live off the rent, it helped leverage my cash flow for the next property. with the potential for an improvent in the area in the longer term, which I thought would attract better people to the area, hoping that would also attract growth too. I just can't see it happening, I need other investers to set me straight with it. Sometimes taking a loss now(about20k) Might be the better choice, unless you guys think I should hold it, believing the area might be better some day.
    I've had 2 tenants in 3 years, first one was incredible, these new ones are ok, difficult, but ok. Just spoke to my PM and he advised there's lots of new cheaply built homes going up, which will probably affect my rental price if these tenants leave. Will most likely drop 10-15 bucks a week.

    I didn't purchase to add value on this one, developed another project in Melbourne after that. This was a set and forget. But I haven't forgotten.
     
  7. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    Do you think it will ever have a cycle of growth going forward
     
  8. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

    Joined:
    14th Jun, 2015
    Posts:
    2,099
    Location:
    Sydney & Adelaide
    Davoren Park is one of the worst tenant pools you can get. There are better areas at a similar price point.

    Many PM's wont take on listings there, or charge a premium to do so due to the time cost associated with managing a tenancy there.
     
  9. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    Reckon I should offload it, 20k loss, perhaps better returns elsewhere at a later investment time?
     
  10. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,621
    Location:
    Sydney
    All areas in cities have growth overall. It will come. The question is how long do you want to wait? And can you manage the holding costs until growth comes? @DaveM is very experienced in that part of Adelaide. His opinion is one that I'd listen to and take onboard.
     
    Barny likes this.
  11. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    Thanks York. I can hold, just don't won't to loose the opportunity costs of holding out and hoping for growth in an economy that isn't looking to bright in the current or near future. I'll see what dave has to say. Cheers
     
  12. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

    Joined:
    14th Jun, 2015
    Posts:
    2,099
    Location:
    Sydney & Adelaide
    20k loss + selling fees + buying fees/stamps? Its hard not to be CF+ in the north, most likely just hold on and enjoy the cash
     
    York likes this.
  13. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    1,387
    Location:
    Melbourne
    yes its a rough area, but my question is , ferals still have to live somewhere,

    what ive found is that because the ferals still need to live somewhere, they cant forsee the fact that, if they misbehave then they wont ever get a rental ever again,

    so then what??? public housing???
     
  14. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,578
    Location:
    Adelaide, SA
    I have properties in adjacent suburbs so am no stranger to the area and even I wouldn't invest nor manage there.

    If you already own the property and its cashflow positive, i'd just keep it and invest elsewhere for subsequent properties.
     
    York likes this.
  15. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,167
    Location:
    Adelaide, SA
    For the same price, I'd rather invest in Smithfield/Elizabeth.

    Davoren Park is an absolute dive, but there isn't a pricing differential to justify the quality reduction.
     
  16. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    Thanks team, appreciate all the feedback. 20k loss was including buying and selling fees. I think I'll give it a few days prior to making a decision. TMNT I read your story recently, guess you felt the same.
     
  17. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    When I first invested here, I was under the impression that most of the housing commission areas where being torn down, and people redistributed into other areas of the city. Making way for newer families looking for a better lifestyle. Boy was I wrong.
     
  18. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,578
    Location:
    Adelaide, SA
    I think thats true of the council as a whole, particularly parts of Smithfield and Elizabeth.
     
  19. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,178
    Location:
    Melbourne
    DT what are your thoughts on the areas future, worth holding now?
     
  20. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,578
    Location:
    Adelaide, SA
    Definitely, and I'm holding myself. There was an area across the road from Curtis Rd in Smithfield Plains (which is very close to your property as well) which was all vacant a year ago. Now it has a petrol station, big medical centre, a vet, 3 fastfood places, a woolworths, a gym, a govt community centre etc. These are those flags of private / commercial / government spending that Rixter talks about in his posts.
     
    Jye likes this.