VIC Does anyone invest in cheap property? Low outlay, low socio-economic areas?

Discussion in 'Where to Buy' started by Bee-mumma, 24th May, 2018.

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  1. Beano

    Beano Well-Known Member

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    Mine is Rent less expenses less a allowance for vacancies LESS depreciation OR instead of LESS depreciation LESS CaPX (that is necessary to maintain rental)
    Divided by cost of investment
    Interest cost does not feature in the Net Yield
     
    Last edited: 25th May, 2018
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  2. Harry30

    Harry30 Well-Known Member

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    Yep, that is how I calculate it.
     
  3. Brendon

    Brendon Well-Known Member

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    I think rents in most areas will only rise with inflation and not much more.
    Even with small rental growths it will continue to produce positive cash flow making it easy to hold the property.

    In terms of growth, it's about the land as much as the house. So my properties are mostly land value which will mean in the future CG can be artificially manufactured through development
     
  4. Brendon

    Brendon Well-Known Member

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    I have a few coastal properties (Phillip island) and a Geelong one.
    Mostly old houses on good blocks.
    All slightly negatively geared but not anywhere near as much as similar properties closer to Melbourne, and cashflow will increase dramatically once developed.

    I'm not a big fan of highly negatively geared properties.
    A) I think it's a punt that CG will come
    B) I'm not a really high income earner
    C) I want to enjoy life and not be tied to my job (too much)
     
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  5. TMNT

    TMNT Well-Known Member

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    I'll bite

    Depends how regional
    Some say a good pm will solve the problem.
    I disgaree

    You can take that trash out of the trailer park but you can't take the trailer park out of the trash

    A good pm will reduce those chances but not eliminate
    That being said a good tenant living in a 2m house could also turn feral too even with a good pm.

    PM's aren't magicians or fortune tellers


    As for growth I'm about 8 yrs since my first purchase

    Admittedly my absolute cheapies have had mixed results. Some have not moved. Some have gone up ok. Decent percentage wise but that could be due to good buying as well.
    Selling will wipe off a decent chunk of these profits.
    Obviously these are spread across the country

    That being said ive got houses in the same street virtually. One tenant hasn't said boo in 5 yrs. The other I've been through like 7 tenants in 5 yrs and 3 insurance claims
    So it's luck of the draw to a certain extent

    As some have said, a $1000 heater costs the same whether it's a dump or million dollar house.. So maintenance is something to consider. Also consider rates are a fixed component and land value component so although the rates aren't the same for either but they're not directly proportional

    If I was going to start over I wouldn't go as low end. And I'd mix in a few more blue chips including commercial

    And I would have bought bitcoin 5 yrs ago
     
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  6. Ross 355

    Ross 355 Well-Known Member

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    You won' find much around the 200k Mark in mt druitt mate.
     
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  7. datto

    datto Well-Known Member

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    True. But that amount would make a great deposit.
     
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  8. Msx

    Msx New Member

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    Hello,

    I live in Melbourne and we interested in considering to invest into the residential property in
    La Trobe area (primary interest - Morwell and Churchhill, because they are cheapest).
    Friend of mine has recently bought IP in Morwell (south part of railway, close to CBD).
    He paid around $180K for the brick veneer house in original but solid condition (house was occupied by its owners - the old couple) on a land about 610m2
    Following the purchase, the tenants were in 2 weeks after placing the lease ad, and the rent is 260 per week.
    Such scenario sounds like a reasonable deal for us and we would like to get more information about that area and the expert opinions about the trends of the property pricing in that region.
    Can you please possibly help us with more information about perspectives for that area after recent power station closer and provide some info about the best spots, public facility locations etc.
    Also - awareness of the spots to be avoided - such as for example the housing commission estate pockets, areas with structural, flooding or noise issues etc.
    The separate item of our interest is how big should the land size be for comfortable perspective of future subdivision for this locality (in case of corner site as well as NOT corner site), and which spots are currently allowed/ not allowed for future subdivision? (essentially, a zoning geography of the area).
    We also would like to know more about the rental outlook - how hard to find a good quality long term tenants ?
    Ideally we are looking IP around 150K with subdivision opportunity, as well potential for soon price increase and good rental return . I know, that it's hard to find and it's too good to be true ))))
    It's not our first investment - we have a few already in Melbourne and Sydney, but looking for possibility to extend our portfolio with not expensive regional IP. We have never visited that area (but are going to, during the oncoming or next weekend for getting familiar with the region) and we would appreciate any info and suggestions from your side. Thanks
    P.S. We will also consider coastal area around Wonthaggi and I will open another topic about it later.
    At this stage we are looking for more information about La Trobe due to our coming visit to this area.
    Thanks
     
  9. radioactive

    radioactive Well-Known Member

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    Which would be a better option-2 hr drive distant areas like MOE or 40kms from Brisbane CBD?
    Any opinions?
     
  10. SMTY

    SMTY Active Member

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    1 Vote for Brisbane
     
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  11. Harry30

    Harry30 Well-Known Member

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    Don’ necessary think of Melbourne or Sydney as having One CBD. Think parramatta (Sydney) Box Hill (Melbourne), both have future potential airports.
     
  12. New Town

    New Town Well-Known Member

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    My QLD properties with low rent of under $250pw usually run into negative cashflow after all costs - though I'm including P&I repayments.

    In general my advice, even for the cheapies, would be to get something that makes at least $300pw to avoid seeing your monthly rents devoured by expenses.

    In terms of tenant fun I've had two separate tenants from the one house arrested and put in jail - one for a knife fight and about a year later one for extortion. They were good tenants otherwise tho :eek:
     
    Last edited: 13th Jan, 2019
  13. spludgey

    spludgey Well-Known Member

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    Ahm... no!
    Badgerys Creek is further from Parra than Mascot is!
     
  14. The Y-man

    The Y-man Moderator Staff Member

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    Haven't heard of any plans for an airport at Box Hill (Vic) but if they build one, will be damn expensive! (Maybe they'll do it during the upcoming property crash?)

    The Y-man
     
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  15. Harry30

    Harry30 Well-Known Member

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    Was saying that Box Hill was developing into a 2nd CBD much like Paramaratta. And there is talk of s second airport out east (not quite in vicinity of Box shill) albeit the concept much less developed than B’s Creek.
     
  16. Beelzebub

    Beelzebub Well-Known Member

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    That would be a third airport then (Tulla and Avalon). It's not going to happen
     
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  17. The Y-man

    The Y-man Moderator Staff Member

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    I have always argued a Pakenham International airport would be great.
    Plenty of flat land (needs ot be protected form the occasional floods though), rail and road infrastructure already there.

    I posit Dandenong is the other cbd centre (not Box Hill, or anywhere within 10km of it).... but take my words with a grain of salt as I have financial interests in commercial and industrial properties in Dandy :D (...but then again I have money sunk into the centre of Box Hill too!)

    The Y-man
     
    Last edited: 14th Jan, 2019
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  18. The Y-man

    The Y-man Moderator Staff Member

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    Well, @Harry30 did say "airport" and did not specify what type - which means Moorabin would count too. :cool:

    The Y-man
     
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  19. Msx

    Msx New Member

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    Specific demography of Box hill make it not attractive for many investors, including us.
    I don't believe that any specific mono cultural area have a good prospective for price increase. It will encourage some group of people , but will discourage other.
     
  20. Toby

    Toby Well-Known Member

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    Box Hill does not have a potential air port...