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. Harry30

    Harry30 Well-Known Member

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    Sorry for not being clear. I was not suggesting they would have airports built close by to those suburbs. A proposed airport has been contemplated in the south east of Melbourne for some time so satellite CBDs in these area would benefit. Admittedly, it’s a long shot. Unlike the 2nd airport in Sydney (BC), getting a second (3rd) airport in Melbourne is a long way off.
     
    Last edited: 14th Jan, 2019
  2. Msx

    Msx New Member

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    We found a few houses in Morwell , which matching our requirements and requested section 32 for one of them.
    We found that property on a top of usual easements related caveats also have caveat related to "mineral resources development act 1990" and few other caveat's clauses , related to mining.
    Can somebody comment it, please?

    Is this sort of caveat common for any property in Morwell or specifically related to certain part of town?
    If yes- which parts have this type of caveat ?
    Also how this caveat affected property/land price and future subdivision opportunity?

    we found that this house on a market for more then 6 month-is this caveat can be the reason or it's just co- accident?
     
  3. momentum26

    momentum26 Well-Known Member

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    Just curious, what would be the minimum number that you would be looking at in order to go ahead, once the above calculation is done to one of the potential purchase.
     
  4. Xiao Hui

    Xiao Hui Well-Known Member

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    My brother bought a 550sqm empty land (used to have a house on it but was burnt down) in a "Rough area" in Bendigo from the housing commission in 2015 for $55,000 - very low outlay and he paid by cash.

    It was sold 2 years later for $75,000. Less all other costs like stamp duty, lawyer fee, council rates etc he still earn around $15,000. Not too bad a return considering the outlay was little and the area is very low socio economic.

    Who says you cannot make money buying in crappy areas?
     
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  5. gty12

    gty12 Well-Known Member

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    Have a look at this link:
    2017 Strategic Investor of the Year: Crystal Palmer

    This was an investor who bought cheap, small, regional homes with the basic strategy (from what I can make out) of having the best interior in town of the home=the idea being that when vacancies rise, good interiors trump poor ones because what you have to pay for good versus poor is relatively small=i.e. she always has a tenant.

    My advice though for buying in poorer areas=use Microburbs, the data is old (2011) but it breaks down a suburb into areas based on Census data and that way you can at least know you are buying in the best area in the worse suburb. I have seen differences of almost 40% in median income across different pockets of a suburb.
     
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  6. Beano

    Beano Well-Known Member

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    Based on market rentals 6.5pc
     
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  7. gty12

    gty12 Well-Known Member

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    @Msx if you are going to pay the $100,000's for a property, and you really like this place. My advice is to have a local draftsman or conveyancer break it down & explain it to you for $100 odd.
    Well worth your money I'd say.
     
  8. gty12

    gty12 Well-Known Member

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    @Msx same as I said in my previous post, talk to a local draftsman about subdivision because it depends on what you want to build. Be wary with a $150,000 suburb you will fairly easily stray into negative margin on development=i.e. building a new home is likely to cost more than the home is actually worth.
    You'll have to wait years if not decades for this negative to turn to a positive (=home going up must be greater than inflation of building costs). Even buy, developing and holding is not likely a good strategy as you could probably have just bought another house in the area for a much better yield (think about it, you will have the rent of a $150,000 house but a construction loan of more like $250,000).
    Finally read up on depreciation benefits with new builds. It sounds like you have a decent income from having a few investment properties but still, depreciation benefits on new builds are significantly better the higher your income.
     
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  9. sasa

    sasa Active Member

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    Glad to see the same question I used to ask.
     
  10. Ross 355

    Ross 355 Well-Known Member

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    Good luck finding something in mt druitt for that price.
     
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  11. datto

    datto Well-Known Member

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    Yeah it wasn't clear. It should read "45 kilometres west of Sydney". 450K should get you a house out there.
     
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  12. Paula Ospina

    Paula Ospina Active Member

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    Quick question...if anyone can help explain.

    I was having a read through the Valuer Generals 2019 Property market movement report, and theres a section where they speak about Logan- it noted that the lower socio-economic areas such as Woodridge, kingston etc had the larger increases ... I was wondering why? is this just due to the demand from investors that occurred and will this have an impact on values in those suburbs over the next couple of years?

    "Logan City land has experienced a minor increase overall since last being valued in 2017. Since then the market has continued to improve with demand for more affordable land driving the residential land market with stronger increases recorded in suburbs such as Logan Central, Woodridge and Kingston."
     

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  13. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    I Looooovvveeeee Mt Druitt. - Just had a 20 second search farrkk the houses arent cheap there even after the so called Sydney correction. Geezus.
     
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  14. Angel

    Angel Well-Known Member

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    I would agree that this was due to every Tom Dick and Harry from down south buying into Logan's lowest priced suburbs in a buying frenzy a couple of years ago. Same happened in the cheapest parts of Moreton Bay when the University development was announced. I would caution that these "fastest growing" suburbs have run out of steam and have cooled off a bit while their nicer neighbouring suburbs steadily plod along without any media fanfare.
     
  15. Daz1979h

    Daz1979h Member

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    Hold on for the long term and 20km from the city won’t seem that far at all! The stigma might not change but the prices will be going upwards.....
    Yeah,nicer suburbs will do better but if you have nice yields and small capital gains you will be fine!
     
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  16. skater

    skater Well-Known Member

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    Yep, bought & sold many over the years.

    If looking at Gippsland, take a look at Traralgon. IMHO it's the best suburb in the area. Many reasons why, I just can't remember them now.

    Is this theory....or do you have a reason?

    This is exactly how we were able to eventually live off of rents.

    I remember one poster, many years ago saying "Don't sweat the small stuff", in relation to giving $5pw rental increases & how it's not worth doing until you can do maybe $20pw. My very long winded post basically agreed that $5 was a small amount, but over the space of a year it was $260, still a small amount. BUT if you have 5 properties all getting a $5 rental increase each year, that $260 turns into $1300. Better yet, if you've got 10 of them it's $2600. Over the 4 year period to get to the $20 increase, you'd be better off by (for 10 properties) $2600 the first year, $5200 the second year, and $7800 the third year before you reached the magic $20pw. A total of $15600 better off than if you'd waited. It's much better in my pocket than my tenants. :)

    At the time, I believe I had around 20 properties, all cheapies, & I was relentlessly putting up the rent at every opportunity. It might only be a small amount, each time, but it adds up pretty fast.

    BTW, have you looked at the rent in your Elizabeth properties, because mine's going up all the time. I'm getting $230 & $235pw for two very average properties.
     
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  17. Scott No Mates

    Scott No Mates Well-Known Member

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    I'd much rather a $5/wk than $5/yr ;)

    A small nip is more palatable to the tenant than a $20 hike. It's barely a cup of coffee/week but do it over 4-5 properties you get your daily coffee fix for free.
     
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  18. skater

    skater Well-Known Member

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    Oops, typo.

    Exactly! A tenant isn't going to question a rise of $5 either, so keeping at market is very easy.
     
  19. TAJ

    TAJ Well-Known Member

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    Curiousity has got the better of me. Do you still have 20 properties?
    How much time, honestly, do you sacrifice in keeping track of all rental arrears, maintenance issues, tax concerns associated with having a portfolio of that size?
    Living off rent is admirable, but I sense it is in no way a truly passive income stream that most desire in their latter years.
    Get your drift of small rental increases adding up to being considerable over time.
    $5 in lower socio economic areas fits the bill.
    I have only 3 IP'S and find it hard at times to keep on top of all the ********e!
     
  20. skater

    skater Well-Known Member

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    I had MORE than 20. No, we've sold down progressively so Hubby could retire.

    Hardly any to be honest. The PM's do the hard lifting. I enter all the accounting into MYOB & the Accountant takes it from there.

    We have been very hands on, in the past, with local properties, so yes, that can take some time. The thing is though, that you don't NEED to be hands on. Property needs painting? Well you've got two choices. Do it yourself, or get a painter. If you do it yourself, you save a lot of money, but you have to do the work, so that isn't very passive.....but you can make it passive by telling the Agent "Please arrange for a painter". It's your choice.

     
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