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

One thing I'd like to add to this discussion, if you have the means & time, consider self-managing for the portion where you only have a few properties. Many of these areas where this strategy is typically practised have higher management commission percentages than normal. Saving that fee alone is a lot with these rentals.

HOWEVER:
It is risky to self-manage and could cost more both in the long run & if you have to reguarly inspect (particularly considering these are low socio-economic areas=you will want to).
To reduce this risk you could:

• Consider having the first few within driving distance
• Consider having the first few within driving distance of a close friend
• Have an on again and off again property manager for troubling tenancies

Cheers.

 

OMG! No! Don't do it! Especially in welfare areas!

Just NO!

A good PM is worth every cent.

 

When the rent's that low, that'll be all they get

 

Completely agree!

Only self manage if you think and actually do know as much as licensed real estate agent

 

No self-respecting PM is going to want to be an on again off again PM with your problem properties. You will be known as the Problem Landlord.

 

Even assuming you knew as much as a pm....I would never want to deal with all the dramas, sob stories and bs tenants some times ( or often, depending the area) throw at you . Also my personal opinion is that a buffer between tenants and landlord is a very useful thing to have .

 

With a desire to defend my position, I did say it is Risky and I would point out that yes a good PM can be worthwhile, however this forum is littered with people who have had bad ones or had to cycle through many bad ones to get a good one=a bad one (singular, not even plural) with this strategy can cost an awful lot.

I too agree with @Sackie though that having a barrier can be useful-however with your full name on the lease and the internet, many of us could easily be found & contacted direct if someone really wanted.

 

Having had over 20 properties at one stage I'm guessing they all weren't in prestige areas, so, tenant issues would of been considerable at times. This alone has always deterred me from amassing a large property portfolio. Sure a good property manager takes the sting out, but they are not magicians and can't solve all problems. Certain decisions still fall on the landlords shoulders.
I simply find other asset classes to be less hands on and consequently less of a headache.
Doing restoration or repair work yourselves would of been fulfilling. Unfortunately while running a business I didn't have the time.
My lifestyle has been achieved through business primarily with both property and LIC'S playing second fiddle.
Great to see some (maybe a few) achieve financial freedom from property alone.
Well done!

 

You are right, the more properties you have, the more likelihood of having bad tenants, however we have found that there is no rhyme or reason behind bad tenants. You can have very good tenants in bad areas & very bad tenants in good areas.

Other asset classes ARE less hands on, & we have been pouring some into the stockmarket, but nothing beats property in boom times.

 

And there it is. Reality. You can argue about it, theorise about it or pull a nike and just do it. Kudos @skater

 

That means when interest rates goes up(generally inflation) the prices in lower SES goes up because the yields are attractive for investors and affordability for OOs. May be location and gentrification has a role to play like you suggested.

 

That was the thought in May 2018. Look where it's now, only took 2-4 years! How COVID's changed things..

 

I bought in Hamilton Vic last year while everyone was buying in moe morwell area. while i was getting "you bloody nuts" and "don't invest in Hamilton" im reaping the rewards at this stage, about to finish a reno and see a $90pw increase in rent! median rent is 350pw and i was only asking 250pw. being a sparky most of the work has been cosmetic but also I've done all the electrical work to the house including new fans lights switchboard PowerPoints etc its definitely been worth its weight! cleaned up garden cut trees down and painted house.
we kicked the tenant out as she was 2 weeks behind in rent.

Demand in the area for rentals has been insane!!!

 

Good to hear, congratulations!

What is the capital appreciation been like since your purchase?

 

Thankyou very much!!! It's such a beautiful area!!!! The buildings and the people are just wonderful! It's everything I hoped for!!!!

Well I bought it for 215k spent 25k (plus a free 15k roof) and current value is 340k hope to rent it out for 340pw everything around it is going for 380-400pw