How important is it for population to be > 10,000

Discussion in 'The Buying & Selling Process' started by brettosm, 5th May, 2016.

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  1. brettosm

    brettosm Member

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    Hello forumites :)

    I'm looking to buy with my dad for his PPOR and for my future investment property. We are looking up to $300k for a house with a garden. He favors towns that offer a country vibe and sense of community. So far he has liked areas with a population < 10,000 e.g. Terang, Cobden and another I don't recall. I've been insisting the population should be at least 10,000 as a sign that it has growth potential and atleast average rental demand. He insists that although Cobden's population is only about 2,000 and has no train, it is still a good area because it has a large milk industry and is 20 mins from Warrnambool.

    Am I just being nuisance by insisting the population is > 10,000 or is that actually really important in terms of the property holding value?

    Please help!
     
  2. larrylarry

    larrylarry Well-Known Member

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    What if the milk company collapse? What other jobs are there? 2000, IMHO too little. You can buy houses under $300,000 in bigger regional areas with more diversified industries like Albury Wodonga. His optimism in small country towns needs to be questioned. Perhaps he's really only thinking about living in it himself and hasn't thought it long term.
     
  3. Gockie

    Gockie Life is good ☺️ Premium Member

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    Does the area have a high school? If not, my opinion is, don't buy there.
    But if its for a ppor for your dad, could be a different story. But since you will part own it, you should only invest what you are comfortable in.
     
  4. Jerry O

    Jerry O Well-Known Member

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    10,000 people is not many.. Capital growth is about the imbalance in the supply and demand chain. What are the factors that you think that area has or is planned to have for it to be desirable to live in? How can the place attract more people to create demand?
    How many more acres of land can be developed to supply the demand?
    How many industry are the 10k people working in? I hope its not just one?

    First you need to ask yourself those questions, and answer them yourself. then ask you dad the same questions. By asking questions, you might make him realize that there is more to a proper due diligence than just a hunch.
     
  5. Propertunity

    Propertunity Well-Known Member

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    Here's the problem - PPORs are an emotional decision and emotions have no place in choosing an IP. There is a conflict of selection criteria that there is no answer to.
     
  6. HUGH72

    HUGH72 Well-Known Member

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    Mixing an investment decision with a ppor and adding family to the mix...

    A 2,000 people regional town is way too small and would lack diversity.
    I think somewhere more sustainable with population of at least 40-50,000 is a much safer bet.
    Orange is slightly smaller than this and that's the only exception where I have bought.

    The only caveat to this is if it is relatively close to a bigger centre so people could still live there and drive to work in a nearby large centre.

    Really small towns don't have universities, hospitals and diverse industries, one major employer could close and you might be left with a property worth considerably less.

    I assume that your father would be your tenant so at least you wouldn't have to worry about extended vacancies which can be more of a problem.

    I wouldn't do it unless I was in a financial position where the outcome didn't really matter and helping my parents was the only consideration.
     
    Magnet likes this.
  7. bob shovel

    bob shovel Well-Known Member

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    If you know the area well or live nearby it can be a good investment. With the <10k towns you'll find there are cashed up locals or businesses that own multiple properties and can offset the vacancies periods
     
  8. Coastal

    Coastal Well-Known Member

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    The Warranbool Metro area has 32000 people. The local area seems to be plenty of people.
     
  9. Magnet

    Magnet Well-Known Member

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    I would never invest in a town with less than a population like Orange as an example. We lived in Cowra for 12 months and although it is only 1 hour 15 mins from both Orange and Bathurst it is a long commute on a Country road - think Kangaroos, long stretches of road when you're tired etc. To further put it in perspective Greater Cowra had just over 13,000 population at the time but I would say it lacked vibrancy and diversity. There was high unemployment. It's a pretty town but it definitely doesn't have the same capital growth prospects of Orange and Bathurst.
     
    HUGH72 likes this.
  10. HUGH72

    HUGH72 Well-Known Member

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    I agree, way too small and potentially volitile.
     
  11. dabbler

    dabbler Well-Known Member

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    I will go against the grain, 10k people is ok, will have large supermarkets etc if a good town, is big enough but also small enough if that is what he likes.

    The one problem will be PM's, find out if the town has a good one, or two, sometimes all are not much chop, in a town that size I would not be spending 300k, you should be able to get 2 150k or 1 dearer and one cheaper at that spend, check the average vacancy, sell times will be longer.

    So you could have a house and an IP at that spend IMO, unless you want new.

    Just because it is smaller will not mean it won't grow in value, but do be picky, not just going anywhere, for IP or PPOR :)
     
    WattleIdo likes this.
  12. hammer

    hammer Well-Known Member

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    Pop 100k minimum here....10k too risky.

    However mixing family, investment and loans together rarely ends well.

    If he's after towns with small populations could you do it for 150k? Would be less risk and headache for everyone.

    300k will buy you a house in greater Brisbane....just sayin ..
     
  13. peastman

    peastman Well-Known Member

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    That would work well. A small town not far from a large town. So it would still have the country community feel your father is after, but as the big town grows, the small one will grow too.
     
  14. babyboomer1

    babyboomer1 Well-Known Member

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    Hi there,
    its been a while since your original post wondering what outcome was chosen personally investing in small towns is inexpensive but if your looking for growth or yield it may be better elsewhere.
     
  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    < 10 k can be an issue with some second tier lenders

    ta

    rolf