How important is the socioeconomic status of a suburb when buying an investment property?

Discussion in 'What to buy' started by Jazcat, 17th Feb, 2019.

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  1. Jazcat

    Jazcat Member

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    And is there a way to find the socioeconomic status of an area?
     
  2. HUGH72

    HUGH72 Well-Known Member

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  3. Noobieboy

    Noobieboy Well-Known Member

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    You can use THIS to see how much people earn in a suburb
     
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  4. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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    It's a big factor but remember these measures are not static, they change over time. The trick is to spot a historically low socioeconomic area and ride the gentrification trend over time if you can.
     
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  5. Angel

    Angel Well-Known Member

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    Australian Bureau of Statistics
     
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  6. Skinman

    Skinman Well-Known Member

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    Microburbs
     
  7. Trainee

    Trainee Well-Known Member

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    Great money from gentrifying suburbs. Think of the dodgy suburbs thaf became trendy.
     
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  8. The Gambler

    The Gambler Well-Known Member

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    I think some people are quite happy to own in low socio-economic areas and there is def some money to be made, but personally having grown up in one and worked my way out, I'll never invest in one purely because I feel it brings you down. I'd just rather not be around that atmosphere. IN saying that, there is definite gentrification going on in certain places. I guess the knack is to know where those places are - Hint: Woodridge ain't one of em...
     
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  9. Sackie

    Sackie Well-Known Member

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    Depends on the investor and their strategy. I have friends who do well in poorer areas to working class areas. I personally prefer middle to upper class unless my DD is showing me clear signs of current gentrification taking place . Otherwise I CBF dealing with the issues you often can get in the lower socioeconomic areas .
     
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  10. NewGuy88

    NewGuy88 Well-Known Member

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    Gentrification process is crucial ingredient for long term CG of low socioeconomic areas ....
     
  11. Webb

    Webb Active Member

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    There was a person on here who invested in lower socioeconomic suburbs in Adelaide. He/she had a thread on how it turned out. It was a really honest thread about rental issues maintenance issues and the relief of selling the properties. I Can't find it now, but it was a really honest and thoughtful post.
     
  12. Paul Mete

    Paul Mete Well-Known Member

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    For me the most important factor when buying an investment property is it's developability which is not even a word :).
    In this market the best way to get ahead is to buy property that has the ability to be escalated in value and development is one of the best ways to do this.
    I am not suggesting you develop, I am suggesting that if you buy property with this ability then you have set yourself up for profit that should exceed most other factors.
    Then in a few years when you consider your next investment you have the opportunity to create another property at wholesale prices.
    Or, if you wish to escalate your current properties value you can apply to council for units, this application would cost a fraction of the price of a renovation but will almost certainly add more value.
    Owning a property that can be developed can often exceeds your financial expectations one way or another.
     
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  13. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    I’ve never had problems purchasing in lower socioeconomic areas provided the infrastructure and other growth points were there. I’m made better money out of buying in those sorts of areas than better class suburbs in a lot of cases. I don’t believe it’s an issue at all (often more of a benefit) provided you do your research.

    - Andrew
     
  14. Lacrim

    Lacrim Well-Known Member

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  15. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    I agree with @BuyersAgent above. It is very important.

    Putting aside rezoning and redeveloping opportunities - let's consider buy and hold investing.

    There are a couple of reasons why better socio economics is important: firstly, when incomes rise, you want people to stay in the area and pay more rent, rather than go to better areas; it also reflects on desirability and mobility in general. Schools, safety, and knowing that your neighbours will look after the streetscape all improves desirability of your property.

    Real estate benefits from a number of aspects, one of which is rising incomes. If you are in the suburb that people flee when their incomes go up, then you are missing out on the capital growth that comes from persistent high demand.

    I own properties in good areas and not so good areas, and the good areas do outperform. You will notice that better areas have been the first to move in the current upswing.
     
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  16. Trailblazer

    Trailblazer Well-Known Member

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    Interesting tool but doesn't mention the date range from when people started moving in from other suburbs. Any idea?
     
  17. chunho01

    chunho01 Well-Known Member

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  18. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    In the current climate.... you'd think the lower socio-economic areas will be the ones with tenants already receiving government assistance with rent.

    Spoke to a client the other day who owns 3 cash flow positive houses in SEQ. Was just checking in they were doing okay with the tenants.

    And their feedback was.. Our tenants are about to get lush with government support for the rent and since ALL of them were on welfare, there is no concern about them losing their jobs.

    This would be different from those renting in a better demographic and still be impacted due to the industry they work in... aviation, retail, hospitality, tourism to name a few.
     
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  19. Omnidragon

    Omnidragon Well-Known Member

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    Is our success in life determined by hard work or natural talents? What if you’re a genius but never worked? Or had an IQ of 70 but worked very hard?
     
  20. David_SYD

    David_SYD Well-Known Member

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    I think this post is more about calling a spade, a spade and not a shovel.

    Success is generally measured by achievement of goals and wealth.

    Not all areas/ suburbs gentrify. In fact, many won’t and many will continue to decline. This is evident all over the world, so it would be naive to assume that investing in a low socioeconomic area is a good strategy for future growth.

    We’re talking strictly investing and specifically tenants paying rent, so in answer to your question, I couldn’t give a toss how giftedly smart an individual is, if they’re unemployed and not working (hard) they’re generally considered a greater risk to me than somebody who is.