SA Hype Davoren Park, Adelaide

And

What nearby suburbs are you referring to? Elizabeth Downs / Elizabeth and surrounds, or are are they still too close to Davoren?

 

Smithfield

 

Lol No disrespect, I love Adelaide.

 

Andrews Farm despite being right next to it is much different, but costs a bit more.
Smithfield Plains is similar to DP - a slight step up and usually about the same price.

 

David how are they different? Is it the government housing in davoren park with current tenants in place? Just so I understand.

Cheers

 

I was thinking about this more and the market forces at play and actually am convinced davoren park will not only outperform adelaide, but be amongst the top performers in the nation in terms of CG plus yield in the next few years. The total return ( yield+cg) will outshine all major capitals and closeby areas.
Here is my rationale:
1. Yield drivers and future prospects
The yield returns of davoren park are well established. The yield is higher in order to compensate investors for potentially higher risk they are taking in investing in the suburb. The ability to mitigate these risks with better quality public and private services ( eg property management) will ensure that davoren park has higher payoff ( potential gain ( taking into account subtraction of risk ( likelihood of occurrence , severity if realised) x probability of success) than adelaide and surrounds. This payoff will be represented in both yield and cg numbers.

2. CG drivers and future prospects
From a cg perspective, i believe Davoren park will lead adelaide in this regard. Investment dollars from syd/mel in particular will flow into adelaide (already happening)- driven by primarily by affordability. The bang for your buck is actually more in davoren park compared to adelaide provided investors can mitigate their risks.
Further,adelaide is about 6-7pm in its cycle ( according to htw- ie significant growth potential ahead)- and that position in its cycle benefits davoren park more than equivalents of the logans of brisbane or the druitts of sydney. How? because the main driver has to date has and will in the foreseeable future be affordability in the adelaide market; Given that its further down the clock and thus potentially more growth potential, as long as risks can be mitigated, the potential upside is more in davoren park than adelaide and other cities who are further up the clock. The people who can afford more will just goto brisbane/mel/syd and likely skip adelaide alltogether, and those that either cannot afford it or purely chase CG/yield or seek to time the market will seek the max bang for your buck in a rising market - and thats more in davoren park than adelaide+surrounds. I predict davoren park will steal business ( investment dollars) from adelaide going forward.

Supporting market characteristics:
Australia is following the way of the US by becoming more polarised- the wealthy will stick to the cbd or as close to the cbd as they can, whereas the less rich will not hesitate to go further out. A lot of the wealth and aspirational class in Australia is following this trend will be further prominent in adelaide ( rather than say a sydney). ...however, adelaide's market characteristics differ in this regard (as compared to sydney/mel and perhaps brisbane)as there is relatively less wealth compared to sydney , less job opportunities etc and this will see on average a higher proportion of residents opting to live in davoren park than adelaide/surrounds. This is a key difference and this demand should lead to higher CG values, as long as supply remains constrained as it currently is.
Conclusion: I thus recommend davoren park for the savvy investor who is seeking highest total returns yet is confident they can minimise risks ( which are well documented and its becoming easier to do so) associated with investing in the suburb. I believe that market has significant growth potential and the drivers of davoren park with respect to the adelaide market warrant taking on higher risks associated with davoren park as opposed to adelaide. Given these risks can be more easily mitigated/minimised (than in the past), market leading CG potential should be present in Davoren Park yet remaining firm on offering amongst the highest yields in the state. The market has not adjusted to the lower risk based characteristics ( factoring in mitigation strategies applied to likelihood of occurrence and severity of risk) of davoren park and that presents a window of opportunity for the wise investor. Bear in mind that davoren park remains the king of all struggle streets and whilst some see this as something to be fearful, it actually presents opportunities for the investor to surpass the broader market. The investor is required to be wise no doubt in venturing into such areas, but if the appetite is there will likely find that risk mitigation is easier than what is widely published historically- thereby presenting an opportunity to achieve higher risk adjusted gains than the broader market.
You heard it here first

 

People in Lizzie and Smitho..have 2 more teeth than people in Davo.

And their lisp is better understood.....but some similarities to Druie people in NSW...they all claim their pay comes from Centrelink and they all say "youse".

Better go...before some people "thong" me....

 

I've been exploring Davoren Park myself.
The yields are fantastic but land is worth very little. 350m2 blocks sell for $85k

There's plenty of existing duplexes and subdividable blocks. If you do chop up some land with the intention of building on the back council won't allow you to build a duplex on a battleaxe subdivision (at least that was the feedback I got)

By the time you've spend $20k on a subdivision there really isn't much room to build and make a profit- and there's a heap of land available with good street frontage that already has long days on the market.

Amazing yields, low grade tenants, very little capital growth and conditions that make it hard to add value.

I've still got my eyes on one at the moment that could work if I found a relocatable that could be made into a house and granny flat to put on the back of a block... But even then it would be more for the great yields than Te capital gains.

I do, however, believe that some good growth should come in the next 5 years- but that's just my uneducated opinion having seen similar suburbs in vic do this - I'm still yet to physically visit the suburb to see how low you can go in social ecconomics!

 

Andrews Farm was a 90's and onwards developed suburb which is almost entirely privately owned. Has a few NRAS developments too. Vastly different to the majority of Davoren Park which is poor quality 1950-1960 stock built as cheap housing trust properties.

Granny flats are illegal to rent to a non related/dependant party in SA. You would need to do it as a dual occ/secondary dwelling.

 

I feel davoren park is similar to how Broadmeadows (vic) was years ago, all that was needed was time and now prices have moved.

The good thing about davoren park is the council is proactive to relocate all the commisioned tenants out of the area, and re distribute them throughout Adelaide. People will knock down and develop those larger blocks as people have already been doing.
Seriously 130k can buy you a large rentable old block with a house on in. Buy and forget about it for a few years, all while it's been cashflow from day one.

You get crap tenants regardless of where you buy. If the tenants are so bad, then how are they allowed to rent in the first place? They have to behave or they won't be allowed to re tenant any other property.

 

How d

Can you define how a dual occ or secondary dwelling is different to a granny flat? I consider all 3 variations of the same thing?

 

Bad/lazy agents who live of reletting fees. Or private rentals off Gumtree. Or illegal sublets off someone else name who isnt on TICA/NTD.

Granny flats are considered a dependant dwelling and can only be occupied by a related/dependant party. They cannot be rented individually. Dual occ/secondary dwelling is an approved use dwelling which can be rented individually (like what NSW had before affordable housing SEPP).

Houses with granny flats can be leased out, however one tenant needs to take a head lease and then sublet to another party and be responsible in entirety for the rent payments. This also generally voids landlord insurance policies. The return for a head lease is less than 2 x individual leases.

 

Took this picture few weeks ago on Peachey Road Davoren Park, road works could be finished by now.

I found it funny as not many "work" in Davoren Park



Partner has allude there gets $280 pw. It is bigger than normal house for area 4 bedroom.

Tenant has been there for 5 years

 

I am sure you are loving it... but can someone please wake me up when it booms.

.... and its not all bad... look at what happened to Mt Druie?? some people actually made money

 

Barny
no disrespect, but cashflow???? have I missed something, where is it, after pm charges, insurance, maintenance allowance. Neutral at best? Growth ?

Would you have achieved cashflow and CG in Geelong? better outcome/less headaches (clients)?, similar cashflow scenario??

MTR

 

So long as they have got out....the reaper cometh.

All will be revealed..in the course of time....

 

Newer home 217k. You can also get 200k newer homes that will rent for 270/week, or older homes for less, and less rent but still positive cashflow.
Rents 270/week=14,040 year, I usually minus 30% for all costs so $9828,
House I paid with buy in costs 228k X 3.99% interest =9,097
Just over 730 a year cash flow.

This does not include the depreciation schedule which also gives back a healthy bonus of tax back.

The headaches have been no worse than renting any other property In all states. Even the Inner ring Melb property which is valued at 1.3M plus. This comes down to a good manager, and hopefully some decent tenants.

You could definitely buy in Geelong or other areas, I'm not familiar with returns there.
I just know that even the worst perceived suburbs eventually become better and we usually wish we had bought in at that time.
This house doesn't cost me anything to hold, perhaps a loss of capital growth if it was elsewhere at the moment is easy to say in hindsight.

 

I've been thonged before. It's not nice

 

Did it happening anything like this...

 

Lol nothing like that. More like a long distance throw