Good Evening Everyone, Just a quick post to introduce myself, I've been studying this and the old ss forum and felt it was about time to introduce myself. I'm Luke, age 26. I've been toying with the idea of getting into property investing and its time to sink my teeth into my first IP. From my research (which is limited) for a pure CG investment the south west region might not be the best place to start. Ideally I would be looking for something cash flow positive and looking into Collie. The town has taken a massive hit over the last few years, house prices are low, rental demand is still fairly average. The main standout is the ability to by an old 3x1 for around the $130k mark (or $150k with sub division potential) with a rental rate of $200 - $220 (after some slight improvements). The idea would be repeat the process if the first IP plays out as planned. Would love your thoughts... I'm still learning so speak slowly
Welcome, I don't know the place at all, I just googled it. There may well be a reason that the town has taken a hit, prices have fallen and rental demand is average. You want to do research and have an understanding of the market in small towns. What industry and future plans does the town have? The population is around 6-7k from what I saw, is this growing or falling? Some people have done really well gathering cash flow from these types of places, just be aware there are downsides and CG's are rarely there. I wouldn't pay any premium for subdivision in a small town. Too much cheap land is available, by the time you pay all the costs to subdivide where is the profit? I can't imagine demand for a tiny block in that area to drive a good price. Think of your goals and what you want to achieve by buying each property. I don't like anything with less than 100k population, I like vanilla, easy to rent, easy to sell if required type property that is accessible to everyone. So frame my comments within that view point.
Welcome aboard! I don't realy know the area (or wa that well yet) well but if you have local knowledge that's great. Most here will baulk at <50,000 population like hodor mentioned and there are reasons. But if you know the area there is still money to be made, just know the risks involved. A big thing would be selling if you need to get out in hurry for whatever reason. plus the vacancy time between tenants can long, I've looked around Northam and the regionals often have vacancies of a couple of months between tenants, so you'd need to allow for that. Plus the tenants can come seasonal There's a meetup at Mandurah coming up worth coming along plus meet @Jess Peletier a local and broker WA - Perth meetup midday Sunday 20th March
Hi Luke, regarding collie I think some major industry has just wound up there so check the main employment in the area before jumping in. Can't remember what it was but possibly a mine? Next meet up is in Mandurah on the 17th April if you'd like to come along
Welcome on board Luke Like others I'm not keen on Collie. It is a small town and very reliant on a couple of mines. It wouldn't take much, especially in the current environment, for one of these to take a serious dive. From a SW perspective I like the tourist zones like Margs and Dunsborough, plus those other small towns. However, they are heavily reliant on tourism (which I think will do well in the next few years - but still). And short term leases, with potential for long term vacancies are a potential hurdle. Oh - and you won't find a 3x1 for $200k. I won't be buying in Perth (or WA for that matter) for another couple of years - and I dare say that would be the general consensus of this forum. Look further afield. Eastern seaboard seems to be where it is at right now. The PC trend seems to favour Melbs as the best potential in 2016. I encourage you to take the drive to meet Jess et.al in Mandurah. Blacky p.s - Nice dogs
Thanks for the welcome and the awesome advice! My attraction towards Collie was the ability to buy low cost - cash flow positive property, I know a limited amount about the town and the general decline has been due to job cuts in the area (in mining). My logic was to - purchase low cost cash flow positive properties, use the rental return to pay down debt and then refinance to purchase more equity + properties. With the market already taking a hit, I felt the risk was minimised alittle and with a fairly strong cash flow position rent would need to drop significantly before feeling much pain. But who knows anything could happen over the coming year. My current situation wouldn't allow for the purchase of property that was heavily in the red, limiting my ability to purchase for CG over CF. I think from the general advice it sounds like WA might be worth holding off on, being my first IP I have hesitations in investing interstate... need to look into this more. I hate questions like this... but ill ask anyway - my situation is 20k in shares which I plan to use on property, a PPOR with minimal equity about 70-90K, mortgage ties up most of my income but I run a side business which produces an income of 20-40k per year which I am happy to spend on the investments.... What would you do? Pay off PPOR or invest... whats your thoughts? I am super keen on the meet up, ill see how it lines up with the work roster. Cheers again!! Luke
Good question! each situation is different there's no clear cut way to do things. Refinance and invest Step 1 find out what you can borrow You might need to take a quick drive to Adelaide and check out Elizabeth and surrounds or just read here. That will get you the low buy in plus yield
I'm quite prone to the idea of developing in Collie and not just because I'm originally from Roelands. A lot of people lump it in to the same category as mining towns such as Port Hedland which are primarily one industry towns. Collie is defenitely spread across multiple types of resources. I certainly don't understand people saying they wont invest in WA until prices go back up. Get in as close to the bottom as possible. I've been toying with the idea of a 15 lot subdivision up there. It would have horrendously long sales times but if you can wait it out, there's some really cost effective deals there that a lot of people couldn't afford to do in Perth. If you're ever looking to do a JV there, hit me up. There's a lot of great information on this forum and there's also a lot of city folks with small comfort zones. Not trying to say one way is better, some people just gravitate towards different things.
Thanks Bob, I think its time to get serious and get the accountant and broker involved. A drive to Adelaide sounds like a nice holiday! For the first IP or two I am a little hesitant on leveraging myself up the they eyeballs, from a quick google search Elizabeth seems like a suitably priced area (thanks for the suggestion!). From a socio-economic view I'm assuming its comparable to say Armadale in WA? Cheers Toby, I know a few Richardson's from Roelands do you still have family there? I tend to agree with you, I want to buy assets at the bottom of the cycle I guess its just taking an educated guess at where that bottom is. Ill get a few runs on the board before going into a JV development but when I do ill let you know
