NSW IP in Seven Hills

Hi All, Would you buy an old 550 sqm house, 5 mins walk to station as an investment property in Seven Hills for 820K ? This property is currently rented for $430 which is a positive things for me as it reduces the effort of looking for a tenant. However, I am not yet sure when the current lease ends. Could you please pour in your suggestions. Thanks

 

ahh sevo

yeah it's good - whack a granny flat on it and enjoy 3.5% gross yield, which is more or less neutrally geared after costs, at current rates. Good CG potential since it's so close to the station.

5min walk - is that the R3 zoned pocket?

 

Are you sure its being offered for 820k? or being advertised from 820k?

The way you advertised it sounds too good to be true but maybe there is some other reason why it is that cheap (or its advertised from and selling price could be 9xxk)

 

Thank you very much for your response. I just had a quick chat with the agent and got to know that this property is in Low to Medium Flood affected zone, R2- Low Density Residential. This property is next to International Peace Park and Blacktown Creek. Could you please advise If this is a good investment ? Thanks In Advance !

LZN (Land Zoning) BLEP2015:R2
Bushfire Zone None
Mainstream Flooding LowMedium
Local Flooding none

 

In answer to your question, NO, I would not buy something for $820k that can only produce $430pw rent. It would have to have something very special about it for me to look at that kind of yield.

 

Any ideas why 7hills are so much underpriced as compared to the nearby booming WH and BH? They have good school there. Is it because the existing dominant housing commission in the area?

 

820k for 430pw is about 2.5% yield which in today's banking climate is neutrally geared. At any point in time in the property market, sydney houses produce neutral or slightly negative before any enhancements like granny flats etc so it's about right, if you are taking the view that current rates are here to stay.

 

Here to stay? You're kidding aren't you? I've been investing long enough to know that rates NEVER stay the same for long. One thing is for sure, and that is rates WILL go up. Don't ask me when, because my crystal ball isn't working at the moment.

 

Have you driven through those suburbs? There is a lot of difference between the areas.

 

I am just talking about the relative increase since this covid RE madness. WH, BH and even nearby Kings Langley has increased by 30-40% while 7H/Toonie have not

 

I like to keep an open mind that anything is possible. Rates could go back up and we see asset prices deflate. Or rates could go back up after massive inflation such that rent dollar amounts go up, leading to little asset price deflation. Or rates could stay or keep going down. There is no floor for rates, they could go negative. Or we could see the world chuck a Japan and stagnate for decades.

 

Rates going up does not necessarily mean asset prices deflate. I well remember rates going to 18%. Then moving down to 7-8%. Years later we had something like 5%, then up again to 8-9%. Rates change! They are not going to stay at current rates forever. They may go down more before they head back up, although I'm not so sure that will happen, be eventually they will revert back to the mean, which is somewhere around 6-7%.

Bearing this in mind, 'investing' in something with a 2.5% yield is more like gambling than investing unless you have a specific use in mind. That could be PPOR, GF, subdivision etc.

You don't have to invest in Sydney. There are other capitals that offer much better yields with just as good fundimentals.

 

Notsure about 7H but Toonie definitely has, 2019 could have got something in the mid 6s (maybe rundown) 2021 seems to be 8s (again rundown and lucky) with 1 mil becoming the norm.

I thought 2.5% in Sydney was expected now days. Specially in not the exact bottom off the barrel suburbs

Major difference between B/H and 7H. 7H used to be rough and has/being gentrified but still has bad stigma and prices go up suburbs between Parramatta and Blacktown increase. BH was always middle/upper middle class but was considered whoop whoop (now probably seems central). WH was/is something in between.

 

I don’t think it is neutrally geared at 2.5% yield?

 

Seven Hills definitely have moved. Many in the $1M+ ranges now and several on $1.1-$1.2M+ ranges and they are not even that special.

If your after yield the ENTIRE of Sydney ain't going to provide you what your after. Prices are just so high now. Even if you go out to St Marys lets say weekly rent is $400 and you pay $750k for a free standing house well that figure is going to suck, around 2.7% gross.

If your after capital growth Sydney is still going to rise. When you see very very ordinary places sell for $3M+ in the east well the prices of houses in the west for $1M+ is very very very cheap.

It gets to a point that more and more ppl have no choice but to move west, hence the huge exponential growth out this way.

Like I said in another thread ppl are calling Castle Hill, Baulkham Hills, Winston Hills, Bella Vista etc....middle ring suburbs now. HAHAHAHAH..........these are 35km+ out from the CBD and were considered whoop whoop area with cows and sheep when I was still in high school (which wasn't even THAT long ago) but prices in the "Hills" area all pretty much $1.5M now for crappy single storey houses and $2M for big double storey houses. Some even hitting $3M+.

Drive down the road a few kms in Seven Hills and Blacktown you can buy under $1M still. Think about that for a minute.

 

Hi skater, where do you invest ?

 

I've got IP's in Qld, NSW, Vic and SA.

 

maybe if your LVR is 50% lol

 

impossible.. the ownership costs and land tax would take a massive chunk out of the gross yield