New Investor - How do I find cash flow suburbs?

I've never heard of HTW. Are they somewhat like a buyers agent. Do you use their services?

-Frank

 

They aren't a buyers agent but have a read of their comprehensive report. It comes out the first of every month and it's free. Tonnes of info in their on the state of the market on everything in most parts of Australia - rural, resi, industrial, retail, office....

 

Have you looked in the invest section of realestate.com.au?
You are able to look for the highest yeilds within your budget across Australia, then narrow down to what where why etc from there.

 

Hi Gockie.

I do look at this "clock" as its published and updated and include it in the many variables I consider, although ultimately I make my own "clock".

Whilst in general I agree, overall with roughly where cities are placed on the clock I think that they are very wrong with where they are placing the Gold Coast. I would place if more around the 7.30 o'clock level.

As for yields, we have houses in some great capital gains areas (mermaid waters, Broadbeach waters, Palm beach yielding 5.5% (even higher for duplexes and units), and with potential for very strong capital gains (not to mention longer term very lucrative exit opportunities on development potential).

 

If you know Gold Coast that well and can spot the bargain, by all means, go for your life, there's markets within markets. I've done the same in Sydney. But the HTW graph signals caution to the general public who may not know the market or region as well.

 

I think if you are concerned about cashflow, @Frank Manno, you should be really thinking about net yields. I think gross yields can be disingenuous, especially when comparing asset classes.

 

Yeah that clock is ok, but it also gives a false signal for the general public.
Toowoomba is also not in a 'starting to decline' as it's been declining for 18months and close to 'approaching bottom' as agents are confirming now.

 

In general I agree with the comments on the HTW. Also I agree, (and especially on the Gold Coast) you really need to know what you are doing. Easy to be burned if you don't know what you are doing (although to some extent a rising tide benefits all ships, or whatever the phrase is ...)

 

For sure!

 

I could renovate if I had to. It isn't part of my plan though but I could.. I would probably get a renovation company/builder to do the work though rather than me manage tradesmen.


-Frank

 

Frank you could also look at other strategies as quality cash flow properties today may be scarce and not sure what you will achieve, I think last time I looked at the numbers in Adelaide in a not so desirable area for example you would perhaps be $2000 cash flow in front pa, is this really worth it? Its a no for me. It could you a YES for you??? don't know

Have a look at what guys are doing in the Melb market with land and house packages there are some investors @Cactus doing this stuff, the formula I believe is new product, depreciation and smaller land component for cash flow.

I am a developer that's another option, but at this stage in the cycles not sure it is viable option.

 

That's the formula. Should be trying to create a 15-25% uplift in equity on completion and a 6-7% yield on costs. This will see you around 1-1.5% gross yield or circa $5k CF+ after depreciation and tax adbacks on an 80% lend on cost. Nothing huge but little to no maintenance and affordable stock for growth an resale with all the new immigrants moving into these growth areas.

 

If you are really looking for a steady cash flow stream from day one. I'd consider finding a property you can add value to. It doesn't have to be any crazy renovations just simple stuff like painting, new light fittings, new door handles, blinds etc. It's beneficial as it creates equity, lowers vacancy rates and boosts rental return.

Be aware if you do end up buying in a regional town and hire a tradie, get lots of quotes! They like to take advantage of investors and out of towners. If you find a good property manager you shouldn't have a problem.

Here is a cheap renovation I did last year My latest mini renovation under $3k

 

That was net yield rental not gross.