NSW Orange, NSW

Tips for who’ll rise up the 2019 property ladder - Propertyology

 

Yet more awesomeness about Orange...
Mountain biking in Orange, NSW

Cheers,
Inertia

 

Homes shortage sees sellers achieving strong prices as demand exceeds supply

 

Dual Occ completed this week. Occupation Certificate expected early next week. Granny Flat already leased. House is also leased - although the listing doesnt say so...$680 combined rent.
This has happened on the last half dozen Dual Occ's; tenants ready to go before the keys have even been handed over . There is very strong tenant demand for these Dual Occ's. Orange's vacancy rate is in the 1's - and with an acute shortage of land available to build on, and hundreds of high paying mining, medical and Govt jobs still coming in 2019,20 and 21.... vacancy rates will get even lower. Pretty good chance rents are only going to climb!

So to the naysayers telling me that I was selling people dud properties with dud growth potential in dud locations where no one would have any interest in renting granny flats,Orange is going very nicely thank you kindly. Now , hold my beer !

36 Miriam Drive Orange NSW 2800 - House for Rent #425850354 - realestate.com.au

36a Miriam Drive, Orange NSW 2800 - Apartment For Rent - $245 | Domain

 

One of the Dual Occ's under construction at the moment...

 

Hi @euro73,

Just FYI, the combined rent we are now getting in Orange is $685...

Kassy

 

Hideous ... horrible .... a total letdown .....

 

What was the cost to buy land/ build?

 

575k

 

Wait till it goes back to normal & your place is no longer brand spankin new, we will see how may dual occ owners are willing to gloat then.....

These tenants wont be loyal you know !

 

Wait till it goes back to normal & your place is no longer brand spankin new, we will see how may dual occ owners are willing to gloat then.....

These tenants wont be loyal you know !

 

Isn't this the same situation as any other investment property? Why not just spend a few $$ to re-paint/ re-carpet the property after 5 years? Most of these properties have a neutral colour scheme and stone top benches etc., so I can't see why a quick re-touch wouldn't solve this problem.

 

Here’s the reality. If the rents move only 50% in 2o years and the prices don’t move at all for 20 years - these will still be paid off by then, generating 50k per annum . I’d say that the owners will be pretty pleased with that. It follows that 2 of these ... costing around 1.15 million , would get you to a 100k income in that time .

Considering that conventional wisdom on these forums says that investors need to generate @2.5 -3 million in profits , sell up to clear 2 million in after CGT profits , then reinvest it at 5% to generate 100k income , I’d say these compare extremely well.

It’s even more compelling when you consider How few actually reached 100k - even with all the advantages of the pre APRA era , when borrowing capacity allowed investors to borrow far more money than they can today AND hold IO for as long as they wanted .... It follows that even fewer will succeed post APRA.

So yeah , I’d say the buyers of the dual occs ( I am a buyer myself ) will be especially pleased - even with only 50% rental inflation and zero growth ... both of which are likely to prove to be conservative estimates ....

 

No, I do not think so.

It does happen like this in periods of demand though, I could have rented out tents in WA in some mining areas, but that does not last.....when people have little choice they will do anything.

People seems to ignore that country towns and areas are *NOT* capital cities.

Your all free to do as you like, but the majority of the market looks for a certain type of thing, and personally, the granny flat thing is not even good in Syd unless you will def hold for a very long period and get the benefit of the additional income.

These figures or returns are no better than having individual properties if you bought in the normal market, actually you could do a lot better potentially with the added benefit of each place being stand alone.

You have to realise too, you can put as much spit and polish on it as you like once used, but it is no longer new.

Only time will tell, but I know my stand alone properties have increased, while all these new places have potential to decrease, this is why govt allows depreciation, new buildings go down in value for some time, unless the building boom drives the costs significantly higher.

You will not make what I have made in 2 years, in next 10 years from your place, sorry, but it is not dis similar to jumping in at the tail end of Syd boom buying a new place. Not only that, I have a fraction or portion of that money tied up.

I know euros thoughts, but over time, all places do well, but I can tell you, most demand is not for units or small places with little yard, you can ignore that fact if you like, I personally would not do the granny flat thing in the country, in fact even in Syd in a lot of places it did not make sense, in a rising market you can prob do near anything or sell anything, as seen in Syd. I ack that.

I mean, sit in a quiet place some time and think, ask yourself, why would people move from say Sydney, to a town like Orange ? What may those people be looking for themselves and family ? And, if returns are similar, and potential for gains greater, from single dwelling large block properties, what then is the appeal, apart from the short term gain when brand spanking new ?

What about when demand goes back to normal, and people can choose a stand alone place prob in a better location for similar rent, with plenty of private yard space ?

I can think of ways where it could be made to work, but I wonder how many put enough thought into all this, making assumptions on numbers is one thing, making assumptions on peoples wants and demands are another, with the thought train above, a new place in a mining town should still have excellent returns today ?

I know people who have moved to QLD, they too are renting new properties, the owners of those places are prob tickled pink, but soon they will find those renters I know will not renew the lease, cause some will move to another new place to rent or that they are building. Same thing happens anywhere there is a building boom, and it happened in Orange before too, after the rise, comes the .......... (fill in the dots yourself)

I love Orange, but put a lot of thought into what your doing, if you have and your satisfied, that is ok, but do not try and convince others to do it just cause you have, if fact, if your on such a gold mine, you would shut up, not broadcast for others to flood in and compete with you, no ?

 

That's the strategy. I am very clear about this. It is a buy, pay it down, retain the income stream strategy. I tell every buyer that if rents go up just 50% in 20 years and prices don't move at all, they'll have a 50K + income stream in 20 years. I don't make any promises of growth, even though Orange capital growth is some of the strongest in the country .... I don't think I could have been any clearer about that.

The evidence would appear to say otherwise. The granny flats are in extremely high demand. Perhaps you are underestimating their appeal. Their rents have increased over 10% in the last year alone.

I can too. And I'm delivering it

Again - the evidence would appear to say otherwise. Orange has proven itself to be Australia's most stable market for over 20 years. During that time it has never had prices retreat for a period of more than 12 months . Where is the evidence of what you claim?

Your also ignoring the reality of the post APRA era and the demographic changes at play . Your arguments are underpinned by implied assumptions like many arguments on these forums are - that cities grow and regions don't. I say that cities will not grow like they used to , under this credit environment. I say it is better suited to this credit environment to invest for yield instead, set loans to P&I and pay them down . This way, my prize isn't a one off lump sum of growth (which I can no longer be certain of achieving) that I harvest ( which I may longer be certain of being allowed to do) but a stable ongoing residual income stream instead.

I also say that increasing numbers of retirees will move to larger regionals with good health care- because traditional sea change locations are now too expensive for many of them.

 

Ignoring Orange, but with rental properties, your always falling behind, high outgoings, increasing costs, periods of vacancy, periods where tenants have caused large probs, maintenance (and yes, tenants manage to break and wear things out that are new too)

Not sure if you know, but while everyone was piling in elsewhere with the herd, I have been on ground in central west at least 1 day a week and often for a decent part of the week, I know the agents, location, prices and the interest levels prior to this surge.

Have skin in the game. In fact often my replies come as I am in Orange or the CW somewhere

So, no, I, if anything, over do my level of knowledge, and know first hand how poor it can be, would not buy anything right now, I stop looking and buying when everyone has an interest

So I would suggest I am not making any assumptions.

And I am not disputing they (anything) would be in demand when there is a shortage of choice on where to live as people are moving, it is once all these investors have got in and the renters go buy or build own place and the migration has slowed or stopped.....

How many places have you rented out during the periods where there was no interest ?.....

I am provoking people too think, not really interested in a debate to try and fortify your case, you have a conflict of interest IMO, I have none, I make or lose nothing whatever way this is viewed or people do.

I have put forward why I think it is a good place, but I am not going to claim it is the best property market "long term", I also know it has not performed well at many points, including the very recent past.

I am balanced in my view, even when I have an interest.

 

I have also been in Orange and Bathurst since before it got trendy. Since 2014 in fact. I have been well ahead of the curve . I did 53 NRAS properties in those locations before I started doing Dual Occ's

The things is...its not investors piling in. If it was, vacancy rates would be increasing not falling.
Orange is building over 250 new dwellings a year and vacancy rates are falling. And as you would know, there is an acute shortage of registered land to build on... and there are still hundreds of higher paying jobs that will require hundreds of workers and their families to move to Orange.in 2019 ,20 and 21.....

So maybe I'm missing something, but acute lack of land + tight vacancy rates approaching the low 1% range + hundreds more people needing somewhere to live over the next several years as the mining, medical and Govt jobs kick on, doesnt add up to DOH! to me... it adds up to likely further rental increases and growth.

But again... this isnt about growth. Its nice that the growth is happening, but I'm looking for cash flow opportunities for my clients that get them a passive income within 20 years . Im looking for properties that will rent reliably and pay the properties off over 20 years. Thats it. And just like I stated earlier, this approach means that even if the Dual Occ's I sell get ZERO growth and only 50% rental inflation over the next 20 years - the outcome is exactly what I have always said it would be; a 50K+ gross rental income stream. Growth only needs to outperform zero , and rents only need to outperform 50% for my clients to do better than I have suggested.

I should also point out - basically no one else is building dual occ's in Orange.... so I see no risk of an oversupply of the product. There is no competition , for the most part. Every now and then someone builds one, but they are not very prevalent. The other builders are all pumping out 4 x 2's and selling them to owner occupier families... you would know that already, though.

But just on the subject of dual occs built by other builders , and by way of comparison, a 4 year old dual occ ( 3 bedder + 2 bedder under ONE roof) on 580M2 is listed at 590K currently.... that's @ the same price as my deals, but it's on much smaller land. has smaller M2. inferior layout ( people want 4 bedders and 1 bedders, not 3 bedders and 2 bedders) and offers weaker depreciation because whoever buys it won't be the first owner. And there's the full freight on stampo duty as well, rather than the stamp duty only being payable on the land....

5 & 5A Webb Street, Orange, NSW 2800

 

Not piling in...but a healthy interest.....nothing is ever piling into Orange etc....

Like I said, I am not really wanting a debate, I make no gain or loss either way. I just do what majority of market wants for sale time....and rental can be very poor.

There is also no shortage of land, I can go build many houses right now, there is a shortage possibly at NTH Orange, plenty elsewhere it seems, agents all lead people where the latest developer wants to be it seems. An interest in this perhaps ?

Either way, this is not the new norm. And no case will change my position that it is a time to sit tight, ship sailed.

 

People may also want to know, in Nth Orange, this is where NSW housing is very active, so your playing roulette on who your neighbors may be.

I know exactly the places I would put money, and new estates in Nth Orange do not even get a mention on my lists.