Regional Property

We actually bought in Broken Hill a few months back, paid 48k. Went up there did a renno in a week (took all materials by truck from melbourne)
All up including accomodation, fuel, materials, labour of one mate we are in for 75k. Bank revalued at 100k. We had the property rented within a week of being advertised at $200 a week. 13.8% rental yield
Yes it is a gamble but it will be posutive cashflow 4 - 4.5k a year allowing 6 weeks vacancy and 1k in maintenance on 100% lvr.

So i think it will be hard to actually lose money if we are patient. There will come a time to sell in the next 15 years just have to identify it. Lot of uranium around as well as the commonly known lead, copper, silver, zinc etc

Only downer was we hit a kangaroo on the way home and almost hit a few wild goats

 

Yes, I have heard of the high returns one can get from Broken Hill. Unfortunately, there must be a reason for this I think... But that said, so long as it remains tenanted, the owner should do very well down the road, possibly better than many house owners in capital cities.

So the beauty of buying in country towns is a good rental return. Calculated over long period, such returns should have compensated a property for its slow or lack of capital growth.

I would be inclined to buy in the growing country towns though - to achieve a combination of reasonable returns (not that type of super high returns from Broken Hill) and some but healthy capital growth. From my research in Victoria, I think Ballarat and Bendigo fit this bill, possibly not Geelong. It seems very possible to buy properties in the low $200,000 in the reasonable areas of the these towns and to rent them out at $250 to $280 (if lucky) pw. With such returns, it reduce the mortgage risks one is undertaking, important esp at this time when the property market seems going downhill, including the main capital cities and with so much uncertainties surrounding us...

 

Just remember with regional that cash flow keeps you in the game but capitial growth lets you exit

 

@strongy1986 what is happening out there with the mines? Closing? Slowing down?

It's a weird town! Is very arty farty! It's like all the hardcore alternative artists from erskinville/newtown are going out there to do acid in the desert and make art!

One thing is that it looks like it's big enough to stand on its feet, provide there's some decent industry, it's better the other **** holes around there, willcania.
The movie stuff could be good but how many that employees vs mining im not sure.
I'd be keeping an eye things out there though. Hopefully it's going up

 

Alternative pay down the loan even if no growth occurs with 13.8% yield and never sell. At that return even after expenses, no bank or super will continue to offer that year after year. Unless the area turns bad of course.

 

Wilcannia ? Nothing wrong with Wilcannia mate.. Has provided a lot of jobs for Public Servants in that town.
Cant see much on the net for sale in Wilcannia though.

 

Regionals can give both if you choose well.

 

Wtf. You really don't know what your talking about.
Public service is a booming industry!

 

Yes everyone who is building a portfolio should have a couple of properties that are certainties for good capital growth

Personally i would only buy blocks that i can subdivide or develop in the larger regionals

Smaller regionals is purely yield and capital cities i would aim for growth

 

The mood in the town is down at the moment as they have no water. Adelaide stole it !
However the NSW gov is working on a few alternatives to supply water so could actually be an economic boost
Being the birthplace of BHP the town has some very nice historic buildings which the government have heritage listed
The mines are open still, no iron ore there but the zinc is struggling. Wages in the mines are good, a grade sparky base is 145k a year..!

We went to a few pubs there and got dragged to the 'nightclub' which was a pub we had been to the night before with the lights dimmed and the music louder

The movie thing is really not a big deal but it does bring in tourists as do the historic sites and the local art

Not sure if the town will kick any goals in the future but i dont think it will disappear in the next 30 years

 

I think Broken Hill is what we term as a declining town. Its population peaked at 30,000 in the 1960s and it was once the third biggest town/city in NSW (can you believe it?). Currently, it has around only 19,000 people and this population looks to be reducing. I do not think it will disappear but surely the value of properties here are not likely to increase much with this.

 

my parents had a house smack bang on the water there for 15 years paid 140k for it, went to 550k sold it, wasn't a planned investment it was just our holiday house. But got good Growth, at the same time iv had people lose there as well. We only did well being right on the water at basin view. Job issues there big as most of my friends lived there growning up and had to move to either Sydney or Wollongong for work or to study

 

That might prove to be correct or it may not - it is speculative
Meanwhile though if i was to receive no growth my return is still 13.8%
Taking into account expenses and the fact your average property yields 4.5% elsewhere you would need 8% growth every year to keep up
Stamp duty cost $750 as well

 

The problem is, it never really had water from what I could see.

No one is probably heading there with large CG as the play.

 

8.14 & 7.59 %

Cliff

 

Thats the risk with smaller regional towns; even slight population reductions can see for a remaining housing oversupply, and can cripple rental returns and/or increase vacancy sharply.

There are those rare micro-regionals that are 'growing', but often the growth is due to jobs growth by just one industry sector, or even worse, by just one employer in one sector. Thsee towns are incredibly high risk, and won't suit most investors' risk profiles.

 

It can be up and down.
As long as people are aware of that.
Try not to buy at the peak and hopefully not just trying to make a quick buck.

 

I know someone with a place there, 80% of property sales are done between friends out there no internet. If you wanna buy you are gonna need to go there and spend time meeting folks or get an introduction. Yields are high, as is the risk.

Well done on that one! Location, property sub type, price and timing all play a factor. The current swell of people moving out of Sydney and the flow on effect of infrastructure spending (roads, new supermarkets etc) is driving some fairly decent population growth that will run a few yrs. Workers are often in Nowra or Wgong, & Sydney as you said but many are mobile with culture and improving internet making it possible to commute 1-2 days per week and work from home. I have bought for some well paid corporate HR types into Vincentia for that purpose. Plus the boomers are retiring, they dont need jobs they generate them.

 

Yeah, the new mini mall is now open:
Vincentia Marketplace Shopping Centre
Will be interesting to see when all of the roads around there are finished.

 

Cowra feels like the town time forgot. Great to live in not so great to invest in.

A good yardstick for a small regional is how many vacant shops there are on the main street. Cowra was dead last time i went through compared with other towns nearby. I own in Young and its a far more vibrant place