Trading up v investing in cash flow rentals.

Discussion in 'Investment Strategy' started by Serveman, 12th Jul, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Serveman

    Serveman Well-Known Member

    Joined:
    17th Apr, 2017
    Posts:
    1,413
    Location:
    North West Sydney
    While I know that personal circumstances and stage in life are a big factor in what strategies people use in real estate I thought I would pose the question of trading up to a better suburb in Sydney for example, compared to buying cheap rental properties in lower socio economic areas around Austrslia and getting an income stream.
    With the first strategy of trading up, I can recall back in 1999 (before the Sydney Olympics) an average house in Epping was $280k and a similar house in Winston Hills was $250. This house in Epping just sold for $2.2m and the one in Winston Hills sold for $950k, so there's a big win for the person who purchased in Epping. One of the reasons why Epping increased so much is that it became very popular with Asian buyers and the proximity to good schools and train line.
    Now the question is based on the circumstances you are in your 40 to 50 bracket and you have some cash would you rather get involved in this type of activity and trade down in retirement or go out and in the next 15 years and accumulate a number of lower priced rentals and have someone manage your tenants for you while you stay put in your current house.
     
  2. gach2

    gach2 Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    1,895
    Location:
    sydney
    I dont think the average in either of those suburbs were what you say they were in 99
    more like 95
     
  3. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,738
    Location:
    Sydney
    My thoughts/memory (1996).
    * Dundas Valley around $170k.
    * Carlingford ballpark $280-$300k. M2 opened 1997. (Very good as it took away a lot of the extreme traffic at the end of Carlingford Rd, and Epping Rd)
    * Epping you could (if you were very lucky) buy near station around $300k, but the usual price would be more than this.
    * Previous owners of my PPOR in Epping bought mid 1997 for $535k, but this is a very special house.

    Tip: Go near the train station.... not only is it more convenient, there's more capital growth! My parents passed up the opportunity to buy a Cliff Rd Epping house and bought in Carlingford instead :mad:. That land would have been easily $3 mill.

    Me going forward... maybe 1 more (cheapie) IP, Interstate.
     
    Last edited: 12th Jul, 2017
    Serveman likes this.
  4. Serveman

    Serveman Well-Known Member

    Joined:
    17th Apr, 2017
    Posts:
    1,413
    Location:
    North West Sydney
    Cliff road now is unit city.
     
  5. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,738
    Location:
    Sydney
    Yep! And they would have owned a good block of land....:mad::(
     
    Serveman likes this.
  6. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,738
    Location:
    Sydney
    Anyway, with your question, its up to the individuals. Cashed up, you have choices. Sell the PPOR house that is worth a few mill, move to Brisbane or Adelaide and buy shares to live off dividends? I'd keep my IP portfolio for at least a while but i'm still relatively young.
     
    Serveman likes this.