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Why I buy in low socioeconomic areas

Discussion in 'Where to Buy' started by spludgey, 12th Jul, 2015.

  1. spludgey

    spludgey Well-Known Member

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    Preamble: I had a few messages back and forth between hotmail and myself talking about why I invest in high yielding areas (Elizabeth SA in this case) over blue chip areas. As we both took a bit of time writing our responses to each other, I thought it might be worth sharing on here.
    Feel free to comment or critique.

    Note: I've taken a few identifying details out.

     
    Breeamy, Northy85, Kael and 11 others like this.
  2. planPerth

    planPerth New Member

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    Thanks for this Spludgey, it is very useful. What is your experience with tenants in these areas? Do you think they are more likely to default on the rent or damage the property?
     
  3. Fielding

    Fielding Well-Known Member

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    Great thread guys, glad you both shared.
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    Spludgey, All very good reasons. Good write up. I also like that @Corey Batt and @D.T. got a mention in there :)

    planPerth, not in my experience. I have inherited 1 that was a non payer, but chucked them on Centrepay and haven't heard a peep from them since. All the others have been completely fine. Maintain an acceptable condition property and there's plenty of tenants about.
     
    Last edited: 12th Jul, 2015
  5. spludgey

    spludgey Well-Known Member

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    I've only had investment properties in Elizabeth for just under a year, so I've got limited experience with tenants there, but I've had investment properties in comparable areas in NSW and QLD for over five years now, so I'll comment from that perspective.
    Out of ten sets of tenants over tenfive years, I've had to take two to tribunal.
    Personally, I don't feel that's a huge number for roughly 25 years of rental years, but it's obviously not zero either.
     
    Last edited: 13th Jul, 2015
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  6. MsAli

    MsAli Well-Known Member Premium Member

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  7. eng

    eng Well-Known Member

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    Thanks for sharing :)
     
  8. Kael

    Kael Well-Known Member

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    Great post and discussion, thanks for sharing!
     
  9. Chilliblue

    Chilliblue Well-Known Member

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    Great read and thank you for sharing
     
  10. trinity168

    trinity168 Well-Known Member

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    How was your experience with the tribunal?
    Cost?
    Time?

    Thanks.
     
  11. spludgey

    spludgey Well-Known Member

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    I'd say I lost somewhere between $1000 and $2000 each time. So certainly annoying, but in no way a deal breaker for investing.
     
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  12. 2FAST4U

    2FAST4U Well-Known Member

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    I'm following a similar strategy mainly due to serviceability.
    With APRA cracking down on lending many people are saying that serviceability is going to be crucial in the future. I think you’ve got a pretty good strategy going for yield since it’s enabled you to acquire 9 properties. If you focused more on capital growth your serviceability may have run out at 3-4 properties depending on income etc. so the opportunity cost is another factor to consider.
     
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  13. ross100

    ross100 Well-Known Member

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    Good read thanks for sharing
     
  14. jins13

    jins13 Well-Known Member

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    Thats pretty good track record. For myself I am so time poor that I cant really take time off work to go to tribunals so often, so didnt really consider low socio areas too much.
     
  15. D.T.

    D.T. Adelaide Property Manager Business Member

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    Use a property manager then?
     
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  16. HUGH72

    HUGH72 Well-Known Member

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    You can find yourself in that situation with any tenants. Unfortunately higher weekly rent is no guarantee. I have never attended, only the pm.
     
  17. trinity168

    trinity168 Well-Known Member

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    Is my understanding correct that the PM charges extra for each appearance?

    Thanks!
     
  18. HUGH72

    HUGH72 Well-Known Member

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    Yes, normally an hourly rate in your management agreement, not that an appearance generally takes very long.
     
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  19. C-mac

    C-mac Well-Known Member

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    Great read mate! Anyone had any experience holding property in the low socio-economic suburbs of Hobart, by any chance?
     
  20. Kael

    Kael Well-Known Member

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    Had an issue with my tenant being behind in rent by about 6 weeks in my VIC IP, my PM charged me a flat rate to attend tribunal. Was a fair amount, imo though.