First IP- Where to Buy 100K-200K with good return

[jameso]

Not completely mining dependant. Far more diverse than singleton, muswellbrook etc.
Lots of agricultural business. It does have Massive mining leases in the area however. Whitehaven expansion still underway. While most of the miners are crying poor. If watermark coal develop their lease as planned things will be interesting. Until developers flock in and screw it for everybody as usual.

James

 

[Alex1]

Wagga - lots of $200k properties with rents of around $250-270pw, and they arnt the real cheapies in worst streets. As diverse as a regional can get with defence, uni, agricultural and govt jobs available.

Alex

 

[Gockie]

The rent return is ok but I'm not so sure about getting capital growth for Wagga though. Prices haven't really gone up. OP save a bit more and you can buy a renovator's delight unit in Sydney (though obviously, not in the most well regarded suburbs). Look for something accessible by train. I'm pretty sure they will rise....

 

[iprock]

Brilliant. I will keep looking. Prices looks to be inflated ATM

The rent return is ok but I'm not so sure about getting capital growth for Wagga though. Prices haven't really gone up. OP save a bit more and you can buy a renovator's delight unit in Sydney (though obviously, not in the most well regarded suburbs). Look for something accessible by train. I'm pretty sure they will rise....

 

[knightm]

Not completely mining dependant. Far more diverse than singleton, muswellbrook etc.
Lots of agricultural business. It does have Massive mining leases in the area however. Whitehaven expansion still underway. While most of the miners are crying poor. If watermark coal develop their lease as planned things will be interesting. Until developers flock in and screw it for everybody as usual.

James

You are right its got a bit of spread. There are worse areas and it has survived the coal doldrums better than most. What is the go with Shenhua, planned timeframe?

 

[knightm]

The rent return is ok but I'm not so sure about getting capital growth for Wagga though. Prices haven't really gone up. OP save a bit more and you can buy a renovator's delight unit in Sydney (though obviously, not in the most well regarded suburbs). Look for something accessible by train. I'm pretty sure they will rise....

If the mantra is to save more and buy in Sydney then its not surprising you are not sure about capital growth for wagga.

The city only argument is as old as moses and it can have its own thread. I made my first rapid capital growth by NOT following that advice in 2003 when I was entering the workforce, ready to buy and EVERYONE said Sydney only ever goes up at the time.

The OP was asking for ideas and is trying to understand what to think about when considering the options they can afford now. One option is to keep saving but we all know that is not always the answer long run in real estate. Entering the market well is. Sometimes this requires saving longer and sometimes it doesn't. My first place cost 65K and nearly doubled in 18 months and many of my Sydney friends and family were absolutely horrified when I bought it.

Regarding wagga wagga its a great diverse regional with reasonable population forecast (reasonable not amazing) growth my issues with it at the moment is vacancies. At 3.4% its soft, and getting top dollar rent will be tough.

 

[Spades]

Hi iprock,

As OP have mentioned and igree,look in adelaide.

Best of both worlds CF + CG's,especially if you don't mind doing a reno.

No point investing in an IP that has zilch CG's prospects.

Hard to offload if you need to exit Eg:job loss etc.

 

[Jaggannath]

I don't mind the suggestions like Wagga, and if you can buy at the right price places like Bathurst or Ballarat are also solid options in my opinion. I'm not looking in these areas at the moment, but every so often my focus wanders back to these places.

 

[Brady]

Have 1 IP in both Bathurst & Wagga. Purchased due to diversed industries and growing population. Both have UNI's, defence, major spending by govt (hospital upgrades), private spending, goes on. Good CF as well. The key for me was to not buy in the lowest of theses areas as I didn't want the tenant issues. And at the same time was far from buying at the top end as still wanted affordability and CF.

In Bathurst I purchased in West Bathurst, close to the public school and hospital. Purchase price $265k rented at settlement $330p/w

In Wagga I purchased in Mount Austin, close to the public school and Uni (also not far from hospital). Purchase price $216k rented at settlement $315p/w

Both properties have a second bathroom so desirable for tenants.

 

[z611143]

Have 1 IP in both Bathurst & Wagga. Purchased due to diversed industries and growing population. Both have UNI's, defence, major spending by govt (hospital upgrades), private spending, goes on. Good CF as well. The key for me was to not buy in the lowest of theses areas as I didn't want the tenant issues. And at the same time was far from buying at the top end as still wanted affordability and CF.

In Bathurst I purchased in West Bathurst, close to the public school and hospital. Purchase price $265k rented at settlement $330p/w

In Wagga I purchased in Mount Austin, close to the public school and Uni (also not far from hospital). Purchase price $216k rented at settlement $315p/w

Both properties have a second bathroom so desirable for tenants.

Just for the novice and learner im trying to become.

For that properties of say 265k per week. You would be paying X amount per week back on the loan but also receiving that 330 p/w rent. Is this difference in value called anything? like a yield or something. Just trying to learn.

 

[jroth]

z611143
Your gross yield is based on the yearly rent compared to the purchase price. i.e. ($330 x 52 weeks / 265k) * 100 = ~6.5%

This is a useful rough guide but don't forget to take into account the expenses.

 

[Brady]

Just for the novice and learner im trying to become.

For that properties of say 265k per week. You would be paying X amount per week back on the loan but also receiving that 330 p/w rent. Is this difference in value called anything? like a yield or something. Just trying to learn.

Paying interest only, don't ever want to reduce the principal (all extra repayments can go into an offset). ($265,000 x 1.05%) @ 4.79% = $13,328 / 52 = ~$256p/w

*1.05% is to include the purchase costs (stamp duty, conveyancer, mortgage registration etc)

As mentioned by jroth ($330 x 52 weeks / 265k) * 100 = ~6.5% gross yield

Need to remember costs

- insurance
- council rates
- maintenance/repairs
- management fees
- vacancies

 

[knightm]

As above I'm glad some have IP's they are happy with in Bathurst and Wagga, they are indeed diverse regional 'cities' and in my view quite low risk. Both have potential for future capital and rental growth. I don't listen to the Sydney only mantra that sometimes shouts down options like these.

My issue is buying into regionals at a time when vacancies are high. I wouldn't do this when I have equally good regional options at the same price point that have lower vacancy rates. If apple and apples are being compared I would choose a town with a tighter rental market. Unless of course you have some kind of inside knowledge on a major infrastructure project, new mine or industry about to create large scale change in the town, then its worth the risk of higher vacancies as they are likely to drop when the change actually occurs.

2795 is currently 3.8% and 2650 is 3.4% - these are quite soft figures (not terrible but definitely not great) and mean the competition for tenants will be tough, possibly resulting in dropping the rent to get a tenant. Around between 2-3% is generally considered a balanced rental market where there is a balanced match between number of landlords, number of tenants, rents aren't rising or falling etc. As vacancies fall under 2% we start seeing rentals increase well above inflation, this is what I like to see in my first few yrs so the IP that may have only been CF neutral in yr 1 gets to +ve in a few short yrs.

Just my 2c

 

[iprock]

Hi guys,

I had a meeting with bank guys today and it looks like we have a preapproval of 500K, so now search criteria has changed, any suggestions on where to. I was looking at Campbelltown/ Minto area, what do you guys say. any chance we would be able to make some money?

Thanks for great suggestions so far.

 

[AHwee]

Hi mate

I have some properties in Bendigo, Victoria. I think you can consider buying an investment property here. This is a good regional city I think, potentially better than most NSW towns listed above.

If you are not really concerned with capital growth, this surburb of California gully has many houses in the $195 to $210k mark. If you bargain hard enough, you may get one for say, $185k. In reasonable condition, these house can be rented for $240 to $250 a week.

Main reason why houses here is cheap is because it has many commission house (or ex). But to me, as long as Bendigo keeps growing, this area will be cleaned up. It is mainly the social stigma that depressed the price, more than anything else. There will surely be capital growth here, but it may be slower than other areas.

Compared to other australian towns, Bendigo has a more balanced economy. It's population is also big at around 105,000. If Bendigo is in NSW, it will be the 4th largest city after Sydney, Newcastle and Wollongong. With the new hospital built in 2017, this "town" should grow even more.

So if stable returns and gradual capital gains is what you are aiming, this is a pretty good place to invest in.

 

[Braveorstupid]

Gunnedah NSW. I got a 3bd on 900sqm 175k rent 285pw

Hi Jameso,
I'm thinking of heading to Gunnedah next week to look at few IP options. I'm being steered clear of the block west of the golf course; the old housing commission area. OK, fair advise. But with the prices so much lower than other areas, the CF looks very attractive. So just wondering is the area suffering from an old stigma, or is it really that bad?
Thanks.

 

[Jaggannath]

Willing to suggest regional NSW towns with better vacancy rates and prospects knightm? Or are you wanting to keep that in the back pocket. I love reading about the diverse places people are considering.

 

[JamesP]

Would there be any regional areas around Melbourne worth considering in this price range? Besides Icy Creek

 

[macca446]

Could of bought mine in orange had it on market 6 weeks but I sold it $196k tenanted $295pw wednesday,I have another in town going to market soon has tenant $240pw $185k to $189k hopefully will not take long to sell.

 

[melisem]

Also a newbie!

I am also brand new to investing and looking in the entry level range (up to $200k). Preferably around $100k though.

I like the look of Bathurst and Wagga. I have my eye on apartments for students in Bathurst... any thoughts on having a studio apartment (under 40m2) as your first investment?

Super cheap and good rent is very appealing to a newbie!

I live in Sydney (recently relocated from Brisbane) and I'm open to anywhere that makes me money