Your article is interesting. I heard about this group a little while ago. Fancy the consultant Jennifer Reeves making this comment "Nobody works out here so there's nothing to do except breed and rent houses." Although after visiting my tenants in Frankston last week I believe there may be some truth in such a statement.
To be fair, she claims to have been misquoted. Since journalists and the real estate industry have similar levels of public credibility (the media maybe a touch lower), let's just call it a draw.
Although after visiting my tenants in Frankston last week I believe there may be some truth in such a statement.
Also facts from credible sources such as the ABS do show some truth in it. After all, there would be something wrong with the social security system's generosity if all the pension recipients lived in the poshest suburbs. It just goes with the territory - in cheaper suburbs you will have more unemployed/disability support pensioners/single mums, etc than elsewhere. And they can turn out terrific long-term tenants. If you don't like it, don't invest there.
Having said that, you will see some thing you don't like in the cheaper suburbs. And when inspecting houses one will hear some tales from tenants about bad PMs, neighbours, etc.
Here's two examples, both sighted in suburban Melbourne in the last month:
1. Suburban house with double garage converted into flat (council has no record of this being approved). The house has a single parent family with 3 kids. This was spotless but not all the lights had bulbs in them as they're Sudanese and have a superstition about electricity. According to the agent rent is paid in the dark when he comes around.
Entering the converted garage however one almost tripped over four or five mattresses that spread wall to wall. There was a small kitchen area with stove, a tiny bathroom and toilet. Apart from the TV there was no furniture of note. Clothes were scattered on the floor of a small room partially seperated from the toilet (the internal wall didn't go all the way up to the ceiling). Four or five Indian students / part-time security guards called this double garage their home.
2. Visited today was an ex-commission home in another outer suburb. The court with about 6 houses had around 20 cars scattered around it. Every horizontal surface was supporting junk (the tenants were moving out and couldn't wait), and even the agents photo in the brochure revealed a cluttered front yard.
The tenant said that they couldn't put a light in a child's room because of the house wiring. Hence powerboards everywhere. Roots from a neighbours tree had played havoc with sewage pipes - that's why the grass was so green in parts. We won't go into the leaking shower (the bathroom floor was on one level with no sunken shower area), the bad gutters or the patio that leaks, forcing water down the walls. Oh, and the mice!
When we came she was on the internet reading about people with 20 piercings through their legs. She had been there 3 years but when moving in saw syringes and rubbish from the previous tenants (who'd been there 3 months then were evicted).
Neighbours were described as psychos (one was her brother) and the tenant had witnessed the house opposite burning (probably an insurance job she claims).
Various faults were reported but none got fixed. The property was (mis?)managed by a real estate agency that recently went bust. It was transferred to another (one of the well-known chains), but the property manager also switched over.
The cheapest areas generally have one or two rogue houses in a street, but this particular court seemed to have them all.
Maybe the tenant was into exaggeration, but it sure was a great yarn. The thing about it was that the asking price was about the same as houses that (probably) wouldn't have had all these problems. The agent is being completely unrealistic since the above problems would surely knock tens of thousands off the price (which if they could be fixed for thousands, makes it worthwhile for the investor). Though these aren't going to fix the 'worst street' issue, this could be the sort of stuff of which $100k houses are made (if the vendor is willing and quits insisting on an asking price of nearly double).
