Albury

[Prop_Perspectiv]

Happy to talk about my experience so far - but I have to warn you, I am very far from an expert and am very early in my investing journey!

The first place worth talking about was in a VERY small rural town (think <3000) and about 100kms from Melbourne. We found an extremely cheap block that was smaller than most in the town and therefore not wanted. We built a house on with a builder friend so got mates rates and they got it done in 3 months. All in for $210000 revaled after 12 months at $280000 renting now for $310pw.

We used the equity from that to do the same thing in the same town with similiar results (this time reval was $300000 8 months later).

Now we are up in Sydney and don't have our builder contacts but we are following a similar strategy but we think the results will be even better (time will tell!) we have found an extremely cheap block in Orange - in a DOH estate - and we are moving a house to the block. Waiting on DA approval but hopeful it will all be done and dusted by early October. Tentative figures put this project at $110000 all in end value around $180 - 200K and rent around $250pw.

Next stop Albury! Though worrying a little about land tax at the moment....

So, we go into rough DOH areas and rural tiny towns - two places that most people warn you off. Something I didn't know because I started all of this before joining the forums Also doesn't matter (as much) about picking short term boom areas to boost your ability to pull equity out quickly because we manifest our own CI. I do try to pick places that will have long term viability in order to capitalise (as much as possible) on longer term growth. For example, the DOH areas we go into have to have some signs of gentrification - selling off houses in the area to owner occupiers, attempts to rebuild burnt out places etc. Also I try to go into places that look strong and vibrant and have something going for them. The little town has a big dual lane road that is being contructed to link it with the Melbourne airport (which is a half hour drive away) and has a very forward thinking council etc.

Anyway, that's where we are at at the moment. Time will tell how it all pans out but enjoying the ride while I can Will report back next week on the situation in Albury.

 

[jaspn]

^ a great read, thank you for your insights.

 

[travelbug]

Thanks for sharing.
Re the land tax. How are you buying? If in individual names you can save land tax by buying one in your name and one in partners name instead of 2 half share.
The way they work out the land tax is ridiculous and not equitable.

 

[Prop_Perspectiv]

We are buying in a trust which is why I'm nervous - no threshold. Not going to let it stop me but am going to look in Vic or QLD.

 

[JennD]

Went to Albury/Wodonga and Shepparton with Margaret Lomas earlier this year for an SPI article (I think August issue).

Essentially, Wodonga was the initially preferred pick (in terms of progressive council pushing growth) but as council is intending to double their land size in the same period of time as doubling their population - making it questionable what sort of growth would occur. Any desirability of Wodonga may ripple through to Albury.

Wodonga plans also to have more of a CBD, which it is missing. Albury already has this + established resident base.

Margaret said to me she'd be looking to buy somewhere that is close enough to get the benefit of both towns, but not in the heart of Albury (as won't get the best price growth).

The feel I also got from the council was that they're still struggling to keep their younger people (as in 20s to late 30s) in the area, as they leave to take on better jobs available in Melb or Syd. This might cause an issue with those looking to have units, as typically these would be the renters of the units? Albury is big on families, and the mayor told us that many come back with families when they're older and have worked in the capitals etc.

Margaret said yield was pretty decent, and while it is unlikely to go crazy there in the short-term, in the medium to longer term both areas would have pretty steady growth.

Food for thought and pretty eye-opening for me as I'd never visited any of these places before.

 

[coastal]

The one on Captain Cook Drive for 109 k looks alright...some of the streets in the area might be a bit dodge...Can anyone confirm what that part is like..how are the tennants?



There are a few cheapies in Glenroy as well..What is that area like..does anyone have an IP there?

 

[Dave_R]

The one on Captain Cook Drive for 109 k looks alright...some of the streets in the area might be a bit dodge...Can anyone confirm what that part is like..how are the tennants?



There are a few cheapies in Glenroy as well..What is that area like..does anyone have an IP there?

While I can't offer a perspective as a property owner in Albury, i've been browsing the listings in Albury lately, and that area does seem to have a higher proportion of public housing tenants, judging by the housing tenure stats.
http://atlas.id.com.au/albury

 

[coastal]

^^^^^^^^^^^^^^^^^^^^^^^

Cheers

Kick *** website

 

[davu]

have a drive down Eastern Circuit!! Luckily I was drove down at 9am, marijuana and cocaine dont wear off for at least 6-12 hours, so I was safe

Long term albury is fine, in the short term, its not about to boom,
yields are high and so is vacancy

I'm flying down this weekend, and will rent a car and drive around there haha. No wonder why Eastern Circuit was so cheap compared to other areas! Thanks for the heads up.

 

[JennD]

^^^^^^^^^^^^^^^^^^^^^^^

Cheers

Kick *** website

True this, and some of their demographers are property investors themselves!

 

[davu]

Thought I'd bump this thread. I'll update my trip details on what I thought about Albury, unfortunately due to time restrictions did not get a chance to go Wodonga but i know some people who have.

Will update this thread tonight

 

[ChrisA1]

Look forward to your comments!

 

[davu]

Ok heres a quick outline on my trip.

Here's a disclaimer: I have yet to own an IP as yet, I decided to put holding deposits down on some OTP apartments in Brisbane & Sydney but never went ahead with them as I realised they weren't good investments with the risks involved. As I educated myself.

I guess what first attracted me to Albury was it was a town that was in my budget to buy 2-3 properties there if the numbers worked. in which avg rental yields were around 6.3-7.7+% so that was attractive.

There were micro developements going on in Albury, or developments under 100Million. Such as the completed cancer clinic in the East Albury Base Hospital in which some of my friends work there. Other council devs, MARS factory, ATO, dev of hotels/serviced apartments, land renewals. You would not see a boom in next 2-5 years I can tell you that but I think it's a stable market and a comfortable place to put my money in for the 5,10,15 year period. But that comes to your strategy again.

I've visited Albury before (2 yrs ago) but only in the main shopping street, ie. David St and the ones that run perpendicular through the town ie. swift & smollett. I phoned a few real estates and asked the good and bad areas of Albury but none were really helpful/wanted to provide answers (probaably they think your just testing but when I went down all the R/E were very helpful in pointing out the areas to avoid which I knew from http://atlas.id.com.au/albury).

*** USE http://atlas.id.com.au/albury LIKE YOUR BIBLE*** it's amazing census data to compare information, and you can make a pretty accurate analysis from the data they provide. PS. Thank you Dave R

Sample of data on what I looked for in the Streets that the properties I was looking at.

Homeowners - 24.6% 28% 16.7%
Mortgage - 34.6% 35.7% 32.7%
Private Rent 30% 28% 41.8%
Social Housing Rent - 5.4% 0% 1.5%

Low income 18.6% 31.2% 27.4%
High income 9.6% 1.9% 7.2%
Median HOUSEHOLD income $1195 $742 $792
Median salary $631 $405 $587
Median age 35 38 33
Unemployment 6.4% 11.4% 9%
Youth Unemployment 14/98 7/40 17/87
Labour force participation 71.6% 53.9% 71%
One parent families with children 11.1% 12.1% 6.5%

Also had a look at housing stress, rental stress - interesting when u compare to adjacent areas...

Housing stress:
households in the lowest 40% of incomes who are paying more than 30% of their usual gross weekly income on housing costs

Rental Stress:
households in the lowest 40% of incomes, who are paying more than 30% of their usual gross weekly income on rent

Median Rental payments

High rental payments >$400/wk
High rental is defined as households paying more than $400 per week in rent in 2011


Albury seems to have a LARGE Discount rate (Probably originally over priced houses to begin with) with real estates knock down at least $10-15k off the price advertised on Realestate.com.

So from http://atlas.id.com.au/albury I can already tell you the places to avoid are any areas that have MORE THAN 26% Housing Commission, there are several pockets scattered across Albury. Such as:
- Area near Bonnie Doon Park (This is over the mountain and up the hills) ie Kurrajong Cres.

- Eastern Circuit & Alexandra St (Yes I drove around there because I was curious to see the conditions, and it was trash dont be tempted by the cheap price tag. And I locked my car doors, turn the windows up)

- Endeavour Park Area, ie. Kurnell St, Rsolution St. near Glenroy

- North Albury : Sarvass Park streets around there. There was a saying people wouldn't want to live in North Albury but this is changing in recent years, but still rough area. If you investing here look for at least 6.5% yield imo, this area is the ONE OF the HIGHEST unemployment rate 11.4% and 50% rely on Centrelink income.


- Area near Lavington Shopping centre, Wagga Rd & Union RD

-Springdale Heights is a not so good area, the area you MUST avoid called the "G Block" ie. all the streets starting with G (Area is listed in alpha order) - Gardia St


Some insight to what I thought.

TL;DR: Check houso areas and avoid, look for at least 6.5% yield for IP unless u want East Alb/Grand View dr where the Dr's live. Negotiate 10k+ k ish.

These are just my opinion of things and I am no expert, In fact I just started in property.

 

[TMNT]

good summary, however, one of the views is that (aka nathan style), gentrification occurs in these shabby areas, so the growth in % wise will be the same or if not more then the better areas of town, sure the they will always be the ugly duckling of the town, but in terms of % gains, then they will be higher,
so for example, lets say the median of the good areas is $200k, and the bad is $130k, in 10 years time, the good areas might be $400k, and the bad areas $300k which would mean a far better % return in terms of CG

especially if the council and the people try and erradicate/reduce the badness of the areas so that the tenants there will be priced out further or out of the area, and more OOs become willing to buy in these areas thus cleaning it up

but its a fine balance between not having a decent tenant, or having maintnence for broken windows and vandalism every couple of months is what you have to consider, vs good CG

my 2c

 

[jaspn]

Davu - I too am considering Albury, however my strategy sounds a little different. Houses under 200k present good value in the lower socio areas of North Albury with 7-8% yields, so they're the areas I'm targeting. I'm all for buying in the crap areas and holding long term because:

a. With the assistance of good yields I can easily afford to
b. If the property does sit vacant for longer than expected, I can cover the shortfall of a much smaller loan
c. Houses at this price in ex housing areas don't stay this price forever, as history generally proves
d. By buying in multiples, I can spread my risk buy buying two over the period of 12 months

I'm also looking at Hackham West and the Playford Shire suburbs in greater Adelaide. Similar story to the above.

Pitfalls are the same as any low socio area; Rodent-like tenants and higher maintenance costs, but these are risks I'm willing to take. I do have a couple of conditions which have to be met though, such as a certain level of gentrification taking place.

So right now I've got to pick either Adelaide or Albury so I can fly over and have a good look for a few days. They both seem to have different things going for them, and not going for them, so making a choice is proving difficult. I like the idea of buying in Adealide being a capital city, but I also like the growth predictions of Albury/Wodonga. I'm aware of the lengthy discussion of both here on SS, but that only raises more questions. Analysis paralysis so it seems. What do you guys think?

 

[travelbug]

Hi Davu, wondering what you didn't like about Savass Park area? I know Swan St houses are more in demand than the rest of the area.
There are some housing comm there but OO is increasing. Kestrel St has a lot of OO.

 

[Qlds007]

We have been buying in Wodonga and parts of Albury for our clients for the past 12 months or so.

Certainly there are parts you wouldn't touch with a barge pole but that said this is the case with any town or city.

A good located property will perform well in the long run although very easy to get swept up with the cheaper prices in parts of the town.

 

[davu]

Hi Davu, wondering what you didn't like about Savass Park area? I know Swan St houses are more in demand than the rest of the area.
There are some housing comm there but OO is increasing. Kestrel St has a lot of OO.

Just personal preference against the stats I guess, did drive around. I inspected the property that was the mortgagee sale on Wantigong st too, over price even after discount.

Likewise with Waugh St & Fallon st, some houses for sale I had a look not bad but wouldnt really buy because of location to cemetery/main rds but just personal pref.

End of the day getting a good tenant is most important.

 

[devank]

We have been buying in Wodonga and parts of Albury for our clients for the past 12 months or so.

How do you buy for your clients from QLD?!?

Certainly there are parts you wouldn't touch with a barge pole but that said this is the case with any town or city.

Would you please share which parts you are talking about?

A good located property will perform well in the long run although very easy to get swept up with the cheaper prices in parts of the town.

Again.. would you please where these good locations are?

 

[jaspn]

Again.. would you please where these good locations are?

A guess would be Eastern Circuit. Pizza Hut design houses and rubbish all over the place on Google Street View, with prices to match. A bit too risky for my liking. Pity, it's so close to the hospital.