Bendigo vs Horsham vs Corio

If you had 150k-190k to invest in a PPOR, later to be used as an IP, which of these 3 locations is the most attractive in terms of capital growth:

  • Corio (North Geelong)
  • Bendigo
  • Horsham

Keeping in mind that i dont mind moving to a rural location, would Bendigo or even Horsham seem a better prospect than Corio?

I've asked alot of people about the Corio/Norlane area and many people my age (25) say its a dump, full of bogans and high crime. Is this true?

Being closer to Melbourne, I see Corio as having greater CG potential than Bendigo or Horsham, but I could be totally wrong... opinions?

I've narrowed my choices down to these three now. It will be a purchase mid next year and we will have a 10% deposit most likely and FHOG. Prefer mid $100k in price range but willing to go up to 190k if we find something fantastic.

Looking for a 3 (at least) bedroom house, 550sq+ land, nothing old enough to have asbestos and nothing needing structural work. Am willing to do interior rejuvenations before we turn it into an IP in 3 or so years time.

So my main question here is where do YOU see the most capital growth happening - Corio, Bendigo or Horsham?
 
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Tiger:

1994-2005 Median House Prices:


Corio (North Geelong): Corio: 1994: MHP $75,500.........2004: $155,250.........Change: 106%

Geelong North: 1994: $77,000........2004: $215,000..........179%

Bendigo: 1994: $84,000................2004: $200,000............138%

Horsham: 1994: $82,500...............2004: $155,000.............88%

Ballarat: 1994: $75,000.........................2004: $190,000.............153%

Wonthaggi: 1994: $75,000.....................2004: $191,000.............155%


Courtesy of Victorian Valuer-General 1994-2005
 
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I've had an epiphany since last night. I read Steve McKnights book and it now all makes sense.

I had read a Peter Spann book the other day and like so many others, he touts the benefits of negative gearing. Although i understand it, all along I was thinking "but Im making a loss and just getting into more debt, surely this cant be the best way"

So my focus has changed. I never wanted to have to keep working - I want passive income from properties in the long term. Therefore I need CF+ properties.

Although I will be moving into our first purchase, it will later be rented out.
I guess finding CF+ properties is a whole new ball game!
 
Although I will be moving into our first purchase, it will later be rented out.
I guess finding CF+ properties is a whole new ball game!

My understanding is that the era of CF+ prop is well & truly over, especially for medium term.

I would doubt that you would find CF+ prop in any of those 3 locations, however your shortfall between rent and mortgage will be relatively low.

Why dont you look at Werribee or Melton..? Both connected to Melb via transport, you can get a 3 bedder for around your budget and those areas have not moved in the last few years and seem to be ripe for capital growth as well.

Yields arent that bad either.

Harris
 
Yep, I just made a post in another thread about my confusion. Maybe its just too early in the morning for this :D

I think ultimately I need to earn more, alot more, from my business which I can then use to purchase properties with rather large deposits, say 40% + deposits.
I want multiple properties, I dont want multiple negatively geared properties for which i have to shell out thousands per year to keep going.

Would buying with larger deposits somewhat alleviate my worries?
 
Would buying with larger deposits somewhat alleviate my worries?

The more of your money you inject into any deal the less & less your ROI.

Negative gearing is only a cash flow loss in the short term thus the reason the ATO allow you to offsett losses against other income. They know that sooner or later on down the track they will collect more tax from you than tax deductions they've provided along the way.

Cash flow is only one half of the equation. The real benefit is the wealth creation it allows one to achieve.

Thus the slight cash flow loss in the short term becomes insignificant with your overall financial net wealth that is built over the mid to long term. Far in excess, from any positive geared low capital growth investment will provide.

Hope this provides you more insight into the double sided coin of negatively geared high capital growth property investment,
 
Thanks Rixter

My confusion has been compounded by the fact that in the past 3 days I've read books by Peter Spann and Steve McKnight; both of who have opposite opinions on the best way to invest in property.

I know that Steve's experience is now outdated and that when he was investing in his first 130 properties, positive cashflow was more common that it is today.

The part that doesnt make sense to me about negative gearing is that you must keep working your day job to service the loans. This doesnt free you from the rat race and doesnt provide financial freedom.
Unless you can sell some properties but my understanding is that this too also rarely provides you with long term financial freedom (unless theres a boom) due to all the money you've put in + paying off the loan + tax.

Im taking a simplistic view of things i know, but i just want to be sure before i jump into the deep end.

With NG, if i had 5 properties worth over 200k each when bought, thats over 1 million in debt . Thats a daunting number by any means and i imagine that would bring me quite an amount of stress if I had to service this debt out of my own pocket. THATS the part that puts me off.
 
With NG, if i had 5 properties worth over 200k each when bought, thats over 1 million in debt . Thats a daunting number by any means and i imagine that would bring me quite an amount of stress if I had to service this debt out of my own pocket. THATS the part that puts me off.

Focus on the BIG picture.

Like I said above, over the short to mid term your income from rents alone will rise and over take your mortgage and other IP commitments.

So much so that the ATO will impose more tax for you to pay. So all you do is purchase another IP to write your taxes off against.

Thats a bit of a shame isn't it - you will have to invest in even more property and increase your net wealth in order to minimise your tax! :D
 
;)

Going back to Steve's book for a second (I do have a mind of my own, but this early in the game I guess Im being influenced heavily by others opinions). He sees NG simply as a way to minimise your tax bill, rather than a way to earn an income. Is that what negative gearing is all about for people, reducing your tax bill rather than earning more money?
 
ok ok i'm getting there ;)

Now back on topic... Bendigo vs Horsham vs Corio... I'm leaning towards either Bendigo or Corio now.. and Corio is looking more attractive due to closer proximity to Melb although Bendigo's CG trends do look good.
So what does that mean.. it means Im no closer to making a decision!
Look like a trip to VIC is on the cards, hopefully i can get a feel for the areas in the couple of days i'll spend there.
 
Tiger,

Heres a tip for you - If you decide on the CG strategy, you need to look for areas that are going to provide the minimum CG you are willing to settle for , and then once you have a list , whittle those down to another list that is going to maximize your cash flow. Like I said earlier rents will increase as time goes by.

Its just a matter of how well you can sustain or manage the short term cash flow loss along the way to mid to long term capital gains and wealth.

Hope this helps.
 
The first house is going to be a PPOR for a while, then turned into an IP or sold if value has substantially increased.

Since the budget is under 200k for the first house and Im looking in areas that have historically been growing, my attention is on the suburbs/towns mentioned here.

I think Im on the right track, just have to take the plunge and talk to those in the know.

As your signature says "I dont have to get it right, I just have to get it going!" ;)
 
I think Corio is a rough area with a high crime rate. But having said that, it doesnt mean there is not some better areas in it, and the undesirable people will slowly be pushed out as values increase.
 
Bendigo is my pick, reasoning follows

When I come to retire in 10-15 years time, and want to move away from
Melbourne, thats the only one of the 3 that I would consider living in.

Horsham is a bit too remote, Corio is a bit too industrial.

My plans wont affect prices, but I suspect others of my generation (last of the babyboomers) might think the same way.
 
Thanks valleymist.
This wont be a retirement home. We plan to move back to Sydney after a few years of investing and living in VIC - well perhaps more than a few years.
So what Im really looking for in this property is somewhere that will have some relatively strong capital growth in the next 5-10 years.

Whats the deal with Corio on Google Earth? Have they got their coordinates slightly wrong or is Corio full of big white tanks..
 

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