Buying in SA for less than 300k

A

ajpmal

Hi
We are looking to purchase our next investment property in SA early next year and with the balance we have in our account after settling for another IP this month we are aiming to buy something around the $270-280k mark.

Preferably looking for a house that is not too old and easy to tenant out and maintain.

Any suggestions on suburbs / streets? At this stage we are thinking of Hackam West or Woodcroft but have not conducted a detailed research yet so keen to get more suggestions on suburbs.

TIA!
 
Have a read throught his thread.

http://somersoft.com/forums/showthread.php?t=99628&page=13&highlight=Adelaide

$300k goes a reasonable way in SA. Gets you a 3bedder on 600sqm+ 5%+ yield with future development potential.


I work in Modbury $300k is good price range. Most suburbs are decent, but every street can have a bad neighbour. Area's I like. Modbury, Ingle Farm, Redwood Park, Surrey Downs, Clearview, Northfield. There are a hold heap of suburbs inbetween which a decent as well. Most have schools, shops, transport all close by.

For down South look in the Christies area, note some of the suburbs/street can be dodgier then the above. But maybe I'm bias :)

I like both areas. Key for both IMO is to ensure you buy a block that has development potential, doesn't mean you have to develop it, but have the potential. This type of property has the best growth.

If you jump on the maps and have a look at suburbs like Greenacres, Holden Hill, Clearview most of the old ugly houses on big blocks are gone, developed. Now have nice new more expensive houses. This will continue to happen and extend out to Modbury area IMO (happening already IMO)
 
I don't think you'll have any dramas purchasing something in SA for sub $300k.

I'd guess that most of the loans I've written in that part of the world have been for properties worth less than that.

Cheers

Jamie
 
ajpmal said:
At this stage we are thinking of Hackam West or Woodcroft but have not conducted a detailed research yet so keen to get more suggestions on suburbs.

TIA!
Click to expand...

If you go with these Southern suburbs, I agree with Brady, stick to big blocks of land for development potential, and keep in mind, much of those suburbs is on sloping land so try to find as flat as possible. $280k is median price range for Hackham and surrounds, so you will get a quality house that can be tenanted imediatelly. Don't worry about the people that say there are only ferrals out South, I have 2 IP's down that way, have never had any problems (but my IP 6km to CBD has been robbed twice! so there can be ferrals anywhere). Rental vacancy rates are very low (under1% for a long time now) so no problems tenanting.

However if you provide more info as to your overall strategy you might get more detailed responses. Are you looking for positive cash flow/ low capital growth, or negative cash flow/ high capital growth, or develop/reno/flip?
 
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Sexyv40 said:
Anyone bought in lately?
Click to expand...

Yes in the areas Erica mentioned.
Hackham west and Huntfield Heights. Was in August to September though. My PM is down there going to opens trying to pickup some for a friend.

Prices have moved up a little bit but not massively.

Yield is still good 6.5% houses and 7.5% duplex.

You can still find good ex gov houses on large blocks for 240-250k if you negotiate hard or buy a "renovators delight"
 
Outer South or North is prime stomping ground for that price range. You may even sneak into parts of North East but it's going to be an older build which doesn't sound like your type of property.

You can get mid to late 90's builds in parts of Paralowie/Salisbury for the mid to high 200's, otherwise as you've touched on Hackham/Noarlunga/Huntfield Heights.
 
Erica said:
However if you provide more info as to your overall strategy you might get more detailed responses. Are you looking for positive cash flow/ low capital growth, or negative cash flow/ high capital growth, or develop/reno/flip?
Click to expand...

Great question - looking for positive cash flow and low maintenance so not looking to redevelop or renovate. We have previously purchased properties which were within 5 - 7yrs old and the depreciation on those properties was fabulous and also meant fewer maintenance issues (although doesn't always tend to be the case). Is it possible to replicate that strategy in these areas?

Also important for us is potential for capital growth in the medium to long term as we are keen to use our equity for future purchases.
 
danwatto said:
Yes in the areas Erica mentioned.
Hackham west and Huntfield Heights. Was in August to September though. My PM is down there going to opens trying to pickup some for a friend.

Prices have moved up a little bit but not massively.

Yield is still good 6.5% houses and 7.5% duplex.

You can still find good ex gov houses on large blocks for 240-250k if you negotiate hard or buy a "renovators delight"
Click to expand...

Can you please share some more info on your purchase i.e. how old and if its a positive or negative cash flow and how easy was it to get a tenant in?
TIA :eek:
 
positive cashflow and excellent depreciation

ajpmal said:
Great question - looking for positive cash flow and low maintenance so not looking to redevelop or renovate. We have previously purchased properties which were within 5 - 7yrs old and the depreciation on those properties was fabulous and also meant fewer maintenance issues (although doesn't always tend to be the case). Is it possible to replicate that strategy in these areas?

Also important for us is potential for capital growth in the medium to long term as we are keen to use our equity for future purchases.
Click to expand...

Have you looked into NRAS? In my opinion it is the best way to get a brand new property with the least personal involvement (as it needs to be professionally managed) and cash flow positive at the same time. I've seen quite a lot of NRAS properties available for rent around Morphett Vale, so there are plenty of investors using this model in the area.

http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=99797
http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=98457
http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=98102
http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=97964
http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=97860
http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=97861
http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=62238
http://house.ksou.cn/rp.php?q=Morphett+Vale&sta=sa&id=81989
and there are plenty more examples if you keep scrolling through that website, but you get my drift.

Depends on your income tax bracket (obviously the higher the better) but when I looked at the figures (a few yrs ago, so my figures are just vague) these types of properties are something like 4k ish cash flow positive after you do your tax return. Euro on this forum is the Guru on NRAS
 
ajpmal said:
Can you please share some more info on your purchase i.e. how old and if its a positive or negative cash flow and how easy was it to get a tenant in?
TIA :eek:
Click to expand...

Hi,

One was a duplex set on a large block (both units) built in 1990, $325k, rents for $250pw & $240pw. Took about 2-3 weeks to tenant both of them. Positive cashflow, especially after depreciation. This is Huntfield Heights. These kind don't come up often you need to keep an eye out on the ex-gov sales. These guys sell them: http://www.smallacombe.com.au/

One was a house $230k in Hackham west, large block, about 50 years old, $290pw rent, took 2-3 weeks as well to get a "good" tenant. Both of the above had several bad applications in the first open due to the area they are in. But once we did a second open we had better options.

Other house $239k is about 40 years old, in Huntfield heights, also on a large block. Rental appraisal at $300pw but they leased someone in just before sale at $255pw.. so I was able to get a little bit off the price but have to wait to raise the rent.

Still get some depreciation on the old houses due to small renovations and other fixtures & fittings, thanks to depreciator.

The houses are about neutral to positive, but definitely positive after tax deductions.

I hope to one day do something on the 2 house blocks, for example knock them down and build duplexes, or granny flats, or split the block at the back for another house. But the houses are still good - so I'm not doing anything now. Once I wear out the house a bit and the area gets better as SA housing sells off it's properties and the suburbs improve I'll consider doing more. But that's not for another 5-10 years. In the meantime they can be held for no cost and will create more cashflow as rents increase.

I think you can still get these prices, but you have to work hard. These 3 were the process of about 40-50 offers and 7 building inspections, there were quite a few that fell over to get to these. Funnily enough I've never seen any of them, the properties I inspected never went through, and these ones I purchased remotely with others inspecting for me.
 
Great site Erica, as mentioned assume these don't apply after buyers period.

I'm tempted!!

This is my favourite $110k!

http://www.affordablehomes.sa.gov.a...=32_Rockbourne_Street_ELIZABETH_NORTH_SA_5113

Check your eligibility






To be eligible, everyone who will be listed on the certificate of title must be able to answer 'yes' to the following questions:



?I don't currently own a property.


?I plan to live in my own home.


?I am a South Australian resident.


?My income is within the allowed limits - less than $75,000 (singles) or $95,000 (couples or families with up to three children), more for larger families.


?My assets are valued under the allowed limits - $332,000 (singles) or $412,500 (couples), higher for people aged over 55.


Further information on income and asset limits is available on sa.gov.au.
 
After the eligibility period, they go onto the open market and end up being offered at above the asking price
 
Sexyv40 said:
Great site Erica, as mentioned assume these don't apply after buyers period.

I'm tempted!!

This is my favourite $110k!

http://www.affordablehomes.sa.gov.a...=32_Rockbourne_Street_ELIZABETH_NORTH_SA_5113

Check your eligibility

To be eligible, everyone who will be listed on the certificate of title must be able to answer 'yes' to the following questions:

?I don't currently own a property.

?I plan to live in my own home.

?I am a South Australian resident.

?My income is within the allowed limits - less than $75,000 (singles) or $95,000 (couples or families with up to three children), more for larger families.


?My assets are valued under the allowed limits - $332,000 (singles) or $412,500 (couples), higher for people aged over 55.

Further information on income and asset limits is available on sa.gov.au.
Click to expand...

Quick question on the affordable homes SA program. If you buy a home under this program, is there a minimum time you have to live in it before you sell it off? If you do sell it, are you able to take all the sales proceeds or do you have to give some back to the program? ( not referring to the Shared value affordable homes which I know you must give back a % of the profit).
 
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