Buying Outside Sydney for around 100k

I have no experience buying any property but based on my deposit of 20k and small income I would like to buy a small cheap property anyway to get started. My target price range would be 80-120k.

Because I have lived in Sydney for such a long time I have a strong belief that if the property doesn't cost 250k or more it's going to be high-maintenance and unprofitable or in a very weak area/market.

So what i'd like to ask is: is it actually possible to buy a house/apartment that's not risky (probability of less demand in the future, high maintenance, high rate of being unoccupied) for around 100k ?

Yesterday another reader suggested "properties outside Newcastle". Sounds great (price-wise) however i'm worried about the above risk factors.

I would think that if I bought a unit in Hornsby for 300k it would be relatively risk-free ! (high chance of tenancy, reasonably low maintenance, sure-fire growth).

Can I expect the same from cheaper properties, outside Newcastle for example.

I can live with low capital growth (i'm using the property as an experience, and to pay off half quickly) and then let it run itself.

My greatest fear is simply:

- a high-maintenance apartment/house
- a small town with a dying market

Are my concerns valid ? Should I wait until I can afford a bigger loan ?
This reply might generate a lashing from some as this is a property forum, but here we go.

Firstly, well done for opening your eyes and seeing more than VB and V8, not many 20 year old blokes (big assumption, but not many girls would call themeselves "giraffe" :)) are able to get past that stage for a few years.

Pending you getting a low-doc loan for a property less than $100k, biggest risk factor would be vacancy and the effect on your cashflow, which @ $200 per week gross once you are at TAFE would mean Mr Giraffe would be paying more than 50% of his wages toward the mortgage payment (80k interest only @ 6.57% = $101 per week)...are you happy taking on that risk? Living on 80 bucks per week can be done but its not nice.

Seeing that your cash flow will be only enough for subsistance until your TAFE course is finished yet you still wish to invest, and invest more than just the cash you have saved/gained up until now, you may want to look in the direction of investing and borrowing to invest in managed funds. If you gear at approximately 50% and invested in a few different funds that provide quaterly dividends, you would probably find that any interest payable would be offset by dividends (just make sure you can cover the 1st 3 months interest).

At the end of your TAFE course, the world will be a different place and you will be ready to take on a more aggressive strategy once your cashflow is stronger.

Good luck

Glenn !

Thank you for your reply,

I appreciate you re-doing the math with me, it helps to understand that i'm not missing anything.

Firstly, I automatically considered a P&I loan at a fixed rate of approx 7% for 3-5 years. Don't ask me why :) Is there any reason why this might be foolish ?

I also noticed that you recommended (or perhaps, just mentioned) using an IO loan. Is this just to make things as affordable as possible and therefore more likely to get the loan approved ? (I've read several books that rave on about paying-everything off asap - eg. Anita Bell).

Also, thanks for making me more aware of living expenses - because I live with my parents (and intend on continuing to do so until I finish TAFE) I have always considered my expenses minimal and therefore, to me - non existant, which isn't the case of course - i'll have to calculate the actual expenses over a few weeks.

Renting seems so easy to me - if nobody wishes to rent my property i'll just lower the asking price by 30/w and THEN the property can probably be rented quite easily with very little negative cashflow. In a year or two of heavy saving i'll have another 20k paid off and then the cashflow should cover all expenses - and my goal is accomplished - to experience the purchase and maintenance of a property - and to experience free cashflow.

Mentally I will feel the urge to pay off the loan entirely in my first year out of TAFE. (50k or so remaining at that point and assisted by cashflow from rent) and I guess i'll feel pretty good ! At 22 i'll own an entire BUILDING (or Unit) :)

I'm almost expecting a not-so-optimised (many errors) first investment yet at 22 I will have an equity of $100k, a cashflow of approx $150/w (i'm guessing what a 100k property may return rent-wise, is there a rule-of-thumb ?).

The next property will easily get a loan, will already have the assistance of property_1's cashflow and be more carefully selected.


As far as I know, the steps for me should be ..

1) find an area that is far from Sydney so that it is affordable
2) somehow research the area for a good understand of market value of each property on the market*
3) find property that appears to be below market value (trying to follow profit-when-you-buy concept)
4) obtain loan, buy property
5) seek property manager to find tenants
[much nail-biting during no-rent period]

So - the first and second step is hardest for me ..

1) What towns should I look at that won't drop in value for some reason in the future.

*2) How can I possibly research the market in an area that's six hours away from where I live ?

Out of curiousity, lets say I choose to begin researching in Singleton ?! I've been there once and know it's pretty FAR, I could take a quick glance at property prices in RE windows and the internet. But getting a GOOD idea of property prices would be DIFFICULT - especially when i'm SERIOUS about buying.
Giraffe.. I have bought 2 properties in Regional NSW, and I'm negotiating on a property in regional Queensland right now. (Going to let the owner sweat a little over the weekend before I come back with a counter offer.)

From my readings (and experience) or regional property I've learned the following:

(1) Buy in a town with a largish population (over 40,000)
(2) Buy in a town with more than one thriving industry. e.g. mining and tourism, tourism and wineries etc.
(3) Talk to the real-estate agents
(4) Get the zoning maps from council
(5) Try and work out where the poor areas and rich areas of the town are. You can work this out from the geography. Places close to the railway yards are cheaper, places in flood zones are cheaper, places with a view are more expensive, flat blocks are worth more than slopey blocks etc etc. Then buy the report from hpg ( to verify your answers. By this stage you should be getting a pretty good feel for the town.
(6) Visit.. visit.. visit. Do lots of drive-buys of houses that have sold recently. Try and work out why the house was valued at that amount.
(7) Jump on the web and look at all the houses for sale in your chosen town. Try and work out if you think they are good value or not. You will get better at estimating the price with practice. Practice "valuing" as much as you can.

It will take you a couple of months and a fair bit of energy to get comfortable with the town and it's pricing. I spent about a year reasearching the first town, and about 5 months researching the town I'm negotiating in now. I've researched some towns that I decided it was not a good idea at the time to buy into. But I feel very comfortable with it when I do. (Always good to be able to sleep at night :) )

Best of luck

Hiya Giraffe! :)

Well done on taking the first steps at such a young age- if only more people your age had the foresight and the motivation to invest for their future!

You say you wish to buy a cheap property as a first investment, to also use it as a learning experience (which it is sure to be, as all our choices in life are) and to be able to pay it off as quickly as possible. In order to achieve this last aim comfortably, you need to be searching for a property with a high yield so that more money is going into your pocket than is coming out.

I have properties in Singleton and consider it an excellent example of a country town that has the features Cornflower has already mentioned in her excellent post. (you go girl!)
All properties I purchased were around the $100K price range and all are renting for highly satisfactory returns- ranging from 8.6% to 10.9%. I know that I will have no problems renting them out as I did my research and know the market quite well up there now. Being an example of a transient workers town, there is a strong demand for rental properties, particularly in town itself.

As for what type of loan you should take out, judging from your desire to pay it off as quickly as possible, then a P and I loan with full flexibility (in terms of paying off in lump sums and extra repayments) would be the way to go. Shop around for a cheap rate, pump in as much deposit as you can afford (by paying 20% or even less, in some circumstances,you will avoid LMI) and keep some cash reserves for unexpected maintenance problems. (eg: expired hot water services, broken appliances, leaks etc). An IO loan is great for maximizing your cashflow but your strategy here suggests you would like a property unencumbered in as short a period as possible (a la Anita Bell style!). Always talk to a good broker about your best options. As Cornflower points out, YOU need to be happy and rest well at night, happy with your strategy.

Wherever you end up buying, remember that you have many friends on this forum who are there as a sounding board, as well as several who have loads of experience. Hope this has been of some help. Talk to me in the chatroom for more specifics if you go ahead in Singleton :)
Thanks again everyone for your support !

Jacque, i've checked out some Singleton listings on and found that many are well over $200k - I just can't beleive homes cost this much - I guess 200k isn't THAT much money when you earn 40k+ a year though :)

Do you feel that properties around 100k are still available at this time ? Again i'm concerned about buying an unreliable property ANYWHERE for 100k :)

Lastly, how do you research Singleton - assuming you live in Sydney ?
IP outside Sydney

Tamworth ( Northern NSW ) I have purchased a property in Tamworth 1 yr ago for $89,000 and am renting for $170/week - not a bad return. Had house valued last month @ $125,000 ( even better ) . There have significant capital gains in Tamworth over last 12 mths ( although it is still affordable ). Tamworth has pop of approx 50,000 with good rental demand. One place to think about......

for prices on Tamworth + Singleton go to -

Has prices for many NSW towns...
Ben is right about that site, Giraffe. It is a specifically for country towns, so will have more local listings on it.
Also, if you want to start to get serious, subscribe to the local papers in the selected towns for a low cost way of seeing the most recent listings. For eg, the local Singleton rag is "The Argus" Ph: 02 6572 2611. Try search engines for the other towns- the papers are a wealth of knowledge.
This week, in the Argus, for example, there were some 7 houses listed for under $175K and a further 10 or so units/townhouses for under $150K. You've just got to get out there and keep looking. Good luck!
Some good ideas there - sorry about the silly questions, I usually work/research pretty hard once the ball is rolling but property investing is still very vague to me :)

Thanks for the reference and I love the idea of subscribing to local newsletters ..

Have you guys/girls often visited your out-of-the-way properties ?

Do you hire a property manager ?

It's so hard to believe that people want to rent in such small towns :)

Yes I do aim to visit my properties to keep a tab on things. I have looked high and low and found whom I believe to be an excellent pm in town. She is motivated, enthusiastic and knowledgable. I write in my Management Agreements that I am to be contacted prior to every inspection, as I will be attending most of them. This keeps the PM on their toes as well as displaying an interest in the property.

Of course ppl will always rent in small towns- there has to be a market for that :)
Outside NSW?

Good on you "young fella"!

My husband and I are finally getting around to dipping our toes into the investment property market - years later than we should have, but that's always the case with 20-20 hindsight, isn't it!?

We are a bit hesitant about sinking $300K in one hit on the Sydney market, which seems to be flush with rentals lately, and have been looking around interstate.

Our thinking is multiple properties (eventually) but acquired in affordable chunks $-wise.

Question 1:

Is it worth sacrificing some capital growth for a steady income stream? Parts of Victoria, for example, seems to be chronically short on rental accommodation. OK, some of this is anecdotal so far - but maybe it's worth investigating further?

Question 2:

How can you get a true picture of the local rental market? Most agents would probably tell you there's a shortage just to get you on their books.

Is there another way of finding out if accommodation really is in short supply and in what categories? We were thinking of contacting the public housing authorities in various districts, as many source accommodation through private owners and pay rent assistance to tenants.
if you were going to rent in an area how would you go about it? the method you use would probaly be a good one to work out what the real market is like. I would assume they want to show you as much as possible, since you are wanting to rent and find the best for the cheapest price.
Hi there, Giraffe.

I'm trying not to be offended by the comment "I don't know why people would want to live in small town, (or similar)" We live in a town consisting of 5500 people. We are an 1 1/4 hours from the ocean and large regional cities with all of their conveniences. This amount of time is similar to the amount of time city people spend commuting to and from their destinations also. We have everything available that city-ites have, except the level of crime, grafitti etc. People actually talk to each other in the street. Try that in the city and see how people stare at you. We have several major industries in our town and have a very good income ourselves. We own our own home in this small town and love living here. It's been a great place to bring up kids. I have lived in both large and small towns and know where I am happier living.

I agree phm. People in Sydey or melbourne would have to be some of rudest/arrogant people ever ( as a whole ). You talk to these people and they think people are so friendly in the cities but they are not generally. You walk down pitt st in Sydney and smile at someone and look at u strange. I think this is the attraction for small towns etc. Alot of people are only in the cities because of work, not lifestyle! Anyway thats from my experience!
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Even though I am contemplating moving from the small regional city I live in i have to agree with Ben and Gunna.

When visiting Sydney and you say where you are from they stare blankly - 50 km from CBD is off their radar screens particularly young people. Many have no idea where you are talking about except if it is north of Sydney and you mention Tamworth and they think country music or "hicks".

I know many forumites have a good knowledge of regional areas and there are now many investors in regional NSW which there is evidence of in our local property market.

It is a pity we have become so divided between cities and "the bush" as the media insist on calling it.

Without bragging too much our town is a little green oasis - a really nice place to be - our water supply is excellent. Don't want to offend the graziers too much though.

Had really good fall of rain on Sunday - west of Guyra has some full dams and creeks.

Unfortunately the larger a city becomes the more impersonal it becomes.

This becomes then reinforced by the area. Take the area just around the City Hall in Sydney. It seems everytime I walked by I would get approached by someone asking for money. Sad fact but it just makes the city more and more impersonal and discourages friendly interaction. This is what some of the rudeness/arrogance is. It is putting up a form of protective self-defence that unfortunately perpetuates itself.


Hi there Giraffe.

I have just re-read your last post and must apologise for my brusque reply. You actually asked "why people would want to rent in small towns." People rent in small towns for the same reasons as large cities - work, lifestyle and facilities.