Country properties - Vic

Please excuse me if I sound green to all of this - but I am.

I notice many people wanting to buy their 1st IP in the city areas - and the prices (along with the mortgage repayments), just give me heart palpatations, never mind if you get a bad tennant. Really, when you are starting off, I just dont see how you can afford these properties, unless you mortgage your soul.

So has anyone started off building their portfolio by buying in the country? Yes I know that the growth would be slower, but spending $172K for a sound 3 bedroom house with an expected rent of approx $160 - $170 p/w - wouldnt this be a better option?

Sorry if my question sounds dumb.
 
There are some really good buys around Shepparton and it seems to be a city on the move with a lot of potential. Lot of work around there at the moment which will bring in the renters. If I had spare cash I would certainly buy up there, new 3 br houses for $285k
 
i am playing in regional victoria, my critera of house.

In main township
10k+ in town/greater township
Mains plumbed Gas
Sealed road
8+% Gross Yield for resi rental in the town

Then i am looking for places that are better than this average or have value add options.
 
I would also like to know from a curiosity perspective,

as many of you know Nathan on the forums appears to have a good knowledge of regional properties

so I was curious,

you can pick up regional properties in regional areas of Vic, say Bendigo for about the $90k mark land only,

http://www.domain.com.au/Property/For-Sale/Land/VIC/Bendigo/?adid=2008249754

or one with a house on it for $120k eg
http://www.domain.com.au/Property/For-Sale/Land/VIC/Golden-Square/?adid=2008274405

the house itself is crap, the land size is 600sqm+ so subdividable down the track, for this price its not in the best location

however, im sure there are plenty of rental properties and vacant blocks of land, in the area

if you did nathan job, with say a $30-$40k major renovation, could you not get $160 per week in rent,

is this a good and affordable way to get in to the market and a good way for a fairly novice to increase equity in a matter of months????

Edit: I do not own these properties or have any affiliations with them, hell ive never even been there! ;)
 
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I'm sure there are some great investment properties out there, but I think there are a few reasons city dwellers (which is most Australians, let's face it) may not bother. For example: (a) they don't want to try to manage a property that is a long way from their home because it's inconvenient and they don't know local agents or tradespeople (b) they don't really know these areas unless they've grown up in them so fear they will misread the local market and can't be bothered researching it properly and (c) wonder how much capital gain you can get when - presumably - there is fairly unlimited land for development and even property on the outskirts of town is only 15 minutes' commute from the centre.
 
Please excuse me if I sound green to all of this - but I am.

I notice many people wanting to buy their 1st IP in the city areas - and the prices (along with the mortgage repayments), just give me heart palpatations, never mind if you get a bad tennant. Really, when you are starting off, I just dont see how you can afford these properties, unless you mortgage your soul.

So has anyone started off building their portfolio by buying in the country? Yes I know that the growth would be slower, but spending $172K for a sound 3 bedroom house with an expected rent of approx $160 - $170 p/w - wouldnt this be a better option?

Sorry if my question sounds dumb.

To answer your main question, YES! In 1997, I bought a block of 4 1BR units in Traralgon, Vic, for $84,000. At the time they were returning approx $60pw each (yes, that's nearly 15%). Wa cash-flow neutral, and sold them a while later at a small-ish profit, but that got us our kitchen upgrade in PPOR and deposit for a "better" investment property.

But as other posters have alluded to, I was relatively local at the time. Would I have bought there if I wasn't local? Probably not. FWIW,
 
Agreed there are possibilities in regional.

I sold a 700sqm house in glenroy. house was crap - demo and develop job.

for the price i sold it i bought a 5,000 sqm block in golden square (Bendigo) with a 4 bed brick home in great condition and an acre to subdivide out back.
 
I also bought some IPs in Traralgon during the 90s, including 2 blocks of flats. They were returning about 17%(1994) and 15%(1998) at the time. Rents 1BR have now gone from around $65/week back then to around $130/week now, with very few improvements. So big potential for rent and capital increase from here with some TLC. :D

Other than a bit of a lean patch in 1995/6, there have really been bugger all vacancies. Average tenant stays approx 5 years and re let period is usually measured in hours.

Values are now 3-4 times what I paid at the time, so capital growth has been similar to here, based on alternatives I looked at in Melb at the time. They are not crazy low yields like in Melb, so I think that even from here there is lots of room for CG (for the right properties).

Anyhow, bottom line is, never be afraid to consider outside your local area, but only consider areas with strong growth.
 
Anyhow, bottom line is, never be afraid to consider outside your local area, but only consider areas with strong growth.

You see, for us - its the scare factor that is making me look at regional properties. The thought of having to take out a mortgage for $400K for an IP in the city scares the you know what out of me, hence why I am looking at regional. And as we are not high income earners, the thought of having to pay alot of $$ extra on top of the rent to make the IP bills just seems out of our reach on a large mortgage.

How do you get past that "oh my god we owe (insert extremely high debt figure)" feeling? We currently have 2 properties (PPOR & 1 IP that is negetively geared) and would love to expand our portfolios, but as the rent does not cover the IP expenses, well its really daunting prospect taking on another.

I take my hat off to those who can fight through this fear.
 
I take my hat off to those who can fight through this fear.

if I had a buy and forget type investment strategy

and it was neturally geared or close to it,

I couldn't give a stuff in the world,

give me $20m in loans in the above and you'd see me smiling like there was no tomorrow,

on the assumption that they aren't shoebox apartments or in unusual places or unusual types of properties

I'm sure there are some great investment properties out there, but I think there are a few reasons city dwellers (which is most Australians, let's face it) may not bother. For example: (a) they don't want to try to manage a property that is a long way from their home because it's inconvenient and they don't know local agents or tradespeople (b) they don't really know these areas unless they've grown up in them so fear they will misread the local market and can't be bothered researching it properly and (c) wonder how much capital gain you can get when - presumably - there is fairly unlimited land for development and even property on the outskirts of town is only 15 minutes' commute from the centre.

i agree,

if I had to drive 1-2 hours just for every property inspection, it would be a big turn off,
as for managing property, id rather have a good tenant far away instead of a bad tenant close by, but maybe looking at properties that nobody is interested in is a great way??

hence I thought someone like nathan could comment,

assuming that its the type of situation where your going to be only house in the street or a radius, maybe its a better way to start off in an attempt for capital growth where it seems that the inner city prices are going crazy while regionals are just going along steadily with the trend
 
When the fear of working another 20 years and then retiring on the pension outwieghs the fear of getting another loan....

I like regional areas .The cashflow is closer to neutral or positive, and as you say, the loan is smaller. I also like the idea of spreading the risk, I'd rather have 5 smaller properties where the chances are very slim they would all be vacant together, than just one that might need to be out of the market for a couple of months to do a reno, and re lease....
As far as maintanence, its important to have a good manager, luckily I have had no major issues. Ive always had 12 month leases. Ive popped up there a couple of times to paint, and oversee reno's, but if I wanted to, I could have left this with the property manager.
Capital growth has been patchy, but the median averages 10% over the past 10 years which is quite reasonable, and I purchased close to the town centre. All the purchases were cashflow neutral or slightly positive at purchase, and I have leveraged the capital growth into Melbourne market.
Just do it!
 
Please excuse me if I sound green to all of this - but I am.

I notice many people wanting to buy their 1st IP in the city areas - and the prices (along with the mortgage repayments), just give me heart palpatations, never mind if you get a bad tennant. Really, when you are starting off, I just dont see how you can afford these properties, unless you mortgage your soul.

So has anyone started off building their portfolio by buying in the country?

Our investing commenced with (Victorian) regional cities and still is...an affordable entry for us to get into property market.

We have been fortunate to not only research and know our reg. cities very well, but buy well and have good returns, plus growth over some years.

The deal (figures) must stack up, some adding value, buying well....

For us, it was about accumulating appreciating assets, we had, and have no issue with commencing this in regional Victoria.

Remember approx. one third of Vic's population lives in regional areas.

That population is not headed to metro Melbourne anytime soon, at least in my lifetime. Generally speaking, there is a shortage of quality, well presented IP available to rent in many regional areas.

I don't hold to any assumption regional investing -necessarily-leads-to-lower-capital-growth....that has not been "our" experience.

Obviously it has not the peaks and troughs, nor the extreme growth coastal/prime areas have, but acceptable to us, all the same.

It has provided ongoing, further equity for us to access to acquire further IP's.

I have researched and know my areas well. But, also just got it going-that can never be underestimated, whether you are a preferred metro investor, or in the "other" camps:)


Yes I know that the growth would be slower, but spending $172K for a sound 3 bedroom house with an expected rent of approx $160 - $170 p/w - wouldnt this be a better option?

My returns have been nothing under 8%...mixture of constructions/land and already builts...stepping stones to other things...just haven't decided what yet, opportunity and grabbing it has been busy ...making most of good buying, so when this is all utilised and up and running, we will review next leap into great unknown...

Sorry if my question sounds dumb.

This is precisely what the forum is about, running through ideas, hearing from different brains and experiences...an information and sharing board, as well as a sounding board. Good for you! Best wishes on what u decide, may the force be with you.

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