For those of you that bought IP's in regional areas, what motivated you to do this?
- Thread starter Chloe
- Start date
Not sure what you would describe as regional but I bought in Muswellbrook about 2 years ago.
At the time of the purchase I was not even looking away from my local area (woy woy) but then noticed a lot of projects being approved in the Muswellbrook area. Decided to look closer and formed the view that capital growth would be good and rents reasonable because of demand.
Rents have been good to date. Only a very short vacant period. Not sure what the capital growth has been like. I assume a small increase but nothing major. House has been cashflow neutral since the begining as it is rented furnished. $550/week for a property that cost $253K. market rent is about $320/week I think
At the time of the purchase I was not even looking away from my local area (woy woy) but then noticed a lot of projects being approved in the Muswellbrook area. Decided to look closer and formed the view that capital growth would be good and rents reasonable because of demand.
Rents have been good to date. Only a very short vacant period. Not sure what the capital growth has been like. I assume a small increase but nothing major. House has been cashflow neutral since the begining as it is rented furnished. $550/week for a property that cost $253K. market rent is about $320/week I think
Affordability. If I could afford to buy a lovely terrace in Paddington, or federation cottage in Balmain, I would. But I can't. So I rent in Sydney and I've invested in Orange/Bathurst.
Oh yeah and because part of my investment strategy is to have my debt spread. Better to have 5 places worth 250K and one of them untenanted for a few weeks than a place worth 1.25 mil untenanted for a few weeks. I don't have an income or cash buffer large enough to have all my eggs in one basket yet. So yeah, well-located properties in popular regional centres help me spread that risk.
Oh yeah and because part of my investment strategy is to have my debt spread. Better to have 5 places worth 250K and one of them untenanted for a few weeks than a place worth 1.25 mil untenanted for a few weeks. I don't have an income or cash buffer large enough to have all my eggs in one basket yet. So yeah, well-located properties in popular regional centres help me spread that risk.
I don't understand why it's not cash flow positive with those figures. Even with 105% lend it should still be positive before depreciation.
Because at the time, I knew no different!
And even if I did know different, I'd have probably still done the same thing!
And even if I did know different, I'd have probably still done the same thing!
It's a mix of everything to me.
Due to the affordability purchase price, cashflow positive is highly likely.
With it's current affordability price, potential for CG is likely where infrastructure etc. will be / being built.
Lower price bracket town with good infras. will eventually catch up with the high price bracket town.
Just my 2c worth of thought!
Due to the affordability purchase price, cashflow positive is highly likely.
With it's current affordability price, potential for CG is likely where infrastructure etc. will be / being built.
Lower price bracket town with good infras. will eventually catch up with the high price bracket town.
Just my 2c worth of thought!
i started regional as it was where i could afford and after some good wins, kept going that way for quite a while before balancing up with some bluechip later on in the capital cities
a regional town with limited housing stock , a rental yield over 7.5% and an increasing population has proven to be a winning formula many times over
a regional town with limited housing stock , a rental yield over 7.5% and an increasing population has proven to be a winning formula many times over
I'm strongly considering buying some very very rural out whoop whoop farmland in future for 3 reasons
1) good potential for capital growth/food production
2) so that I can go fishing/hunting on my own land
3) possible hideout in end of the world scenario
Dead serious by the way. Swine flu this, Bird flu that, WW3 if Iran is invaded, possible Zombie apocalypse just from how dumb people are these days (don't even worry about viruses doing it)...a mans gotta have a place to hide with the barramundi
1) good potential for capital growth/food production
2) so that I can go fishing/hunting on my own land
3) possible hideout in end of the world scenario
Dead serious by the way. Swine flu this, Bird flu that, WW3 if Iran is invaded, possible Zombie apocalypse just from how dumb people are these days (don't even worry about viruses doing it)...a mans gotta have a place to hide with the barramundi
I bought into Mackay for the high expected population growth, tight rental market with good returns and the expected mining boost.
http://www.mackay.qld.gov.au/__data.../Mackay_Population_Growth_-_Medium_Series.pdf.
I also recently bought in the Bowen Basin as I believe in the long term coal story. And the positive cash flow balances my negatively geared properties meaning my portfolio is now cash flow neutral. That's pretty cool!
http://www.mackay.qld.gov.au/__data.../Mackay_Population_Growth_-_Medium_Series.pdf.
I also recently bought in the Bowen Basin as I believe in the long term coal story. And the positive cash flow balances my negatively geared properties meaning my portfolio is now cash flow neutral. That's pretty cool!
Thanks everyone for the replies.
RLeon, Warrnambool is an area that i'm looking at if i can't afford to buy in Melbourne. Friends and family of course were sticking their noses up and were puzzled as to why i would consider it, mind you none of them have an IP anywhere!
Ideally i'd like to have one of each to start with (say within 12-24 months of each other) and then see from there.
RLeon, Warrnambool is an area that i'm looking at if i can't afford to buy in Melbourne. Friends and family of course were sticking their noses up and were puzzled as to why i would consider it, mind you none of them have an IP anywhere!
Ideally i'd like to have one of each to start with (say within 12-24 months of each other) and then see from there.
Number 1 reason why you should NOT listen to them!! Although any advice from them will be (probably) well-intentioned, they are not speaking from experience, but rather LACK of experience.
Hi Guys,
Welcome Chloe
I'm interested in the reasons that some of you that have bought in regional areas?
I am familiar with many of the regional cities, bigger towns (smaller ones for that matter), of Victoria, been witness to their growth, struggles, issues, developments..so a strong sense of familiarity for a start, the 'knowing my own backyard', as opposed to jumping in and investing in say, Melbourne/her suburbs.
Was is because it's more likely to get +CF? More affordabe?
After looking at the regional city property sales of houses and land, realising the approximate rental returns possible, I realised it seemed to suit my needs and wants (re investing) pretty well on many levels, I know the areas relatively well, affordibility, rental returns, the deals that were appearing, (circa 2003).
Did you do this to get your foot in the door?
Yes, foot in the door, followed quickly by leg, hips, torso...
Any regrets?
That I did not start sooner.. ie 18yo, it's fun, possibly if my residence had been in Melbourne, I may have found something there instead of Bendigo, but regional Victoria has been a good base to begin, not only for myself, but other investors.
Thanks
You are welcome, hope it helps some..
YES. We are on a lowish income and low tax bracket (due to working in not for profit sector) - therefore, we can only claim very little neg gear tax breaks.
YES. But you need to find the right property......at least to meet our requirements anyways - which is that it has to pay for everything, not just the loan.
NO. We already had a few metro IP's (outer 'burbs).
NO.............and YES. In order to get something cheap enough, we've had to purchase stuff needing a fair bit of work bringing up to scratch. I do all the work myself, so I've had to live away from home & family for a time, building kitchens and bathrooms (and much more). Not much fun.
Its always the same story with the friends and family- I am lucky that my dad invests a lot so he understands however, so many of the others don't. I wonder if they would turn their noses up when they purchased Warrnambool 4 years ago and watched their 300K house sky rocket to $600K. My investment strategy is very city oriented (or close enough) however, the growth in Australia the past 5 years has seen regional/resources/mining type towns smash the returns across the board that city's have had. Warrnambool on a much smaller scale to the Karatha's and beyond but with billions of dollars of gas plant and wind turbine projects that have already been given the green light over the next 5-10 years, low unemployment, very low vacancy rates and a sensational coastal feel- I am not walking away without a few more IP's. There are bargains and money to be made all over the country and its best to keep an eye out everywhere.
I spoke with 2 agents in Warrnambool just to pick their brains.
One sounded like he was 16 and didn't really know a lot and the other told me that it is very slow in Warrnambool, rentals aren't moving fast and recommended that i stick to Melb for the moment!
Another told me the opposite and says how great it is!!!
One sounded like he was 16 and didn't really know a lot and the other told me that it is very slow in Warrnambool, rentals aren't moving fast and recommended that i stick to Melb for the moment!
Another told me the opposite and says how great it is!!!
