You can't do a subdivision of the lot if that helps.
There are so many obscure subclauses it is a wonder anything ever gets done.
Is unit in Hornsby a good IP buy?
- Thread starter china
- Start date
You can't do a subdivision of the lot if that helps.
There are so many obscure subclauses it is a wonder anything ever gets done.
Congratulations on starting the journey.
In your strategy you have mentioned $100k passive cashflow. But you've previously mentioned a reluctance to borrow and cash in the bank. So did you want to get the cashflow from cash only, or are you looking at borrowing?
I'm not a big fan of Hornsby myself. It's a unit jungle- and when is supply vs demand which drives prices, I can't see any shortage of supply. I've seen the prices there stay flat for a number of years when other areas were increasing- if there has been recent growth that may just be catching up.
There is the possibility that median prices in the area have risen because of new more expensive blocks being built.
I know that you'd like something in which you have minimal involvement and high safety. One way of doing this may be with a DHA property. There are downsides, especially the high management fees. But the upsides are long term secure tenants and routine maintenance being taken care of, with a recarpet and/or repaint at the end of the lease. They have a high standard of property, so you have an assurance of food quality. www.dha.gov.au
There's not many properties available in Sydney though. Properties are available elsewhere of course but that may not suit you.
In your strategy you have mentioned $100k passive cashflow. But you've previously mentioned a reluctance to borrow and cash in the bank. So did you want to get the cashflow from cash only, or are you looking at borrowing?
I'm not a big fan of Hornsby myself. It's a unit jungle- and when is supply vs demand which drives prices, I can't see any shortage of supply. I've seen the prices there stay flat for a number of years when other areas were increasing- if there has been recent growth that may just be catching up.
There is the possibility that median prices in the area have risen because of new more expensive blocks being built.
I know that you'd like something in which you have minimal involvement and high safety. One way of doing this may be with a DHA property. There are downsides, especially the high management fees. But the upsides are long term secure tenants and routine maintenance being taken care of, with a recarpet and/or repaint at the end of the lease. They have a high standard of property, so you have an assurance of food quality. www.dha.gov.au
There's not many properties available in Sydney though. Properties are available elsewhere of course but that may not suit you.
Congratulations on starting the journey.
In your strategy you have mentioned $100k passive cashflow. But you've previously mentioned a reluctance to borrow and cash in the bank. So did you want to get the cashflow from cash only, or are you looking at borrowing?
I'm not a big fan of Hornsby myself. It's a unit jungle- and when is supply vs demand which drives prices, I can't see any shortage of supply. I've seen the prices there stay flat for a number of years when other areas were increasing- if there has been recent growth that may just be catching up.
There is the possibility that median prices in the area have risen because of new more expensive blocks being built.
I know that you'd like something in which you have minimal involvement and high safety. One way of doing this may be with a DHA property. There are downsides, especially the high management fees. But the upsides are long term secure tenants and routine maintenance being taken care of, with a recarpet and/or repaint at the end of the lease. They have a high standard of property, so you have an assurance of food quality. www.dha.gov.au
There's not many properties available in Sydney though. Properties are available elsewhere of course but that may not suit you.
In your strategy you have mentioned $100k passive cashflow. But you've previously mentioned a reluctance to borrow and cash in the bank. So did you want to get the cashflow from cash only, or are you looking at borrowing?
I'm not a big fan of Hornsby myself. It's a unit jungle- and when is supply vs demand which drives prices, I can't see any shortage of supply. I've seen the prices there stay flat for a number of years when other areas were increasing- if there has been recent growth that may just be catching up.
There is the possibility that median prices in the area have risen because of new more expensive blocks being built.
I know that you'd like something in which you have minimal involvement and high safety. One way of doing this may be with a DHA property. There are downsides, especially the high management fees. But the upsides are long term secure tenants and routine maintenance being taken care of, with a recarpet and/or repaint at the end of the lease. They have a high standard of property, so you have an assurance of food quality. www.dha.gov.au
There's not many properties available in Sydney though. Properties are available elsewhere of course but that may not suit you.
Its these higher management fees over time that are coming back to you and paying for the recarpeting and painting at the end of the lease.
I have also noticed DHA properties are marketed at slightly inflated asking prices compared to other comparative property's available on the open market.
If you are purchasing DHA property for security/peace of mind then as with most things it comes at a price, as illustrated above.
I have written about this before ... be careful with 'hoping'.
Ok, so you are suggesting a commercial property which I can sell off in little lots? Can you give some concrete examples of such investment opportunities and more importantly where to find them?
I keep reading realcommercial.com.au and commercialrealestate.com.au. Is this the right way to go about it?
I think that 1.5m is probably the max I want to try my hand in my first outing. I suspect that will involve some ppor equity, loan on the property and some cash from me.
The 100k p.a. passive cashflow is the end result of what I would like to achieve from all this business.
Much as I hate borrowing, in fact, I have never borrowed any substantial sums in my life, I have learnt from this forum that some form of leveraging is vital for growing the portfolio in a significant way.
Further more, I have also learnt that I really need to do something with the cash besides holding it in the bank as it will get eroded rapidly by inflation and taxes. Hence the need to get into property - primarily as a hedge against inflation and allows me to generate part of the 100k p.a. which will allow me to retire and know that my income will be indexed to inflation.
I bring up Hornsby only because my sister used to live in that block and is familiar with that area. Not a good reason to invest 500k but I bring it up in case there was agreement that it would be a good start. Clearly, there are many concerns raised by posters here.
I appreciate your comments regarding supply / demand so I guess it is back to realestate.com.au, if I focus on residential. I guess the feeling is that I should buy land and old house and hold for CG. I suspect that I need to buy something within 15km of sydney cbd as I understand that this has a long history of CG. I am hesitant to start out anywhere else as it would make me feel uncomfortable venturing too far from familiarity.
Otherwise, I need to find something commercial as aaron has suggested.
There have been many posts on this forum regarding DHA and I feel that no concensus has been reached regarding this.
My preference has always been inner city properties like the old, large terrace houses - not the single storey ones but the huge ones. Ones that can be used for both commercial and residential use like rooming houses (for cashflow) or offices. I look for mixed-use zoning as this provides the best flexibility. However, that is my preferred strategy. Something like this: http://www.realestate.com.au/property-house-vic-west+melbourne-112265591
Close to the CBD, close to the shops/trams/Victoria Market. Most likely will go up in the next few years and it doesn't even cost that much (relatively speaking). I am sure there are plenty of similar properties in Sydney, if you look hard enough.
China, I know you said about 15kms out but have a look around satellite CBD's such as Parramatta & surrounds..its suits my CGA strategy for CG. I've put my money (well OPM 
) where my mouth is & purchased a brick and tile villa couple years back. I believe it will produce the CG you are looking for with a lower entry level & higher yield.
) where my mouth is & purchased a brick and tile villa couple years back. I believe it will produce the CG you are looking for with a lower entry level & higher yield.Thanks for the link. Would it be correct to say that the property that you have mentioned would need development by yourself or you would rent it out as is and then wait for CG?
I suspect that the equivalent in Sydney are suburbs like Annandale, Newtown, Surry Hills which are all regularly touted as investment hotspots due to gentrification and urban renewal.
I have not found much support for Hornsby units and I guess I had best look elsewhere.
China, I know you said about 15kms out but have a look around satellite CBD's such as Parramatta & surrounds..its suits my CGA strategy for CG. I've put my money (well OPM
May I ask how properties in Paramatta and surburbs provide better investment potential than say Hornsby and surrounds?
My understanding is that both provide relatively low entry level which I must agree with Aaron would require management of multiple properties with all the associated administrative and tenant issues.
Both are of similar distance to Sydney CBD and there seems to be abundant supply of units in both these areas.
No need to develop but you have that option if you need to in future. Especially in the inner-city areas you tend to get better quality of tenant and higher demand. Not everyone employs this strategy of course but it works for me.
Same. $480k could be used for some significant profit through some subdivisions or commercial. With only a few years until desired retirement though, China wont have time to watch his 480k unit become worth 540k in 4 years time, its not going to get to the end goal.
If it was me, and I had access to leverage a 750k ppor, I would be looking at buying a CIP (or three), eg quality warehouse units in demand areas with strong tenancies and use the next few years to pay down the loans as far as possible with the goal to have them paid off for retirement. If you have 3 units at $400k each grossing 10%, theres your $120k pa income.
Hi China,
My 2c is that I'd have to agree with some earlier posters. I live in the Hornby Shire and there is a prolific supply of units in and around the CBD area.
If I remember correctly going back to some earlier research...the Hornsby Shire is committed to developing another 16,000 dwellings by either 2036 or 2050. I can't remember which but I think the real winners are going to be the land owners around Galston and Glenorie with the council already sending out public proposal for subdivision of acreage.
Together with a new Woolworths and recently finished multi million dollar power station down Cattai Ridge Road...I saw a lot of old Italians on acreage wearing their singlets and King Gees in Glenorie Bakery with beaming smiles on their dials.
Anyway I digress, to many units in Hornsby.
My 2c is that I'd have to agree with some earlier posters. I live in the Hornby Shire and there is a prolific supply of units in and around the CBD area.
If I remember correctly going back to some earlier research...the Hornsby Shire is committed to developing another 16,000 dwellings by either 2036 or 2050. I can't remember which but I think the real winners are going to be the land owners around Galston and Glenorie with the council already sending out public proposal for subdivision of acreage.
Together with a new Woolworths and recently finished multi million dollar power station down Cattai Ridge Road...I saw a lot of old Italians on acreage wearing their singlets and King Gees in Glenorie Bakery with beaming smiles on their dials.
Anyway I digress, to many units in Hornsby.
Even though I wish to reach the end goal ASAP, I guess I cannot retire until I reach the goal. So it could be anything between 5 to 10 year time frame.
The ware house situation is totally foreign to me. I suspect that they would be low maintenance and good passive income. Should be far easier to deal with that similar cost resi IPs.
I understand that the main problem with warehouses is that there is a high tenancy rate as it is easy to replace readily, that is , endless renewable supply. This means limited CG and difficult to resell. And I understand that banks may only give 50% LVR on warehouses?
Could you give example of where it would be good to buy warehouses with 10% gross yield?
There is far more supply in Hornsby than South Wentworthville where I stuck my money. See below..
South Wentworthville
Houses - 1,277 or 68%
Semi-Detached / Townhouses - 587 or 31% or suburb
Flat, Unit or Apartments - 18 or 1% of suburb
Other Dwellings - 3 or 0% of suburb
Now compare that with Hornsby....
House - 2,876 or 38% of suburb
Semi-Detached / Townhouses - 586 or 8% of suburb
Flat, Unit or Apartments - 2,336 or 31% of suburb
Flat, Unit or Apartments: In a 4+ storey block - 1,779 or 23% of suburb
Other Dwellings - 28 or 0% of suburb.
Source 2011 census.
As you can see Hornsby has twice (%) the number of units etc and half (%) the number of houses than South Wentworthville.
Now this is just one of a few other underlying fundamentals that need to be taken into consideration when conducting ones DD on potential areas.
I hope this gives you better perspective when it comes down to supply & demand equations.
At least you know some of the things people look at when deciding where to invest.
I mentioned DHA because, although management fees are higher than a normal IP, it I a good investment option for somebody who is investing for the first time, possibly worried about vacancies or tenant problems, and who likes to keep hands off.
That doesn't apply to many on the forum. It applied to me for my first investment property. It was a good intro to IPs. In the first 9 years, the only time I was ever contacted about anything was to ask me permission to install deadlocks. At their expense.
So China, if this is the type of investment property which suit you, DHA may be something to consider.
I mentioned DHA because, although management fees are higher than a normal IP, it I a good investment option for somebody who is investing for the first time, possibly worried about vacancies or tenant problems, and who likes to keep hands off.
That doesn't apply to many on the forum. It applied to me for my first investment property. It was a good intro to IPs. In the first 9 years, the only time I was ever contacted about anything was to ask me permission to install deadlocks. At their expense.
So China, if this is the type of investment property which suit you, DHA may be something to consider.
