NSW Central Coast

Discussion in 'Where to Buy' started by Paul B., 12th Mar, 2013.

  1. Paul B.

    Paul B. Member

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    Hi all,

    I am looking to invest around $200,000 for my first investment property. I am looking to get my feet wet in property investing and don't necessarily plan to keep my first property long so I am giving more consideration to yields rather than capital gains.

    The Central Coast has caught my eye as a potential starting point for the following reasons:
    - The Coastal lifestyle (desirable for an ageing population)
    - 6 - 7% yields
    - Proximity to the two largest cities in NSW
    - Rail and F3 access to both said cities.
    - Limited land available east of the F3.
    - Proximity to coal operations (some of which have pending applications for expansion).
    - Warnervale airport
    - Proposed development: Wyong Employment Zone (Warnervale), Chinese Theme Park, Munmorah Power Station, Magenta Shores Tourist Facility, Kellogg's Factory

    The beaches are beautiful and I have always considered Wyong Council as very innovative and proactive.


    Please share your opinions!
     
  2. The Fence

    The Fence Banned

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    Ummmm..are you serious..?

    The rest of your post refers to cap gains inputs.

    Why are you after yield only but short term..? I dont get it..
     
  3. Paul B.

    Paul B. Member

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    I didn't state that I am only looking at yields, I said I am giving it more weight in the decision than capital gains. Of course I would expect some sort of capital gain over the short - medium term.

    Our cash flow is limited so I don't want to be sinking a bucket-load of cash into a negatively geared property. I am more looking at a relatively low risk and affordabe way I can kick off my investing ventures.
     
  4. china

    china Member

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    Hi Paul B,

    Currently on the Central Coast, you will find many 200k properties yielding about 270 dollars per week rent. However, these are usually dodgy units with minimal chance of capital growth. So it means that you will make tiny bits of cash but unlikely to achieve anything life changing from a financial viewpoint.

    The proposed second airport is unlikely to happen and at present I am not sure that there are any major drivers to price growth in the foreseeable future. There is population growth on the coast but no where near the rate of western and southwestern sydney.

    It is a great place to live but I am not convinced that it is good for cashflow investing.

    Probably some good buys for holding for long term capital gain in terms of waterfronts on Point Frederick and ocean view properties in Terrigal / Avoca.
     
  5. Shahin_Afarin

    Shahin_Afarin Finance Broker

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    CC is a tough market and it has been a tough market for a very long time. Bargains are rare like hens teeth.

    Regards

    Shahin
     
  6. china

    china Member

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    I suspect that property bargains, by definition, are hard to find anywhere.
     
  7. Shahin_Afarin

    Shahin_Afarin Finance Broker

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    For sure but development in CC are that much harder - budget has to be water tight.

    Regards

    Shahin
     
  8. Liberator

    Liberator Member

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    I am very new to the forum so please don't think of this as an expert opinion in the slightest!! But my feeling would be to be more specific about what timeframe 'long' means here and also reconsider why you would want to invest in property specifically if you don't think you would keep the property for 'long', especially as you are not aiming for capital gains. :confused:

    My understanding is that the buying and selling costs mean that unless you do something to manufacture capital gain (or happen to buy a place that has large & fast capital gain for some other reason) then you are almost certain to lose money if you sell in the short term?

    For instance, buying costs include conveyancing, stamp duty, insurance, inspections. Selling costs include agents commission, advertising, conveyancing, and then if you have made a capital gain and 'not long' means less than a year, the CG tax is on the net amount instead of just half of it.

    I would be interested to know what else you might be thinking of doing if you don't keep the first property for long? As in, what is your actual long-term strategy?
     
  9. Mick C

    Mick C Mortgage Broker

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    With an 7% yield on a purchase price of $200,000 you would make $10-$20 p/w after expense generally speaking...not sure if that is a good "shot term strategy".....personally rental yield strategy works for investors who is after an "hold and forgot" type investment and over a long period of time.

    If your plan on holding your property for only 3-5 year, you BETTER hope it has good capital growth- because the cost to buy the investment (stamp duty, legal, set up etc) will surely eat into any profit you can potentially make if you don't receive a decent CG.

    Well that's my thoughts anyway.
     
  10. Mick C

    Mick C Mortgage Broker

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    That makes more senses...lol your 1st post is a bit vague.
    ^ if your serviceability/ income is limited than yes i would def focus on rental yield.

    But really with investing you should make sure you have the budget and ability to hold the property for over 5-7 years to give the property a good chance to ride the market; of course if it's a dud you would sell earlier and if it makes good profit you also may sell earlier and re-invest the funds.

    ^ no set rules...as everybody's financial capacity and situation is different.
    As per the above post...i straight away thought it was not a good idea to focus on rental yield given the "short" term outlook....however once you mix in the "lack of income" it makes a bit more sense...however i personally wouldn't look at it from a "short term outlook".

    P.s One person's short term could mean 2 year while for others it could mean 5-6 years....

    Regards
    Michael
     
  11. Paul B.

    Paul B. Member

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    Gday guys,

    Thanks for the responses. As evident from your replies, there are a lot of variables that need to be considered in an investment. I guess I was looking for discussion on the viability of the CC market and if my strategy would be suited to such a market.

    Regarding my circumstances, my partner and I are currently paying off a PPOR. We have built up some equity and we are looking to get into the investment game ASAP. I am therefore looking for an affordable property that has reasonable yields (to minimise ongoing outlay) and decent capital gain prospects over the next 5 - 10 years.

    The reason I am interested in the CC market is outlined in my first post. I know the market has been flat on the CC for some years, but I am aware of some significant projects in the area that indicate increased employment opportunities and improved livability.

    The CC has all the makings of a strong property market but just never seems to get any momentum. Surely this cant keep going on like this?
     
  12. Mick C

    Mick C Mortgage Broker

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    ^ local knowledge is king! so i would say it's now just a matter of finding the right property in the right street and at the right price.

    P.s 5-10 years in my books is more like medium term ...i would say short term is a time period under 5 years...so your strategy and thinking ( planning your financial budget and risk controls) especially your local knowledge of CC is sound :)
     
  13. Paul B.

    Paul B. Member

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    Yes I would say my local knowledge is somewhat limited to 'desktop' information. That is why I wanted to generate some conversation around the CC and hopefully get some locals to give me some insight.

    Haha yes I was a little vague regarding my timeframe. I agree 5-10 years is medium term.
     
  14. Shahin_Afarin

    Shahin_Afarin Finance Broker

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    There has been a lot of reported deaths due to people holding their breathes for the CC to 'pick up'!

    Regards

    Shahin
     
  15. Mick C

    Mick C Mortgage Broker

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    :p:p:p HAHHAHAH
     
  16. Paul B.

    Paul B. Member

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    haha Shahin I wouldn't doubt it!
     
  17. The Fence

    The Fence Banned

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    What are these significant projects?
     
  18. Paul B.

    Paul B. Member

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    Namely the Projects I identified in the first post as well as a large retail development in Warnervale, and applications to list Tuggerah Towen Centre as a state significant site (in addition to the already gazetted Wong Employment Zone and Warnervale Town Centre listings).
     
  19. Ideo

    Ideo Member

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    Also I hear a whisper that the Wallarah 2 Underground Coal Mine is going back to the department very soon ;)
     
  20. spludgey

    spludgey Member

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    I still reckon it will eventually. I've got two properties up there now that are slightly cashflow positive, so I'm not too fussed if it takes another 10 years.

    I just can't understand why anyone would want to live past Penrith rather than in Woy Woy. It costs the same and takes similar time to get to the city, but I think the coast (even with all its problems) is a much nicer place.