Reply: 2.1
From: Dave
Hi Mike,
Great post, I really enjoyed it - logical and well communicated. By the way, I'm the David T you referred to in your post. *grins*
You raised several very interesting points. I don't think the reason people don't post their "Boom suburbs" opinions online is because they are afraid everyone else will cash in on their little secret. Far from it. It's because everyone has a different strategy and different opinions - always. Someone's high yield strategy may see investing 20 km West of Melb, out in the suburbs, a great "Boom Suburb" for THEIR strategy. This, however, may seem ludicrous to someone primarily concerned with capital growth. Again, same goes for type of property. For example, houses is Essendon, have performed fantastically. And yet, in my humble opinion and the research I've done, the apartment market in Essendon has been quite ordinary. I've just recently been talking to a developer in Essendon who has been marketing his complex for a year - and not one has sold yet. He's now selling the entire, still unbuilt complex to another investor...the third owner now.
So, it's not that we don't want to share our "little secret", because there IS no little secret...it's just that there will always be reasons why MY boom suburbs won't suit everyone's strategy and there will always be knockers putting you down, no matter what you do.
As long as I do something. If I try to figure it out perfectly, this futile yet self-justified procrastination will set me back years.
I like to buy new property for reasons that suit me. That's enough for me. As long as the property is in a growth area. I place equal importance to yield as I do tax deductions. To some, this is crazy, I know. However, I'm paying a *$@#load of tax each year and if I can get an extra $500-$600 p/mth in my hand every month, this SUITS me just fine. It's the cap growth that's most important to my wealth creation. So yeah, I'm negatively geared..sorry Steve McKnight...but positively cashflowed. So what?? It suits ME.
Ok, I'll stick my head out BIG TIME here. I personally like to stick to a certain geographic area I know well - ala Michael Yardney and others - and become an expert in the area. The area obviously must show good growth and continued growth prospects..
The areas I invest in are Footscray/Seddon/Yarraville locations.
*OUCH*..I can feel the shoes being thrown at me already!
See what I mean?..we all have our reasons why we chose certain areas and will all have different opinions on certain matters.
Why these areas? My reasons are: only 6-7 km from the cbd, currently CHEAP compared to any other suburbs this far from the CBD in any direction, has nowhere near peaked in terms of growth (I buy and hold..so long term is more important to me), the demographics of the area are such that 49% of the population is aged between 25-39 and is University educated and profesionally employed. This high percentage of GEN X means good rental demand and high disposable income in the area. Also, some distinguished property investment magazines have flagged at least one of these suburbs as a definate BOOM suburb. The other two neighbour this one...so they too will eventually be as great.
Mike, I agree with your opinion about what causes capital growth, particularly in apartments. It's buyer demand - not rental demand. That's why I decided against several other blue chip suburbs when looking for apartments - there are just too many of them!
The suburbs I've mentioned are close enough to the CBD to attract Gen X renters and there are increasing numbers of professionals moving there because of the Universtity and Hospital. But there are virtually no (new) apartments/units there. This causes buyer demand for them - investors know they are rare, in demand, and are prepared to pay good money for them when they DO find them.
Now there you have it...I've spilled my guts. What have I got to hide? Of course there are other, possibly better, ways of creating wealth through IP. But this is the one I'VE chosen...and am going to go full-steam ahead until I leave "the job"....can't wait to the day when I email that letter of resignation (maybe with a virus..lol)
I now dare anyone else to leave themselves as exposed as I have and give YOUR view on what YOU think.
This could now be the end of an otherwise great thread..because no-one else is willing...or it could be the start of an invaluable source of info/advise that both the amateurs and experienced investors can all benefit from.
#@%$^...!! I waffle to much...blame the bottle of red!
Cheers,
Dave