Peoples thoughts on Adelaide?

Neutral/positive gearing shouldn't be the only consideration, I'm sure those who invested in mining areas learned that the hard way.

As for most of those investing up north being in it for the long term... I know one investor who bought a couple there a few years ago (probably near the peak), had numerous tenant issues (vacancies, damage, other repairs) and has been trying to get out for break even for some time. Let's not use our anecdotal stories to generalise :)

Could be right (mostly priced in), but I prefer to wait a little longer and see.

Definitely. Property is about capital growth but income restricts where you can invest and what strategies you can use. Personally I'm on a below median salary income so investing in the eastern suburbs/close to the CBD is out of the question for me. I would be getting a poor yield and my serviceability for future purchases would be effected.

As for the neutral/positive gearing it all depends on your strategy but when I was talking about it I was thinking of metropolitan investment. Personally I'm investing around the Salisbury region. Yields are higher in Elizabeth but they are still good in Salisbury as well so holding costs are generally minimal.

Yeah Elizabeth has been pretty flat for the last few years so if you're getting bad tenants and maintenance issues all the time I could see it becoming frustrating. That's all part of the game though. Nothing worth having comes easy.
 
Definitely. Property is about capital growth but income restricts where you can invest and what strategies you can use. Personally I'm on a below median salary income so investing in the eastern suburbs/close to the CBD is out of the question for me. I would be getting a poor yield and my serviceability for future purchases would be effected.

As for the neutral/positive gearing it all depends on your strategy but when I was talking about it I was thinking of metropolitan investment. Personally I'm investing around the Salisbury region. Yields are higher in Elizabeth but they are still good in Salisbury as well so holding costs are generally minimal.

Yeah Elizabeth has been pretty flat for the last few years so if you're getting bad tenants and maintenance issues all the time I could see it becoming frustrating. That's all part of the game though. Nothing worth having comes easy.

Excellent write up mate
 
Hobo you can get bad tenants anywhere, just because there is widespread social disadvantage doesn't necessarily mean problems IMO? That's what good PMs and insurance are for if you happen to be unlucky
 
Hobo you can get bad tenants anywhere, just because there is widespread social disadvantage doesn't necessarily mean problems IMO? That's what good PMs and insurance are for if you happen to be unlucky

Ditto

I went the BC meeting of our Mosman units on Sunday , and much of the talk was about the tenant in unit 8 .....

The owner is happy because he keep cranking up the rent and she is happy to pay it , but everyone else ....

Cliff
 
Fair points and good post 2FAST4U.

Hobo you can get bad tenants anywhere, just because there is widespread social disadvantage doesn't necessarily mean problems IMO? That's what good PMs and insurance are for if you happen to be unlucky
You are right that problem tenants can be anywhere, but there's a reason landlords insurance is more expensive for Elizabeth compared with Unley.
 
I speak to a lot of people in my role here in adelaide.

Those with IPs I always quiz them on how its all going, for the majority they have had zero growth since the GFC.

Although I must say that looking at houses over the last 6 months things to seem to be picking up in the more desirable suburbs and those that surround them.

There is a lot of competition for houses in the FHB/downsizer/Investor demographic around the $450-$500K mark.
 
Fair points and good post 2FAST4U.


You are right that problem tenants can be anywhere, but there's a reason landlords insurance is more expensive for Elizabeth compared with Unley.

Obviously more claims there. Higher number of investors compared to residential, therefore the insurer has higher concentrated risk which is mitigated by higher premiums. But don't think because it's the suburb that you get worse tenants.

My Elizabeth tenants are my best tenants out of all my properties. The property that cost me the most has had the worse tenants.
 
Fair points and good post 2FAST4U.


You are right that problem tenants can be anywhere, but there's a reason landlords insurance is more expensive for Elizabeth compared with Unley.

Maybe I got a honeymoon rate but my new policy which was building and LL insurance was just under $500, I was surprised it was that cheap for a property in Elizabeth and much cheaper than anything I have in Qld. I like to have quite a high excess so maybe that was the reason, some people like to make minor claims but you end up paying for it anyway with future increased premiums.
 
Property is about capital growth but income restricts where you can invest and what strategies you can use. Personally I'm on a below median salary income so investing in the eastern suburbs/close to the CBD is out of the question for me. I would be getting a poor yield and my serviceability for future purchases would be effected. ....

I agree with your thoughts about CG being the long-term king. ...but are you sure about not being able to buy in the Eastern suburbs??

You could buy a quality 2 bedroom units there for under $400k which would deliver about 4.8% yield less strata. Yes, they would be initially cash flow negative but how much negative? Well, after plugging the numbers into the good old Excel spreasheet it appears you would be... about $1,000 in the red after tax PER ANNUM. Less if you could claim some depreciation due to recent renovation...

And capital growth? Well, the only reliable way to judge this is to analyse repeat sales of the same property over time... two examples from a recent research I did for a client: one unit went from $82k to $340k in 19 years and the other from $97 to $370 in 18 years... that is an average CG of about 15 to 16% per annum...

I definitely know where I would invest...
 
You could buy a quality 2 bedroom units there for under $400k which would deliver about 4.8% yield less strata. Yes, they would be initially cash flow negative but how much negative? Well, after plugging the numbers into the good old Excel spreasheet it appears you would be... about $1,000 in the red after tax PER ANNUM. Less if you could claim some depreciation due to recent renovation...

Can you share the details? I highly doubt you are taking into consideration the real costs of ownership based on your numbers, but happy to be proven wrong.

What size deposit was assumed in the scenario?
Do the figures include financing stamp duty & LMI?
Do your figures account for maintenance/repairs, council rates, strata, management fees, insurance, periods without a tenant?
 
I agree with your thoughts about CG being the long-term king. ...but are you sure about not being able to buy in the Eastern suburbs??

You could buy a quality 2 bedroom units there for under $400k which would deliver about 4.8% yield less strata. Yes, they would be initially cash flow negative but how much negative? Well, after plugging the numbers into the good old Excel spreasheet it appears you would be... about $1,000 in the red after tax PER ANNUM. Less if you could claim some depreciation due to recent renovation...

And capital growth? Well, the only reliable way to judge this is to analyse repeat sales of the same property over time... two examples from a recent research I did for a client: one unit went from $82k to $340k in 19 years and the other from $97 to $370 in 18 years... that is an average CG of about 15 to 16% per annum...

I definitely know where I would invest...

It would be costing me a lot more than $1000 a year to hold. Council rates and maintenance would be a factor but also remember I'm on a below median income so the tax advantages of negative gearing and depreciation doesn't apply to me as much since I don't have a high income to write it off against.

I prefer small freestanding houses (less maintenance) with 3 bedrooms on big blocks. At the end of the day land is an appreciating asset, whilst buildings depreciate. If I had 400k and could only purchase 1 property I'd be looking for houses around the Edwardstown region. However, if I could purchase more than 1 house I'd rather buy 2 freestanding houses in Elizabeth South, which would be providing yields of 6.5%. If I bought a 2 bedroom unit for 400k in the eastern suburbs I'd be lucky to get $360 a week rent. Meanwhile if I bought a couple of 3 bedroom houses at Elizabeth South I would easily be getting $260 a week rent for each of them. That's $520 v $360.

Using your 19 year example look at Elizabeth. If that person had spent their 82k in Elizabeth 19 years ago they could've bought at least 2 free standing houses for 82k. Those houses would both be worth at least 170k each right now, which would've provided you the same capital growth.
 
It would be costing me a lot more than $1000 a year to hold. Council rates and maintenance would be a factor but also remember I'm on a below median income so the tax advantages of negative gearing and depreciation doesn't apply to me as much since I don't have a high income to write it off against.

I prefer small freestanding houses (less maintenance) with 3 bedrooms on big blocks. At the end of the day land is an appreciating asset, whilst buildings depreciate. If I had 400k and could only purchase 1 property I'd be looking for houses around the Edwardstown region. However, if I could purchase more than 1 house I'd rather buy 2 freestanding houses in Elizabeth South, which would be providing yields of 6.5%. If I bought a 2 bedroom unit for 400k in the eastern suburbs I'd be lucky to get $360 a week rent. Meanwhile if I bought a couple of 3 bedroom houses at Elizabeth South I would easily be getting $260 a week rent for each of them. That's $520 v $360.

Using your 19 year example look at Elizabeth. If that person had spent their 82k in Elizabeth 19 years ago they could've bought at least 2 free standing houses for 82k. Those houses would both be worth at least 170k each right now, which would've provided you the same capital growth.

Couldn't have put it better myself :)
 
It would be costing me a lot more than $1000 a year to hold. Council rates and maintenance would be a factor but also remember I'm on a below median income so the tax advantages of negative gearing and depreciation doesn't apply to me as much since I don't have a high income to write it off against.

I prefer small freestanding houses (less maintenance) with 3 bedrooms on big blocks. At the end of the day land is an appreciating asset, whilst buildings depreciate. If I had 400k and could only purchase 1 property I'd be looking for houses around the Edwardstown region. However, if I could purchase more than 1 house I'd rather buy 2 freestanding houses in Elizabeth South, which would be providing yields of 6.5%. If I bought a 2 bedroom unit for 400k in the eastern suburbs I'd be lucky to get $360 a week rent. Meanwhile if I bought a couple of 3 bedroom houses at Elizabeth South I would easily be getting $260 a week rent for each of them. That's $520 v $360.

Using your 19 year example look at Elizabeth. If that person had spent their 82k in Elizabeth 19 years ago they could've bought at least 2 free standing houses for 82k. Those houses would both be worth at least 170k each right now, which would've provided you the same capital growth.

:cool: /Popcorn

Btw Logica, my average yield in Elizabeth is 7.5%+ and without strata. I find it hard to believe that with 4.8% less strata, you are only out of pocket for $1,000.

FYI, I use 105% loan to calculate interest, council, insurance, water, property management fee, vacancy of 2 weeks and maintenance in my calculations.

That said, I might still consider buying in eastern burb because wife is having a bub and I have think about school zones now :p
 
That said, I might still consider buying in eastern burb because wife is having a bub and I have think about school zones now :p

Congrats and welcome to the club!

If you are considering the Linden Park Pri & Glenunga International HS catchment areas, you should act fast.

FYI; Frewville, Glenunga, Glenside, Linden Park, Hazelwood Park, St Georges and Beaumont (some parts) are the only suburbs zoned for BOTH Linden Park Pri AND Glenunga International HS.
 
Can you share the details? I highly doubt you are taking into consideration the real costs of ownership based on your numbers, but happy to be proven wrong.

What size deposit was assumed in the scenario?
Do the figures include financing stamp duty & LMI?
Do your figures account for maintenance/repairs, council rates, strata, management fees, insurance, periods without a tenant?

Hi hobo-jo.

Deposit was 10%, all stamp duties etc are included, LMI is included, BA fee is included, council / insurance / water etc is included, PM fees too. Vacancy rate is not included but a unit in Fullarton or Parkside would have minimum long-term vacancy rate.

The shortfall would be higher for a marginal rate of 30%. Minimum depreciation was assumed though. As I said, if you buy renovated unit the depreciation would go up and the shortfall would be less in each case.
 
It would be costing me a lot more than $1000 a year to hold. ....

... generally not a lot more...

I prefer small freestanding houses .... I'd rather buy 2 freestanding houses in Elizabeth South, which would be providing yields of 6.5%. ....
Using your 19 year example look at Elizabeth. If that person had spent their 82k in Elizabeth 19 years ago they could've bought at least 2 free standing houses for 82k. Those houses would both be worth at least 170k each right now, which would've provided you the same capital growth.

I respect your preferences. But the data I have does not support your insertion that Elizabeth experienced the same long-term capital growth as Parkside or Norwood or Goodwood...

It is the TOTAL return over the asset's investment horizon that counts, so one needs to crunch reliable numbers carefully...
 
... generally not a lot more...


$400k x 4.8% yield is $20k.
Interest is 18k on 360k saying 90% (i prefer to calc using 105% though).

So we're 2k positive. Not sure if council water strata are all negotiable, package them together for under a grand maybe? :)
 
$400k x 4.8% yield is $20k.
Interest is 18k on 360k saying 90% (i prefer to calc using 105% though).

So we're 2k positive. Not sure if council water strata are all negotiable, package them together for under a grand maybe? :)

4.8? Time to refinance. Can easily get <4.5 these days ;p
 
Congrats and welcome to the club!

If you are considering the Linden Park Pri & Glenunga International HS catchment areas, you should act fast.

FYI; Frewville, Glenunga, Glenside, Linden Park, Hazelwood Park, St Georges and Beaumont (some parts) are the only suburbs zoned for BOTH Linden Park Pri AND Glenunga International HS.

Burnside PS is the way to go. Best 4 years of my school life. :p

The Chinese buyers will choose a private secondary school, so probably doesn't matter what the HS zoning is.
 
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