Hey everyone,
Does it worry anyone else that the majority of properties that are cash flow positive are in a regional place?
I've always thought my strategy would be to buy with 15k of major cities?
But obviously a few cash flow positive properties can balance out the overall port folio.
However, I am a bit skeptical about regional places but I guess it all comes down to due diligence whether or not I believe the town will grow in the long run.
Who here is sold/not sold on cash flow positive properties in regional towns?
I've both made money and lost some with regional areas. Am currently holding something in both Regional NSW and in Regional VIC.
I've found that you need to really research an area before diving in. Being out of area you may not have as much knowledge as a local, so try to learn as much as you can, not only about the area, but try to get a feel on the agents too. Afterall, they will be the ones doing the managing of your property.
The only REAL problem I've encountered is with Agents. One area that I have a few properties has a handful of Agents. They all suck, but in varying degrees. At one stage I had several properties that were vacant and according to the Agent there was no demand. After having these properties vacant for some time, they told me the reason they were not renting was because the properties were in a bad state of repair.
Ummm.....OK, so why wasn't I told of this earlier and why wasn't the money taken from the bond? Many reasons! Well, firstly you have to have a bond before you can take it to use for repairs. And that was only one of the minor problems that started to appear with this agency. I won't dwell on this, but it is depressing. Overall that particular agency cost us around $10k through their missmanagement. So.....if there are only a handful of Agents, proceed with caution, because sometimes in smaller communities they just can not get good staff. OK, this happens in larger cities too, but at least they have a bigger pool of applicants for available jobs to choose from.
We move to another agency and paint the properties (they weren't in a bad state of repair) and they have all now been let long term. Another point with regards to another agent in the area is that they did not like out-of-area landlords and would not rent our properties out unless there were no local landlords properties available at the time.
We have now tried every agent in the town. The current ones are certainly not perfect, but they are the best of a very bad bunch.