Regional Investing-New South Wales..

[Macca]

Norwa has a pretty high unemployment rate , suspect the Prnces Jighway upgrade will influence values in the short term but the project will effectively end at Bomaderry so it's probably three to four years at best then nothing.

Grafton on the other hand on the north coast is just as cheap similar demographic but right in the middle of the 5.5 billion remaining of pacific highway upgrade over the next give years.

The highway upgrades are to assist people to bypass the towns and very little money goes back to the towns from the upgrades and even less afterwards. To be fair, Grafton has been bypassed for years and it is just plugging along with no real change in sight.

Unless the employment situation improves with some massive employment announcement then places like Coffs Harbour and Ballina will remain the most popular places.

 

[Swearengen]

The highway upgrades are to assist people to bypass the towns and very little money goes back to the towns from the upgrades and even less afterwards. To be fair, Grafton has been bypassed for years and it is just plugging along with no real change in sight.

Unless the employment situation improves with some massive employment announcement then places like Coffs Harbour and Ballina will remain the most popular places.

I don't really see it that way. I work on these projects for a living, most of the workforce relocates locally and spends locally over the course of the project but I agree that there isn't much afterwards.

 

[knightm]

I don't really see it that way. I work on these projects for a living, most of the workforce relocates locally and spends locally over the course of the project but I agree that there isn't much afterwards.

True,

But I also believe in long term improvements...

when you head south many Sydneysiders currently stop at Kiama/Gerringong or Berry because they are a comfortable day trip distance (1.5 hrs from Southern Syd). The road from Berry south to Nowra will get better increasing the ease with which people can travel. This sort of thing was a factor for us when we sea changed out of Sydney 7 yrs ago. Each section of road work make our trips back to see family(and their trips to see us) a few minutes shorter and less of a strain as the road improves. For the coastal stretch from Nowra south weekends away become easier, increasing tourism, which feeds the economy, and we have a fresh batch of retiring boomers moving down here now, which increases construction employment so the local trades have more money. They spend more at the supermarket and shops/restaurants, which gives the teenaged and local business owners more $, which in turn feeds the whole system. The more people have jobs the more the young people stay, which increases demand for local tafe and Wollongong Uni external campus (Nowra and Batemans Bay) to expand. The more they expand the more subjects they can offer, which keeps more young people, which means more demand for housing, etc etc etc.

There are some locals who actively oppose road improvements for the same reason I support them - they facilitate increased economic activity and population growth. The NOAMS (no one after me) want bad roads and fewer people. I don't believe they will get what they want eventually the growth will happen. Council believes it: http://forecast.id.com.au/shoalhaven/about-forecast-areas/?WebID=320

 

[nuta]

I have a place in Erowal Bay. It is my lowest yielding property but capital growth is ok. Barely been vacant, rents are slow moving. The new Woolworths shopping centre opening 2015 will improve values I believe.

 

[trinity168]

I recently purchased a IP property in RT. I spent a week there DIY renovating. The property is on a street with high HC properties.. I got worried on Day 1 but after a while I got used to it...
The guy across the street across was a HC tenant.. He came over for a chat with a VB in his hand... I get to know that HC is charging their tenants not that much less than market rent. He was paying 295/wk

You hear crimes on local papers every day. I live in Sydney West and this happens all the time, but it didn't stop buying frenzy in sydney west or 2770.

1 week renovating and spending time with the locals etc may not be much, but I felt I did my DD before buying into RT

RT less 5% HC properties scattered certain streets. 2770 has 20-30%, Logan has 10-15%
There are houses that are 400k, and there are houses that are 200k
I booked a hotel at Walsend, a 20-25min drive to RT each day
There is a lot of money going in Anna Bay, and it is not far from RT
No houses in Newcastle that are in that price bracket.
Unlike others, RT is not driven by certain industry or sectors.
over 7% is achievable for properties in 200k circa.
for example, I am confident a new paint, new kitchen and toilet for 5-10K, would take the rent to $275k-285. This is 7.15% return.
Correct you will get tenants like single mother, government benefit tenants, but as Datto said bogan needs houses
Agent said rental is bit soft there at their moment, but my property got leased within 2 week at 285/wk, with a total outlay of $175k that included reno cost, my hotel, stamp duty.
$300/wk is affordable for someone on pension or government benefits.
The property is under SMSF, with 120k loan on 6% IR...so you can work out the numbers..

I would not live in 2770 or RT, but I would invest there.
If you know property that is under $150k, please PM me.

Hi,

Just wondering how you can quickly determine the percentage of HCs in an area?

Thanks.

Cheers,
J

 

[BMW]

Hi,

Just wondering how you can quickly determine the percentage of HCs in an area?

Thanks.

Cheers,
J

If the local government is signed up to atlas.id.com.au. On the 'Map Selector' drop down, pick 'housing tenure'

 

[Brady]

Knighttm what's your thoughts on Bathurst?

Have a property in West Bathurst, loan is coming off fixed hoping to tap into some equity but haven't followed the market too much. Struggling to find compareable properties, valuer will likely have the same problem.

 

[knightm]

Knighttm what's your thoughts on Bathurst?

Have a property in West Bathurst, loan is coming off fixed hoping to tap into some equity but haven't followed the market too much. Struggling to find compareable properties, valuer will likely have the same problem.

Bathurst vacancy is 3.3%, little bit soft for my money to be buying more in same town unless you know something on the horizon we don't?

 

[knightm]

Brady did you have a particular idea in mind involving Bathurst?

 

[Brady]

Brady did you have a particular idea in mind involving Bathurst?

I've got a property in west Bathurst 3 bedroom 2 bathroom double garage brick highset. Not sure what the markets like now, bought it for $265k few years ago. Looking to get a re Val done soon

 

[knightm]

I've got a property in west Bathurst 3 bedroom 2 bathroom double garage brick highset. Not sure what the markets like now, bought it for $265k few years ago. Looking to get a re Val done soon

Investar has the median LIST price of 3x2x2 in Bathurst at $326,500. Without more info hard to say much more than that. Send me a PM if you like.

 

[RicandAnn]

True,

But I also believe in long term improvements...

when you head south many Sydneysiders currently stop at Kiama/Gerringong or Berry because they are a comfortable day trip distance (1.5 hrs from Southern Syd). The road from Berry south to Nowra will get better increasing the ease with which people can travel. This sort of thing was a factor for us when we sea changed out of Sydney 7 yrs ago. Each section of road work make our trips back to see family(and their trips to see us) a few minutes shorter and less of a strain as the road improves. For the coastal stretch from Nowra south weekends away become easier, increasing tourism, which feeds the economy, and we have a fresh batch of retiring boomers moving down here now, which increases construction employment so the local trades have more money. They spend more at the supermarket and shops/restaurants, which gives the teenaged and local business owners more $, which in turn feeds the whole system. The more people have jobs the more the young people stay, which increases demand for local tafe and Wollongong Uni external campus (Nowra and Batemans Bay) to expand. The more they expand the more subjects they can offer, which keeps more young people, which means more demand for housing, etc etc etc.

There are some locals who actively oppose road improvements for the same reason I support them - they facilitate increased economic activity and population growth. The NOAMS (no one after me) want bad roads and fewer people. I don't believe they will get what they want eventually the growth will happen. Council believes it: http://forecast.id.com.au/shoalhaven/about-forecast-areas/?WebID=320

Hi Knightm,

Given the above, why would you chose say Nowra (just over 2 hrs from Sydney) over say Lake Macquarie (Just under 2 hours from Sydney) with similar lifestyles and demographics? To me, and I am certainly no expert, the central coast appears more attractive for purchase of an IP given the rail line and F3 are better transport options than that from down south.
Is it simply that you see more potential down south?

Ric

 

[Swearengen]

Hi Knightm,

Given the above, why would you chose say Nowra (just over 2 hrs from Sydney) over say Lake Macquarie (Just under 2 hours from Sydney) with similar lifestyles and demographics? To me, and I am certainly no expert, the central coast appears more attractive for purchase of an IP given the rail line and F3 are better transport options than that from down south.
Is it simply that you see more potential down south?

Ric

The rail line goes to Bomaderry (Nowra)

 

[RicandAnn]

The rail line goes to Bomaderry (Nowra)

Ok Thanks, I was only thinking about the Woolongong line . Checked it out , train times almost exactly the same, using Toronto as a base. With transport links to Sydney, demographics, lifestyle, access to the beach and lake/basin all being close to equal I guess it comes down to analyzing which area is undervalued the most and which has the most potential.

 

[knightm]

Ok Thanks, I was only thinking about the Woolongong line . Checked it out , train times almost exactly the same, using Toronto as a base. With transport links to Sydney, demographics, lifestyle, access to the beach and lake/basin all being close to equal I guess it comes down to analyzing which area is undervalued the most and which has the most potential.

Hi ricandann,

I wasn't trying to pit the south coast agains the central coast or say one is better than the other.

I think the Sydney boom will eventually benefit both areas.

I am not based on the central coast or actively buying for clients there. If I had enquiries for that area I would probably just recommend Alan Fox (Propertunity) who is a resident central coast expert and can comment specifically on the market up there. I have had family buying and selling up there so have watched it a bit but as I said not currently targeting it.

The reason I am bullish on the south coast is that it is decades behind the north side in terms of infrastructure. The roads and transport are slowly being improved after long term neglect. The population is smaller but growing and for those Sydney dwellers on the south side (many of my original Sydney contact are from "The Shire" and I have a bunch of extended family in Campbeltown) they are now saying heading out and down is the logical choice.

The young ones are coming down due being priced out of Sydney, and the better lifestyle opportunities, their parents (recently retired boomers) are waiting a few yrs to make sure the kids are serious, then following the grand kids down. I have seen it happen on a number of occasions. To a certain extent the same thing is probably happening on the north side too?

When coming south the space, the clean beaches, the natural assets are all obvious and its only 2-3 hrs out. The development levels north are just further ahead and the people numbers already bigger.

 

[RicandAnn]

Hi Knightm,

Thank you for your reply, understand that your area of expertise is South coast and appreciate that. Quite a few years ago we were actively seeking an investment property around St Georges basin, Culburra beach but got cold feet when we couldn't find what we wanted and was worried about renting the properties. Agree with you with regards to the area being underdeveloped compared to the central coast and we may have to revisit the area. Would love to hear your views on waterfront/beachfront properties in the area with regards to growth v yield value. Basically, is paying a premium for a waterfront property worth the reduced yield given higher expectation of growth?

 

[Mark Coburn]

Capital growth is king

Capital growth is king

Be very careful investing into regional areas. While the yields can be great, you have to watch out for the real drivers that are behind creating capital growth. What?s going to be driving the demand for jobs and population over the next 5-10 years are questions to ask your self?

So what is yield?
Understanding that yield is just a form of "interest". Interest that you receive for your capital (money) that you have invested in your property. Just like interest you receive for your money (capital) sitting in your bank account. It?s just a form of return.

Why capital growth is key:
? Capital growth is how and where you create your wealth when investing property.

? Capital growth is fundamental to building a property portfolio.

? It's capital growth that lets you revalue your property assets and take your (newly created) equity to buy your next property.

? It's capital growth that reduces your percentage of debt over time.

? It's capital growth that increases your percentage of equity so that you have surplus cash-flow to live on when you retire.

Also, don't get fixated capital growth for that matter too, without yield you can?t hold a portfolio, ether.

As an example:
I have a regional block of 10 units, purchased in early 2006 for $620,000. They were renting then for around $1200 per week. Dream Yield!

After a bit of renovating, they are now renting for $2800 per week (2014), yet if I went to market I wouldn't be able to get more than $980,000 for the block. That?s very poor capital growth when compared to what I get on other investment properties!!!

The issue comes about because back when I bought this block of units I was more fixated on finding a great yield. I hoped the area would grow well and as a result I tied up a bunch of my investable capital for not much capital growth.

So after I take the management fees, renovation costs, maintenance costs, vacancy into account the returns on this regional block of units are not worth the time, effort and capital I have tied up.

 

[knightm]

Hi Knightm,

Thank you for your reply, understand that your area of expertise is South coast and appreciate that. Quite a few years ago we were actively seeking an investment property around St Georges basin, Culburra beach but got cold feet when we couldn't find what we wanted and was worried about renting the properties. Agree with you with regards to the area being underdeveloped compared to the central coast and we may have to revisit the area. Would love to hear your views on waterfront/beachfront properties in the area with regards to growth v yield value. Basically, is paying a premium for a waterfront property worth the reduced yield given higher expectation of growth?

Hi RicandAnn,

I understand your reservations. The rental yields on the south coast have always been on the low side which is why it has always flown under the radar as an investment location. Cashflow is really important so buying well, renovating, granny flats etc are all strategies to keep the yield up. Waterfront certainly offers a unique and in demand property that will outperform in the boom times. Premium property also has a tendency to underwhelm in the downturns, particularly global stock market downturns, as some of the premium property is held by those with wealth tied into the share market and when they hurt they sell what they can to recoup.

In my very local area (Mollymook/Ulladulla) I have a great short term holiday let property manager who gets better than average occupancy and returns, but for say approx $1m homes in front strip at Mollymook it is still only getting 5%, which is better than 3% but not an massive yield by any stretch.

There are still a few waterfront cheapies down this way if you are thinking about that. The vincentia/husky area is quite a bit pricier, and vacancies are still a bit of an issue, they have over 3% vacancy which is different to the rest of the south coast. I personally slightly prefer Culburra as it is landlocked and has the ocean which always commands a premium. I have a $$$ friend who is looking in Husky right now as he loves fishing though. So horses for courses I guess.

Really the best plan is to work out your long term goals for investment and ppor location and work backwards to develop a strategy that will help you get there.

 

[RicandAnn]

We looked at Culburra a a few years back, and even found some good properties that we thought had potential, with water views not waterfront ,high up in Orient Point but were put off by what I think was an Aboriginal reserve which looked quite run down. Are they doing much improvement in this Area?

 

[knightm]

I agree Mark balancing Capital Growth and Cashflow across a portfolio is very important and its easier to make significant wealth via CG in short space of time.

I noticed in another thread some mention that you only market new properties? Can you tell us more about this or why they would offer better capital growth than older?

Thanks
Matt

Capital growth is king

Be very careful investing into regional areas. While the yields can be great, you have to watch out for the real drivers that are behind creating capital growth. What?s going to be driving the demand for jobs and population over the next 5-10 years are questions to ask your self?

So what is yield?
Understanding that yield is just a form of "interest". Interest that you receive for your capital (money) that you have invested in your property. Just like interest you receive for your money (capital) sitting in your bank account. It?s just a form of return.

Why capital growth is key:
? Capital growth is how and where you create your wealth when investing property.

? Capital growth is fundamental to building a property portfolio.

? It's capital growth that lets you revalue your property assets and take your (newly created) equity to buy your next property.

? It's capital growth that reduces your percentage of debt over time.

? It's capital growth that increases your percentage of equity so that you have surplus cash-flow to live on when you retire.

Also, don't get fixated capital growth for that matter too, without yield you can?t hold a portfolio, ether.

As an example:
I have a regional block of 10 units, purchased in early 2006 for $620,000. They were renting then for around $1200 per week. Dream Yield!

After a bit of renovating, they are now renting for $2800 per week (2014), yet if I went to market I wouldn't be able to get more than $980,000 for the block. That?s very poor capital growth when compared to what I get on other investment properties!!!

The issue comes about because back when I bought this block of units I was more fixated on finding a great yield. I hoped the area would grow well and as a result I tied up a bunch of my investable capital for not much capital growth.

So after I take the management fees, renovation costs, maintenance costs, vacancy into account the returns on this regional block of units are not worth the time, effort and capital I have tied up.