Risky Strategy???

[coastal]

Would it be a risky strategy to have 20 properties in regional towns across Australia with the minimum population being 10 0000 people. Valued at 3000000 at 50 ? 60% LVR
Equity 1 million to 1.5 million

Av value of property $150 k

Equity is manufactured through renovation ? buying run down dumps well

Gross Rent $200 ? 250k

Net rent 30k ? 60k

 

[Brady]

More info required.

Would this be the sole income from rent?

Other investments? Shares? Super?

Exit strategy?

 

[Tonibell]

Yes - it is a strategy with some risks.

There are safer strategies out there - but there are also some riskier ones.

It depends if it works for you or not.

It is not an approach I would consider.

 

[greedy2000]

so you're buying 20 low value properties rented to mostly likely undesirable types...

Sounds like 20 headaches to me.

You do know there is an ICE epidemic in regional Australia.....

 

[D.T.]

Needs context.

If i was a blind man I wouldn't dream of crossing the road unassisted.

If I knew my area well I'd be buying everything in sight there despite everyone else saying no.

 

[Peter_Tersteeg]

If given a choice, I'd prefer 6-8 properties in well located metro suburbs worth $700k each...

* Maintenance costs are about the same as a regional property, but you've only got 1/3rd the amount to worry about.
* Rates costs are significantly lower overall.
* Management costs are proportionately lower.
* Less risk of unemployment exposure than a regional town.
* Rental growth is likely to be higher.
* Capital growth is likely to be higher.

 

[coastal]

This would not be the sole rent. I am 28 and have job – atm 75 k, live at home no rent am married. Wife earns $40 k
Incomes will increase

Have 5 properties at 60% LVR – using this strategy – 700k in loans and 280

The strategy is to force growth by renovating buying in regional areas and quickly build up a foundation portfolio. It aint easy as I have made a lot of mistakes, a lot of mistakes.

The property must be in an ok area of town not a crap part of town. Rent would be minimum $200 + per week after renovation with potential to increase

Risk wise given the properties are in multiple areas the risk are reduced. I have taken into account the high vacancys

I have significant buffer and have LOCS for the equity


Exit strategies – I can sell down – will take up to 12 months given regional areas and invest the gain into metro properties – buy 5 or so outright
I can use the to develop and invest in other metro areas
The net rental income can also be used to pay off loans

The other strategy is to buy renovate and sell in Brisbane.

Eventual strategy is to live off rent and property flipping income. I need equity to flip property so that I why I am going to build up some equity. Once I have got what I need to from my early acquisition the plan is to sell the regional properties and buy Metro properties outright.

 

[pinkboy]

Mum must have sore t!t$ with dear son still at home!


pinkboy

 

[see_change]

I'd want to look at the specifics of the towns . Small regional towns , what is the rational for them . Can it be replaced . What industries are they dependant on . Can that be destroyed .

Buying cheap , riding the wave , selling and then buying nice places in the city ....

Working for us

Buys in previous cycle . Logan 7 , Rocky 7 , Townsville 1 , Hobart 4 , only hold the Hobart ones now

Buys in current cycle . Mosman 2 , manly ( nsw ) *2 , manly q 'land 1 , Wynnum 2 " Teneriffe 1 .......

Looking at buying some more cheapies to pay of the above ones .

Cliff

 

[coastal]

Mum must have sore t!t$ with dear son still at home!


pinkboy

I am actually from an indian family so we tend live together in an extended family while being fully independent. The children will look after/provide for parents as they retire. So that may sound strange to anglo Saxons and normal to people of south Asian decent.

 

[WattleIdo]

If I knew my area well I'd be buying everything in sight there despite everyone else saying no.

Agree with this.
Towns are where 'the right side of the tracks' still matters - especially @ population 10 000. Where do stable families live? Even if they're single mums.
Yes there are ice junkies camping out in their mates' backyards but they're the poor little rich kids so I wouldn't worry about that too much.
I personally think your idea is a good one (great minds think alike) but I'd want to balance out some of the regional with metro. I think the risk is in the sheer numbers that you're proposing which suggests that you won't know your areas well enough.
Another consideration is that the towns should be buzzing now. And you need to find out what's going on - roads, hospitals, transport - now and in the future.

 

[hugh72]

I'm probably a little biased, after buying a few middle or inner city houses we started looking to do things a little differently and wanted properties with a higher yield. Once rates hit 8-9% it can start to bite and buying any more of these despite good growth wasn't that appealing.
Since then we have purchased lots of regional property but there is regional and regional. I like places with a population of at least 30000 and no mining towns or places dependant on one industry, they require a lttle more research IMO to avoid getting it wrong.
I also like the lower end of the market in capital cities where a good return can be found, there is basically no limit to how many could be purchased as rates are so low. It is easy to find a 20% deposit for them and the main thing slowing purchases is finding sufficient time to get on the ground and learn about a market to some degree IMO

 

[hugh72]

If given a choice, I'd prefer 6-8 properties in well located metro suburbs worth $700k each...

* Maintenance costs are about the same as a regional property, but you've only got 1/3rd the amount to worry about.
* Rates costs are significantly lower overall.
* Management costs are proportionately lower.
* Less risk of unemployment exposure than a regional town.
* Rental growth is likely to be higher.
* Capital growth is likely to be higher.

Yes I agree but this is why most people only have 1 or 2 ips IMO. They don't have the income to support this strategy and give up thinking its too hard

 

[hugh72]

so you're buying 20 low value properties rented to mostly likely undesirable types...

Sounds like 20 headaches to me.

You do know there is an ICE epidemic in regional Australia.....

I think there is an ICE epidemic full stop and anyway thats what PMs are for

 

[mikezen]

Would it be a risky strategy to have 20 properties in regional towns across Australia with the minimum population being 10 0000 people. Valued at 3000000 at 50 ? 60% LVR
Equity 1 million to 1.5 million

Av value of property $150 k

Equity is manufactured through renovation ? buying run down dumps well

Gross Rent $200 ? 250k

Net rent 30k ? 60k

If I had out deposits down on 10 cash flow positive properties in toowomba 18 months ago I would be sitting on a mill now

I reckon the lower end of Toowoomba will have another 100k in it over the next 18 months with all the inferstructure lined up to start but just my opinion