Strategy

I am considering the following strategy for investing into property

1) Buy properties that have a decent yield in regional towns (population of at least 5,000)
2) Buy properties that I can buy for at around $150,000 max (at least at 1st stage)
3) Buy properties that have at least 2 bedrooms (aprtments, units or houses are fine)
4) Do not buy new property. However do not buy complete dumps that people cannot live in without a renovation.
5) Buy in different states in Australia.

My aim is to be buying properties for 20 years. While I would love capital growth, I don't have much faith that I can pick capital growth better than anyone else. I am not a builder or a handyman so I do not want to consider developments.

My aim is in 30 years (yes 30) is to have no mortgages with the total properties earning at least $1,500 a week (in today's money) before expenses.

I have the following questions

1) Is there a resource that shows average rents in a certain area for at least the last 20 years. I can get these for average price, but struggling with rent.
2) I am interested in hearing from people that are following a similar strategy regarding tips and pitfuls.
3) Any other comments are welcome.
 
Population above 10,000 would be safer, multiple industries too.
If you're looking at 150,000 price range I'd be looking at houses rather than units as the strata kills your yield - but you have to factor in extra insurance instead.
Check out some of the posts by Nathan Birch, has been very successful with similar strategy but he uses cheapo renos to create the sweat equity for next purchases - can be done cheaply if you have good tradespeople.
 
Regionals with a population of 5000 are way too small IMO, I like a population of 40000-50000 or bigger. There is more scope for things to go wrong so you need to research regional centres carefully.
Look for diversity of industry, locations with several industries at least.
Reasonable,preferably low vacancy rates
Places with some population growth the more the better
Look at if they have grown recently and if so why? Is it likely to continue.
Look at yield and historical yield, generally they will be much higher than capital cities but lower end properties can come with more maintainence and tenant issues-a generalization.
What's the local economy like? Is there new businesses opening up?
Can I insure property for a reasonable premium in the location without making the deal not worthwhile.
Can I find a PM who will manage the property for a reasonable premium or will they manage it at all. Some HC areas are avoided by some agencies.
Don't always look at the absolute cheapest stock, it might mean more problems and tenant issues-generalization again.
Are properties selling? Generally regionals are slower to sell due to less demand, not a problem providing you don't need to liquidate in a hurry.
Vacancy rates can be more influenced by developers creating new estates, sometimes if a regional becomes a hotspot and gains too much attention the market can be flooded by investors buying H&L packages, this can mean it takes several years for the market to rebalance.
Is the property in a flood zone?
Not trying to be negative as I like regional centres mixed with some capital city holds, very strong yields are achievable and providing you have suitable deposits there is almost no limit to how many can be purchased in terms of serviceability.
Sometimes all regional centres get lumped together but they are not all equal IMO.
 
I do similar, I've looked at Logan area of Brisbane, Wagga in NSW and outer suburbs of Adelaide.

They match the criterias given by yourself.
 
We did this and now have enough passive income to live comfortably on. Agree with all above comments, do your research. We basically moved to heavily subsidised employer provided accommodation for three years (living remote) and paid every spare cent into paying off debt..just our strategy and there are others of course. We have eight properties with a couple of cg/low yield ones to balance. Now would be a good time for me to say enough's enough and stop buying but have probably developed an addiction.
 
Back
Top