Sydney r/e or rural Acerage 2.5hrs from Sydney

Hey

I'm in a new 'situation'.

Lately I have had my eyes set on south west sydney )St Marys, Mount Druitt, Penrith, Letherbridge park), I've seen a few homes under $250k with good rent returns.

However, I have also been looking at rural acerage 2-3hrs from Sydney near Musswellbrook (mainly on the regional side of Mudgee) and Singleton region. In both regions you can pick up between 5-200 acres for $150k-$250k, with power and water available. Now, I have not yet gone as far as understanding if there will be future potential for subdivision - but basically i'm in the situation of either keeping focus on Sydneys market of blocks under 400sqm with a building or rural acerage with no building.

I buy for the long term to gain, and can service a loan. But i'm caught between where to buy...Sydney....rural acerage...Sydney...rural acerage???

Your thoughts would be appreciated.

Thanks:)
 
If you buy rural acreage without an income (i.e., house or rentable farmland) then there are no tax benefits allowable.

Yes, I know you should never buy an investment for the tax benefits, but these can be substantial and are definitely something to be taken into account.

With a Sydney house you will gain rental income and tax benefits and capital growth. Your lower holding costs may also enable you to purchase another IP sooner, if that is part of your plan.

With rural acreage you will have capital growth. Potential subdivision will be more valuable, but will probably have a higher purchase price.

It all boils down to whether you think the rural capital growth will outpace the income benefits of the Sydney house - and your opinion is as good as anyone else's.

Polish up your crystal ball!!
Marg
 
If you buy rural acreage without an income (i.e., house or rentable farmland) then there are no tax benefits allowable.

Yes, I know you should never buy an investment for the tax benefits, but these can be substantial and are definitely something to be taken into account.

With a Sydney house you will gain rental income and tax benefits and capital growth. Your lower holding costs may also enable you to purchase another IP sooner, if that is part of your plan.

With rural acreage you will have capital growth. Potential subdivision will be more valuable, but will probably have a higher purchase price.

It all boils down to whether you think the rural capital growth will outpace the income benefits of the Sydney house - and your opinion is as good as anyone else's.

Polish up your crystal ball!!
Marg

Thanks for those points Marg. Yes, will need to get a clearer picture from the 'crystal ball' for the growth factor.
 
Hi Boost

I had the same dilema as yourself some years back when I started investing, whereas I wanted to purchase in my old home town (Mudgee) however after talking with some seasoned investors (one which owned more than 200 properties) I decided to purchase in Sydney being the western suburbs such as Lehtbridge Park out and into the Hawksbury and Penrith as well. The reason for this was that there was immediate income from the rent and the capital growth was more stable over a period of time. The problem with regional areas is that they usually rely on a handfull of industry to make the "economic wheel" go round and if one or more of these industries goes bad, then the whole town and economy suffers.
As you mentioned in your post, Suburbs such as Lethbridge Park and the like are offering good yields. Yesterday we secured a 3 b/r house on 600sqm that was fully renovated 2 years ago and in excellent condition, except for the fleas, for 201k as a "no money down deal" and although currently vacant, I expect a rent return of $230 p/w as even my worst house out there is getting $200. It seems that the "power" has returned to the landlord with rents on the steep rise and according to all the agents, there are only a few houses vacant.

Best of luck.
 
However, I have also been looking at rural acerage 2-3hrs from Sydney near Musswellbrook (mainly on the regional side of Mudgee) and Singleton region. In both regions you can pick up between 5-200 acres for $150k-$250k, with power and water available. Now, I have not yet gone as far as understanding if there will be future potential for subdivision - but basically i'm in the situation of either keeping focus on Sydneys market of blocks under 400sqm with a building or rural acerage with no building.

Depending on whereabouts the land is Regional side of Mudgee - loads of land available, Muswellbrook large subdivisions already happening and Singleton, I remember only a couple of years ago nobody wanting to buy land in the new subdivision, but I believe wasn't too much land available last year.

If it was closer to Rutherford or Maitland for that much $$ then I would say Wow go get it as Urban spread is moving up the Valley. Don't want to turn you off the land, but I know the Hunter pretty well and have several IP's there, so I think the growth is going to be good (and has been good), especially with the new mines being approved and feasibility studies happening.

I guess the thing is timeframe, are you happy to wait 10 or 20 odd years before you think it is ready for subdivision. What opportunites will you lose in the meantime?

Its a hard one, my crystal ball is very foggy.

Hey just had another though - could this land have a coal seam underneath?? NOW that is where $$ are to be made. Know of quite a few farmers sold up to coal mines or lease to coal mines for a LOT of money.

There's some more DD for you to look into.

Sunshine
 
It sure is hard to have a crystal ball, but I have to agree with Dash. We live & invest in Western Sydney. Prices are good, rental returns are even better. I increased the rent on 2 of mine just last week & none of them return less than $210pw. I have one that I paid $185k only a couple of years ago, have done nothing to it except paint a couple of the rooms & it returns $240pw. And if you are reading this Dash, then yes, that is one of the ones you missed out on.:D If you know where to look you can find a really good basic house with a good yield.
 
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