Thought on Mt Druitt Surrounding Area, 2770

[RetireRich101]

It' still the cheapest house in Sydney. However there is an element of risk if you're chasing yield this year. A flock of investor purchased this area in the last 12-18 months puts the owner vs renter bit out of balance. Maybe I am wrong, I am predicting the rental market will be continue to soften if interest rates remains low, and having a high number of investor property in the area doesn't help.

Having said this I am surprised to see 3 suburbs in 2770 ( Herbasham, Shalvey, Whalan) in the top 50 of Lowest Vacancy in NSW, all under 2%
Source: Investar (attached)

 

[datto]

This area doesn't increase in value very often, and it has just experienced massive capital growth which indicates that once it's finished this run it will be quiet for a while as far as growth is concerned.

I agree. Last boom before this was 2003. Before that about 1989. Long time between drinks.

Yields are low here now, so you may be better off investing somewhere where capital growth is steadier until the rent improves compared to price, which probably won't happen until interest rates increaseand stay higher for a while.

Once the boom is over in PC 2770 I expect rents to go much higher ie back to a high yield again.


On second thoughts. Just having a deep conversation with myself. Could I be wrong? Have the dynamics of 2770 changed in such a way thet we will see steady CG?. Has the game changed due to a lower bogan count? History may NOT repeat itself afterall? Only time will tell. Time for some of the Colonel's secret recipe

 

[RetireRich101]

On second thoughts. Just having a deep conversation with myself. Could I be wrong? Have the dynamics of 2770 changed in such a way thet we will see steady CG?. Has the game changed due to a lower bogan count? History may NOT repeat itself afterall? Only time will tell. Time for some of the Colonel's secret recipe

LOL,
In blacktown CBD, near the train station it's the same bogan I saw in the last 10 years. I thought the moderate increase in rent would force them to 2770, but obviously not. Don't under estimate the government payment..if they have 2-3 on pension/dole renting your house, there is no problem there..
If I continue living here I might be a slight upper class bogan...

 

[datto]

Amazing stuff RR, anecdotal evidence suggests that bogans are a resilient lot and are difficult to eradicate from their environment. I wonder if David Attenborough has studied this unusual life form?

 

[skater]

and it has just experienced massive capital growth which indicates that once it's finished this run it will be quiet for a while as far as growth is concerned.

Its hardly a massive growth. Well, not yet anyway. I'm expecting it to keep moving steadily upwards for a while yet. Then it will soften. Meanwhile rents will stagnate & soften due to more investor activity. This will be temporary, as it usually is, until the demand once again outstrips supply and rents start to move upwards.

It's nothing more than the cycle doing what it does.

 

[see_change]

I worked in LP for nineteen years . I've talked to people who had to do a mid night flight as they were witness to a murder in the house next door and They were scared for their lives ...... Letho , willmot ( willnot go there again as one forumite who grew up there calls it ) and tregear shops have all burnt down and had to be rebuilt . Letho was the most recent . I was told it looked really nice sine it was re built , but I was out there recently and it looked the same ....

I met several people who bought out there because it was cheap and within a matter of months there were selling to get out of the area due to problems with neighbours , eg they'd walk out the front door and the neighbour was going over the back fence to break in .

Having said that most of the people out there are relatively nice , but there is a big ******** element out there ( maybe 5-10 % ) They're not good at sorting out disputes ........

Would be happy to buy there at the beginning of the growth cycle but that has already passed . Forumites like skater who has her finger on the local pulse have done well but I'd be wary about buying now .

In previous cycles Mt Druitt was one of the last places to move but this cycle it moved earlier . We bought more upmarket in Sydney when other people were buying out there ( in mosman , manly and turramurra ) . If you'd asked me a couple of years ago I would have been expecting to buy in mt Druitt in over the last six months , however it was too late for me at that stage , so we ended buying in Brisbane where you could still buy in good areas with some room to negotiate ( last half of last year )

The Brisbane suburb which is similar to 2770 is Logan . We bought there in the previous cycle and did well but we bought at the beginning of the cycle.

Mt Druitt is cheap for a reason . It's in the middle of nowhere geographically and is close to the bottom of the sydney market socioeconomic ally While prices will go up , I see no reason why it will move " up market " compared to other areas despite what Datto says . Previous places that have moved up market have been centrally located .

Cliff

 

[vaughan]

Having said this I am surprised to see 3 suburbs in 2770 ( Herbasham, Shalvey, Whalan) in the top 50 of Lowest Vacancy in NSW, all under 2%
Source: Investar (attached)

Surprised? Vacancy was <0.5% when I bought. We found a tenant before the reno was finished, and between the time we exchanged contracts and finished the reno, the rent had gone up about $20 a week.

 

[vaughan]

Mt Druitt is cheap for a reason . It's in the middle of nowhere geographically...

Cliff

MD is cheap because people keep thinking things like this. St Marys -- consider much better than MD -- is further west. Penrith is further still.

 

[datto]

Seachange, I'm sorry, I have to disagree. I think you are living in the past. The past doesn't necessarily reflect the future.

If the area was that bad , prices wouldn't go over 150K. The media would have a field day out there - every day.

Sure there's been spot fires here and there, a mugging here, a murder there. But most of these crims have moved onto "greener pastures" or are languishing in a 10' X 10' cell.

I recently leased my premises to a family I knew. Great people. Funny thing, 2 years ago when I offered the property to them they wouldn't have a bar of it. Now they love it. And why not - cheaper rent, big land, decent house.

My opinion, and it is my opinion only, I think there is more CG to be made in the area this year.

 

[see_change]

Seachange, I'm sorry, I have to disagree. I think you are living in the past. The past doesn't necessarily reflect the future.

If the area was that bad , prices wouldn't go over 150K. The media would have a field day out there - every day.

Sure there's been spot fires here and there, a mugging here, a murder there. But most of these crims have moved onto "greener pastures" or are languishing in a 10' X 10' cell.

I recently leased my premises to a family I knew. Great people. Funny thing, 2 years ago when I offered the property to them they wouldn't have a bar of it. Now they love it. And why not - cheaper rent, big land, decent house.

My opinion, and it is my opinion only, I think there is more CG to be made in the area this year.

Datto

I'll agree to disagree with you . As I said , most people are nice , but there is a noticeable rat bag element there .

I'm not a big fan of St Mary's . Penrith is next to the nepean and the blue mountains so geographically it has that going for it .

The reason the media don't have a field day out there every day is that they don't live out there . I lost count of the stories that would have made the front page of the dailies if they had occured somewhere else . Eg the last measles out break in sydney started in Lethbridge park . It was going for around three months before it got into the papers , and that only occured when it leaped to Glebe and a child care centre there . Guess who's kids went there ...

While there was some coverage of the wilmott " homemade bazooka fired at buses " saga , if it had occured on the north shore or eastern suburbs there would have been widespread community outrage and a much strong coverage in the papers .

I only found out about the burning of the willmot shops as revenge for the death / shooting of armed robber by the shop owner when one of the tenants approached me to join my practice ....

I can go on

I do go out there every so often ( great supplier of charcoal for the BBQ in the industrial area ) and have a drive around . Was it you who made the comment about the Letho shops being better now ? I worked there for 19 years , the shops and customers looked the same to me when I was there recently .

I do agree that the market has more growth to go in the current cycle . On average prices have double in each previous cycle , so if we see an average price at the peak of the last cycle at around 240 , then I'd expect prices to peak out at around that in the current cycle , though I may be wrong . Personally I would want to pick up more of the cycle , esp if I was buying in Mt Druitt or Logan .

In Logan in the last cycle we were buying around 65-80 and selling around 240.

If you are buying in that type of market I would advise people not to buy at the bottom of the market there as you will get the bottom of the market renters . We made that mistake in Logan , and while we made nice capital gains , we had several problematic tenants including one who's kids where throwing s..it over the fence at the neighbours .

In rocky we bought a couple of steps up from the bottom and had no problems . ( 80-85 rather than 60-70 ) I know forumites who bought at the bottom in rocky and had problematic tenants.

Cliff

 

[Beau Lyon]

I'm expecting it to keep moving steadily upwards for a while yet.

Are you still buying there in the current market?

 

[macca446]

I will sit and wait on the area now buy in price to high,the area will drop back again to more realistic value then I will buy especially once rates move higher.

 

[skater]

Are you still buying there in the current market?

Haha, no! I've got enough in Western Sydney. Don't want all my eggs in one basket. Of course, in saying that, nothing is set in stone. If he right place came up at the right price...........who knows?

 

[doozer]

I have 2 x IPs in Mount Druitt and have had nothing but success in the area. The vacancy rate is virtually negligible, the market is hot, rents are climbing but moderately, there is a huge lack of supply and the infrastructure is improving. The area was once a no go zone but not anymore for an investor. Get in quick though before the market moves to tipping point.

 

[datto]

Points noted Sea Change.

I was in Logan a month ago for a day. Went to the big shopping centre. I was impressed how big the place is. Qld seems to have more open land - big blocks and houses are cheap - prices start at about 250K.

Great to do u turns at traffic lights! Yeah saw some dropkicks hanging about but they didn't seem too bad.

Back to Letho:

Its an outrage how the media didn't jump on the measles outbreak sooner. I would have thought the health dept would have done something sooner as well.

Yeah, it was I who said the Letho shops were better. They looked better in the sense that they looked new and clean. Same ratbags still hanging about heh.

Maybe what they need is a heavy duty virulent strain of gonorrhea to get them moving around to a new area lol. Maybe they should start hanging around Glebe and give those journo's something to sing about in the loo!

Anyway, Letho - love it or loathe it - people still made a lot of loot out of the area.

 

[RetireRich101]

Points noted Sea Change.

Back to Letho:

Maybe what they need is a heavy duty virulent strain of gonorrhea to get them moving around to a new area lol. Maybe they should start hanging around Glebe and give those journo's something to sing about in the loo!
.

I was thinking where else they would go in Sydney?
They would be paying over $300/wk for most houses in 2770
It's not like the rent is cheaper in Campbelltown or else where in Sydney..

 

[skater]

I was thinking where else they would go in Sydney?
They would be paying over $300/wk for most houses in 2770
It's not like the rent is cheaper in Campbelltown or else where in Sydney..

No, but some move to QLD.

 

[travelbug]

I'm happy with all my purchases in 2770 and Blacktown.

Because of reno's they were all CF neutral or CF+ from day one and I've had rent increases in the last 2 years also. So all CF+ now and with built in CG.

And with the recent CG I'm very happy.

There are some bad pockets, but it comes down to knowing the area and the streets. First thing I do is see how many HC owned houses in the street.

I must admit though that the Letho shops were a surprise. I didn't realise they were that bad. When I pulled up I thought it had been closed. It looked deralict with all the barbed wire around it.

We have great tenants in our 2770 houses. Occqasionally here from one. The others never. Places always spotless on inspection. One of the guys in the Blacktown unit is a grot but I keep putting the rent up and he keeps paying so he can stay until we sell. We'll just change the carpet and paint.

Deciding whether to sell a couple but will have to run the figures- CG vs CF. And deciding where to put the capital gain.

 

[Spades]

No, but some move to QLD.

And central coast ie:gosford etc.

Cheers Spades.

 

[skater]

One of the guys in the Blacktown unit is a grot but I keep putting the rent up and he keeps paying so he can stay until we sell. We'll just change the carpet and paint.
.

Haha, I do that too!

Had one with repeated tribunal visits. Couldn't get rid of them, because they had children. I just put the rent up by $20 each six months or so. They ended up paying considerably over market. It helped to pay for the cleanup when they left.

Got another now. Grotty, but the house is original. Needs a full Reno. We didn't have time to do it when we bought it. They can't really make it much worse, unless they punch holes in it. Just waiting for them to leave, but they keep paying. Of course, we do attend to maintenance issues, but nothing else until they go. They are now paying what they'd have to pay for a reno'd place. I would not let them rent a reno'd place, though.