Thoughts on Regional Vic

Hi everyone,

I have been reading the forums but I've only recently joined and this is my first post :) Must add that this website is fantastic! I purchased my first property 4 years ago, which I currently live in and I am looking to purchase my first investment property. I've spent a lot of time narrowing down my criteria's for an investment and it's lead me to the conclusion that Regional Vic would be an ideal place for me to look at.

I am looking for capital growth but it is also important for me that the property can be easily rented out. My budget is under 300k. I was originally looking at Wyndham Vale but the vacancy rate concerns me. I then started focusing on Bendigo (I have looked at a few properties in Golden Square) and Ballarat and I've been researching both areas for the past few months.

I would really appreciate if anyone has any thoughts about the areas I have mentioned, particularly from a capital growth point of view :)

Looking forward to hearing the responses.

Mery
 
I might get flamed here but I'd stay away from Wyndham Vale (i.e. Werribee) as you've already decided.

Not sure about Bendigo or Ballarat but just keep in mind that there's quite a few 3/4 unit subdivisions going on around there on 1,000 sqm blocks. Maybe buy something around that size for future value-add?
 
The one plus for Wyndham Vale is that the new railway line will run through it offering a very fast service to SX compared with normal Metro trains from suburbs that are the same distance from the city or nearer. Otherwise it's hard to find a compelling reason to buy there.

http://www.domain.com.au/Property/For-Sale/House/VIC/Wyndham-Vale/?adid=2009124939
True investors rejoice- this is the deal of the decade! How does a guaranteed 10 year, government lease sound? ... The rental commences at $230.00 per week and increases each year by CPI, in years 4 and 7 of the 10 year lease is increased to market value in accordance with the National Rental Affordability Scheme. It's a 2+1+1 for $279,000. No thanks! If there's a NRAS payment in addition, the agent has been seriously remiss in not mentioning it.

I currently have an offer on the table on a unit in Ballarat. The vendor, advised by his agent, is sticking, saying that it's worth the asking price (I'm offering $10K under). The problem for him is that AFAIK he hasn't got an other offers, and I'm not feeling under any pressure to go higher as there are lots of other properties on the market - Domain shows 115 between $200K and $250K with the yield typically 5.5%. T.
 
mezma3,

Welcome to the forums :)

I have been investing in Bendigo for the last couple of years. I have two properties in Golden Square and a share of one in Flora Hill. Bendigo, I feel, has a lot to offer for a number of strategies.

There are good sized blocks for sub-division potential now and in the future.

There are great older houses if you want to renovate and build equity that way.

There is a great market for rentals (I think vacancy is 0.6%?) and most rental managers have a list of people waiting to get into places.

And there is a good, solid building industry where you can get brand new places with solid yields and depreciation rates.

Personally I went towards larger blocks and bought a 4,900sqm block in Golden Square in Feb 2010 and a 3,600sqm one earlier this year. The first one is a house at the front and I put plans on it for 10 units, and the second has just gone into council to keep the house, add 2 x 300sqm building blocks and a 7 unit townhouse site as well.

It just depends on what you want, but I have a few contacts up there and am around a fair bit if you have any questions on properties or areas.

Good luck!

Ben
 
Hi everyone,

Thanks for the replies regarding my post. Ben, in regards to your reply, I'm glad to hear that you are familiar with the area, particularly Golden Square. I had thought about looking at properties on a large block with the possibility for sub division, however, as I have prior no experience with investing, I think my best plan of attack would be to get my foot into the investing market, work on building equity and learning the basics before I even attempt sub dividing. What are your thoughts?

I live in Melbourne so ideally I would be looking for something low maintence. My preference is a house with a min of 3br. I had looked into new house and land packages, which would really suit me from a maintence point of view but there are some older establised houses, well within my price range with good potenital. I noticed that there is opportunity for house and land packages in Kangaroo Flat, Epsom and further out towards Huntly but after speaking to a few agents in the area, the general advice was to stick closer to the CBD. So, at this stage, I'm still no closer to making a decision on whether to go new or established and which suburb. I don't want to get to a point where I procrastinate about taking the plunge, but at the same time, I want to make sure I cover all my basis because, as mentioned earlier, I've never done this before.

Thanks again for the feedback so far and I'm looking forward to reading some more responses.

Mery :)
 
Mind if I ask what your budget is and what % you will be borrowing? Will help me advise on a good area.

Cheers

Ben
 
if borrowing 95% i wouldn't recommend buying a house and land package. I would be looking at a 2 bed unit then, you should be able to get one in Golden Square for $240-260k, or a 3 bed if it doesn't have street frontage.
 
JIT - there would definitely be but it would be hard based on the medium price. Medium = $285k. 7% means $383/week which is a stretch for Bendigo.

It does have quite a few 5-6% yields though. If you want more there are a few options:

1. NRAS properties, being a lower price point the government incentives count for a lot more % wise.

2. fully furnished properties. Especially walking distance to the hospital or CBD. Lots of workers coming into the area for the hospitals over the next few years, starting next year.

3. Buy a house on a decent block, build a 2nd dwelling out the back. Could be something like $280k buy, $180k build = $475k total, rent potential of $300 each a week would get you over 6.5%.

These are all generic numbers and opportunities but are easy to achieve possibilities.

My tip for Bendigo would be to buy one of the few properties still there for =< $250k or close to it with a bit of land, reno the house, get a good yield and sit on the land.

What to watch for: Bendigo is an old town and has a fair bit of overlay about it. Do your DD with the PMO site (http://services.land.vic.gov.au/maps/pmo.jsp) AND with council - some local overlays wont show on the PMO.

For the OP - Units should be fine from a overlay point of view, a 2 bed unit in Bendigo costs about $140k to construct so you should get some OK depreciation as well.

Cheers

Ben
 
Thx for your advice Ben. I will continue my search and if you don't mind, can I get your opinion if I find something that fits the bill.

Ta,
Mery
 
Sure Mezma3,

As I said, I am around a lot in Bendigo. Also I am not looking at buying at the moment so wont be stepping on toes :)

Ben
 
Hi Mezma

I've got one in Shepparton.

Haven't been blown away by it's performance, however there has to be something said about the ease of dealing with Regional PMs and regional tenants vs. their inner city counterparts.

When (if) the current tenant moves on, we'll spend some time and money out there and really try to drive up the yield. Probably getting about 7% at the moment but this could be tweaked to 8-9-10% over the next couple of years.
 
Hi Tom-B,

Thanks for your post :) Funny you mentioned Shepparton, I have looked into the area and the growth has not been spectacular, although rental yields are quite good. I read an article by Jon Edwards in this month's API magazine and he name Shepparton as one of the areas he expects to perform well over the next 5 years :) I know that you can't base all of your decisions based on what you read, but if it comes from a reputable source, it's worth taking into consideration :)

Mery
 
Hi Tom-B,

Thanks for your post :) Funny you mentioned Shepparton, I have looked into the area and the growth has not been spectacular, although rental yields are quite good. I read an article by Jon Edwards in this month's API magazine and he name Shepparton as one of the areas he expects to perform well over the next 5 years :) I know that you can't base all of your decisions based on what you read, but if it comes from a reputable source, it's worth taking into consideration :)

Mery

Thanks Mery - I'll have to go out and grab a copy of API and see what they have to say!

Shepparton has undergone a fair degree of infrastructure build out, particularly in terms of retail growth, along with a number of new estates really pushing the outer boundaries of the CBD outwards, with an increase in distance / traffic etc I think we'll slowly start to see some upwards price pressure on our property being located very close to the CBD.

Our IP out there is definitely a buy & hold compared to our props in Melbourne that I can see us selling as needed to facilitate a PPoR upgrade. We should have it CF+ in another couple of years at the most. In 4 years it hasn't been vacant for more than about 2-3 weeks in total.
 
Hi Tom-B,

Do you have any advice on which suburbs to look at in Shep? I have looked at the figures in terms of capital growth and rental yield for the suburbs in Shep but it seems pretty even across the board. Is it better to stick close to the main center?

I have looked on the net to get a general view of what's currently available and the prices are within my budget, even for a house that is between 5-10 years old - would really suit me as I'm not keen to tackle renovating, even if it's just a minor one lol.

At this stage, I'm keeping my options open. I do have a distant contact who owns a real estate agent in Shep but it might open up some old wounds on my in-laws side of the family - past family dispute and not sure if I should go there :confused:

Looking forward to reading what your thoughts are :)

Mery.
 
Some updates about regional Victoria, I began investing in areas of regional Victoria back in 2003, and I have never had any difficulties renting, or keeping my (well presented) regional city IP's rented:

April 2011 update

REIV-April 2011 Update of vacancy rates

In regional Victoria, vacancies in the three main centres remain scarce. In the Geelong region the vacancy rate was 1.6 per cent compared to 1.4 per cent 12 months ago. In the Ballarat region the vacancy rate was 0.9 per cent compared to 0.5 per cent a year ago and in Bendigo one per cent of rental homes were vacant compared to 0.2 per cent a year ago..

and..

(Courtesy of REIV's Enzo Raimondo, Wimmera Mail Times, Jan. 6th 2012):

Rental homes still remain more scarce in regional Victoria, with the vacancy rate at 1.3%- down from 1.6% in September.

Bendigo continues to have the lowest vacancy rate of major regional centres, with 0.3% recorded, down from 0.6% in September. Geelong at 1.9%, (1.8% Sept), Ballarat now 1% tightening from 1.6%..
 
Last edited:
...and just some averaged out, (over the decade of '2000 to 2010') growth per annum for some random Victorian regional centres, (+ tossing in a few metro suburbs) keeping in mind the severe drought we experienced in many parts of Victoria for the decade, if not 12 years. Data is based upon figures collected by Victorian Valuer General, (these are specifically house prices) :

Apollo Bay: 10.2%

Ararat: 10.8%

Armadale: 12.1%

Avoca: 9.8%

Bacchus Marsh: 8.5%

Bairnsdale: 10.1%

Ballarat: 11.2%

Bendigo: 11.8%

Bright: 9.8%

Brighton: 10.5%

Brunswick: 10.9%

Castlemaine: 12.4%

Echuca: 6.8%

Footscray: 11.8%

Frankston: 11.3%

Geelong: 10.8%

Hamilton: 11.7%

Horsham: 7.4% (8.2% 1998-2008)

Lorne: 6.8%

Maldon: 11.1%

Melton: 9.9%

Mildura, took a poleaxing with dried fruit industry brought to it's knees, but it's battling back and when one door closes, another opens: 6.2%....1998 to 2008-7.2%.

Mornington: 10.6%

Mortlake: 15%

Morwell: 11.9%

Mount Martha: 10.1%

Ouyen: 9.3%

Port Fairy: 9.6%

Richmond: 11.1%

Shepparton: 7.3%

Stawell: 7.4%

Swan Hill: 7.8%

Warracknabeal: 8.2%

Warrnambool: 9.4%

Wodonga: 9.3%

Wyndham Vale: 10.5%
 
Back
Top