Western Sydney

My opinion is that investors should be looking at Western Sydney for fantastic opportunities. Why?

Sydney is coming out of a downturn
Vacancy rates are negligible
Land supply is minimal
Rents are going up
New infrastructure has been or is getting built
Immigration, over a third of new Australians settle in Sydney
Low building approvals (1950's levels)

What properties to look for? Again just my opinion (but it's worked for me)

New apartments min 2 bed, 2 bath
Close to public transport/shops
Price range $250k-$400k
Suitable to local demography

The best advice I was ever given is don't invest anywhere with a population less than 250 000

Although one area that goes against this that I invest in and believe will continue to grow at some rate (driven from the baby boomers retiring) is Bundaberg.
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Interesting reply Boatboy

You see the difference between me and spruikers is that I am a wage earner. I work for the government. I work a 38hr week and earn a little over average.

But I also invest. I have no products or services to sell but rather like to share my opinion, like many others on this forum.

I don't run seminars nor have a book for sale. In fact I have nothing for sale (except some household items that I need to sell due to moving).

I have been to many seminars and read many books. They all come to the same age old principles.

My opinion is free, take it or leave it I don't mind.
I agree with some of your post there, although Im not too certain on the new apartments in the Western Sydney area.

The classic areas are Blacktown and Mount Druitt, where there are all these brand new apartments / near new for sale all the time. Not sure about the strata costs in some of these new ones because they have alot of mod cons.
I own property in Mt Druitt and the strata costs are OK. Yes it is an expense but newer apartments attract quality tenants (as long as due dilligence is applied) and that means higher rent. Whilst there is some new developments in these areas there isn't many. And there is even less of quality properties available.

If you can find them then snap them up.

I would rather pay the strata costs for mod cons than not have the mod cons. This way I know I can appeal to a better tenant. The strata costs are tax deductible so the tax man helps out a bit.
Yeah they do come up, and I guess I'd never say never. My next purchase will possibly be a unit / townhouse in the western Sydney area. I just need to see how much more the bank will give me :)

What did you buy and what are you getting on your place at Mount Druitt? Purely from a rental return point of view, some of the places Ive browsed look fantastic. Only thing is the CG in the area.
I bought an off the plan apartment in Mt Druitt for $259k in 2007. it rents for $300p/w. It's at the end of a cul de sac and not surrounded by other units (unit saturation). Some are selling now for $285k. Not a huge increase but we are just coming out of the downturn now.

I think St Mary's and Penrith also have good opportunities at the moment. Yes you won't experience the capital growth of the more inner suburbs such as Ashfield, Dulwich Hill and so on but you may not find too many new apartments in those places at a price you can afford and offer the yield that western sydney does at the moment.

There's always a trade off.
New apartments out west, and just about anywhere else are a suckers game.
And if you'd like to point to history, they have been the lowest class of asset out there.
That's just my opinion based on the fact that I'm glad I've never bought any in the last 20 years and put my $$ elsewhere.

Otherwise, yeah I think you can find some value in the west.
i went to the home expo a few weeks back and the guy from property planning held a seminar which had a few examples of old units outperforming brand new developments. in one example they were located right next to each other.
Each to their own I guess. I would like to see the old v new figures. Not sure how that goes given the tax advantages with buying new.

Buying out west being a 'suckers' game? That's a generalised statement. Like anywhere, north, south, east or west, if the figures work then you have bought well. For me, the figures have worked. I've bought out west of Brisbane and done well, I've bought west of Sydney and done well. It's all about research.

At the moment median priced new property in some parts of Western Sydney is good value. Good yield, reasonable growth.
if you bought 3bed/1bath houses on 500+sq.m out in western sydney around 12 months ago... you are a winner already.

Personally I like the land you can buy out there.
12 months ago you were buying land with a free house on it, and a line of tennants ready to pay top dollar rent for it.
True there are houses at good value out there. My interest though lies in new apartments not surrounded by other new apartments. New property offers tax incentives and good rent as well as (usually) a better tenant.
Neither do I. I invest to live comfortably, now and later. Tax incentives though assist cashflow in the process and should be in the plan somewhere.
i went to the home expo a few weeks back and the guy from property planning held a seminar which had a few examples of old units outperforming brand new developments. in one example they were located right next to each other.

This is discussed at length here: http://www.somersoft.com/forums/showthread.php?t=52989

I'm still all for buying older properties or re-sales a few years after OTP properties have dropped in value (see links in the thread above) so there's still some deduction benefits. Personally I'd never buy OTP - just see too much stagnant or negative growth compared to the older equivalents next door.
80% of my purchases have been off the plan and I have had way more success with that compared to buying established properties. Why? Perhaps a few reasons:
Dealing from a well established and credible agent who does stringent research and due diligence
Buying from developers with sound and well established credentials
Buying in areas which strike a balance between yield and growth

They are also carry minimum stress with little repairs and maintenance. Of course established homes can be just as good and sometimes better. It's a case by case basis and comes back to a couple of circular arguments:
new v old
unit v house

It all depends on your strategy. I will though continue to buy OTP if the numbers work.
Western Sydney is my stomping ground. There are certainly some good bargains around, however I would have to say that the bargains in NEW units are few and far between.

I don't understand the reasoning on buying something with a large negative cashflow (but you get good tax incentives) when you can purchase something in good condition in a similar area and be neutral/positive geared.

For instance, there is a block of units that I looked at the other day. I believe I could purchase this unit for 150-155k. Current rent is $180, but market rent is around $230pw. Purchase unit, put in new kitchen, carpet and give it a paint, spend much less than $10k, get it revalued at $190k (which it would revalue for). Let it out at it's (now) market rent of $260pw.

Now all I have to do is convince Hubby. He doesn't want to buy units, but I like this one. My plan would be to buy it, fix it, keep it for 12 months (1/2 CG liability by doing that) & sell. Of course, since the market is now moving, it would have increased in value.

Like Hubby, I don't much like units for long term, but I see no problem in a short-term trade for a little added cashflow.