You were originally replying to Vaughan, and Vaughan was referring to Western Sydney.
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Sorry, this turned into a long post. Executive summary: if you want to know where western sydney is heading, go to the Westfield at Penrith. A truly World Class shopping centre, absolutely stunning. They even have an Apple Store. Yea that's right, Apple sees the bogan westies as their customers.
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Yep, I'm settling on a house in Whalan later this week. My first IP.
I tend to "get into things" when I do them, so I started investigating property investment in a major way. My wife and I went to a Positive RE weekend seminar 12 months ago and I found this site soon after. The lessons I have taken on are:
0) The "numbers" are the most important part of an IP. If the numbers don't work then it's not a good investment.
1) Make money on the purchase.
2) Keep the loans separate.
3) Add value through renovation or subdivision.
4) Keep the rent at market value always.
5) Get a good property manager.
(I often start with a rule zero: its often the one that never gets mentioned but is the most important.)
We are buying on equity from our PPOR so it's essentially 100% OPM. We want the properties to be cash-flow neutral or better (I don't mind paying tax on income) so we want properties with high yield. Secondarily we also want good capital growth in the long-term future. We are buying to hold.
After going through the property data from the magazines the high yields are either regional centres like Wagga or Werris Creek, mining towns in the middle of nowhere, or 2770.
We decided on buying in an area that is reasonable commuting distance to Sydney: from Liverpool in south to west Penrith and north to the lower central coast like Woy Woy. (I'm originally from Mangrove Mountain near Gosford.) Must have easy access to trains, highways, or both.
So the very first 2770 place I looked at was in Wilmott, 8 Weisel Place. Wife and kids wouldn't even get out of the car... cannot blame them. Not pleasant.
But we persevered and in the next few weeks discovered Mount Druitt, Hebersham, Whalan... all the OTHER areas in 2770. There are a lot of places around there are beautiful. At night all you can hear are birds (and a few dogs barking). No cars. If it was near the coast it'd be the Northern Beaches 20 years ago.
I'd live at Whalan. Streets are clean, lawns are tidy, nice cars in driveways, usually more than one (and none on bricks). A couple of commission houses in the area look sad but these are in the minority and are actively being sold off and made private (these are the sales with "must be owner occupied" caveats). The whole area is gentrifying: private money is being spent and second stories are being added, places are getting re-cladded and effort is being put into painting them up nicely. There will be cafes appearing there soon. The trick, as others have already noted, is that the rest of the world hasn't worked it out yet. Think Marrickville or Waterloo or Zetland 10 years ago. If you think 2770 is a long way from Sydney then you need to change perspective and realise how close they are to Penrith and Parramatta.
We just bought 3-1-1 fibro ex-housie for $220k that was renting for $270 per week, place looks and smells terrible and was on the market for 3-4 months originally asking $260k. We're doing a $15k reno (kitchen, floors, paint inside and out, tidy the front lawn and gardens) and should get $340+ pw. A 4 bedder 2 doors down the road with original kitchen and bathroom is rented for $360 by the same PMs. Land is large enough to put a granny flat on in the future too.
The amazing thing is that properties like this are EVERYWHERE out here. The low hanging fruit, those that only need paint or simple reno work to add value, has already gone. Only renovated places or those that need major work (and are over-priced) and left. But the yields on these renovated places are still excellent, and the nice ones with good tenants are selling fast for their asking price despite the market. REA said many buyers are owner-occupiers, not investors.
We're already on the hunt for IP 2, 3 and 4. I'm considering other suburbs, to diversify the risk, but none even come close to the yields in 2770 so we'll likely buy more here.
