Smithfield SA
- Thread starter cceasy
- Start date
Its better in the same way a Quarter Pounder is better for you than a Big Mac.
Elizabeth > Smithfield > Davoren Park, with varying order of the elizabeth suburbs in there.
Yes there are good deals and yields, but you need to be comfortable with dealing with the low level of housing and subsequent tenant pool that a socioeconomic area brings. Not all tenants there are bad, but the chances of issues are much higher.
Elizabeth > Smithfield > Davoren Park, with varying order of the elizabeth suburbs in there.
Yes there are good deals and yields, but you need to be comfortable with dealing with the low level of housing and subsequent tenant pool that a socioeconomic area brings. Not all tenants there are bad, but the chances of issues are much higher.
It's a low socioeconomic area therefore:
rental vacancies are higher
maintenance is higher
Demand is lower - more difficult to sell, more difficult to rent.
capital growth is very low
Personally anything North of North Adelaide is not my preferred area - I like western suburbs for investment. They can sell in a week - high demand.
zoning is about to change in glandore - kurralta park area along anzac highway allowing more subdivision and higher stories, that is $300,000 added to existing prices in the next 6 months. Much better investment potential.
rental vacancies are higher
maintenance is higher
Demand is lower - more difficult to sell, more difficult to rent.
capital growth is very low
Personally anything North of North Adelaide is not my preferred area - I like western suburbs for investment. They can sell in a week - high demand.
zoning is about to change in glandore - kurralta park area along anzac highway allowing more subdivision and higher stories, that is $300,000 added to existing prices in the next 6 months. Much better investment potential.
Maybe pull out google maps
It's really not hard to work out a decent area to invest in
Your selected must either have a decent commute to the CBD or be close to a beach (people will tolerate longer commute times but depends on the city)
Now a decent commute changes vastly from Adelaide to Sydney
Sydney is 45 mins?
Adelaide would be about 15
However people in a beach suburb will often happily commute a bit further
The area you chose doesn't meet the CBD or lifestyle criteria
The only reason you would invest there is if you are a cash flow junky - will you happily buy 20 of these properties to reach your goals of financial freedom? If the answer is no and you only ever intend to buy two or three ip's then make them count
Side note - I notice a tonne of people from Sydney (presumably priced out of the local market) jump on somersoft and ask about outer suburbs in Adelaide and Brisbane - Sydney is a completely different beast,huge population and very limited supply of land , has a lot of natural boundaries. The lack of supply is why the outer suburbs in Sydney became so expensive. Adelaide and brisbane's populations need to grow significantly before that will be replicated there.
To provide an alternative view,
I have a couple up there and I'm comfortable with that decision. They're on developable blocks, one of which I'm developing now and the other I'll sit around and wait til the numbers stack up. Happy to collect the positive rent in the mean time.
New shopping centre is being built 1-2 streets away from where mine are as per https://renewalsa.sa.gov.au/woolworths-playford-alive-now-construction/ and http://www.premier.sa.gov.au/images/news_releases/13_05May/playford_woolworths.pdf
Also significant population growth and infrastructure growth as per http://www.playford.sa.gov.au/page.aspx?u=1308
Finally, I believe the area north of here yet south of Gawler will be uninhabitable due to underground water tables hence providing a geographic boundary and limiting ongoing supply.
I have a couple up there and I'm comfortable with that decision. They're on developable blocks, one of which I'm developing now and the other I'll sit around and wait til the numbers stack up. Happy to collect the positive rent in the mean time.
New shopping centre is being built 1-2 streets away from where mine are as per https://renewalsa.sa.gov.au/woolworths-playford-alive-now-construction/ and http://www.premier.sa.gov.au/images/news_releases/13_05May/playford_woolworths.pdf
Also significant population growth and infrastructure growth as per http://www.playford.sa.gov.au/page.aspx?u=1308
Finally, I believe the area north of here yet south of Gawler will be uninhabitable due to underground water tables hence providing a geographic boundary and limiting ongoing supply.
Yep then it's probably not for you
It's ok for someone like dave because his strategy is different. He already has 7 properties I think and it doesn't sound like he will ever stop. So lower end will work for him because he can cover all his expenses and because he purchases so many it will be sufficient capital/ rent to reach his goals
You won't be able to do that in Elizabeth area by only purchasing 2 or 3 - you might find it hard to do it anywhere really - I think you would need to look at more like 4 or 5 but you get my drift
It's got a pretty bad reputation and capital growth out North has been sluggish for the past 5 years or so (eventually it'll pick up). I was seriously looking at purchasing a place in Elizabeth South or Elizabeth North a few months ago.
I ended up spending another 50k and got myself a nice free standing house at Salisbury Downs instead. The yields won't be as good but it's a better area and if there's capital growth at Elizabeth it'll flow onto Salisbury anyway.
I ended up spending another 50k and got myself a nice free standing house at Salisbury Downs instead. The yields won't be as good but it's a better area and if there's capital growth at Elizabeth it'll flow onto Salisbury anyway.
I don't quite understand.
You're saying IF there's capital growth, you'll get it in both places anyway, yet you opted to take less cash in the meantime?
You're presented with the choice of 6% CG + 6% Yield vs 6% CG + 8.5% yield and you chose the former?
The median house price in Salisbury Downs is 275k, whilst the median house price in Elizabeth North is only 153k. If we calculated based off free standing homes the median price of Elizabeth North would be 190k.
Let's say your house at Elizabeth North is worth 190k. Assuming 6% capital growth for 20 years it'd be worth 610k giving you 420k worth of growth.
With mine at 275k assuming 6% capital growth for 20 years my property is now worth 882k giving me 607k worth of growth.
Yields naturally increase in time with a buy and hold strategy anyway so I'm not concerned about that. Plus with Salisbury i'm attracting a better class of tenant so I have less concerns about maintenance, tenants not paying rent etc.
0.30% currently between Smithfield 2.6% & your stomping ground Norwood 2.3%... Jump across to my 'Northern' suburb property in Elizabeth East 0.8% (data sqmresearch)
Again not always true, all depends on the property you purchase, quality of tenant, how good your PM is... My best suburb tenants turned house into grow house $20k of damage, 'worst' suburb tenant politely asked for upgraded air con as current was struggling when we had 40degress days.
10% CG over two years in Elizabeth East property. Reasonable given the yield is >7% compared to <4% in say a Norwood.
Anything can sell in a week pending price, location doesn't always = sale. My last purchase was made after property being on the market for 2 days, it was a good price. Most properties priced well with development potential are flying off the rack as long as they are priced appropriately.
This is the only bit of useful info I see in this post, thanks for update. Are you finding the properties in these areas already pricing in the zoning change. Do you have more info on the zoning change? I've got some clients who have done very well developing townhouses all along Anzac Highway.
Ah OK, that makes more sense since you have such a long term outlook. Hope you do well with that. The same deposit you used could have got you 2 of the others though so perhaps it'd add up the same?
I prefer to make money now not later. For example on my last purchase, it was structurally damaged so couldn't have a valuer through it (because he'd crash the deal) so bought at 80% of $147k purchase. I fixed it up (for $3k) during settlement and then shortly after had it revalued and topped up to 90% of new value. This provided enough funds to buy similar again with little to no input from me. My skin is removed from the deal and the cashflow is still coming in each week.
No maintenance issues either, because when it starts being bad I'll just demolish it and build 2 there.
I prefer to make money now not later. For example on my last purchase, it was structurally damaged so couldn't have a valuer through it (because he'd crash the deal) so bought at 80% of $147k purchase. I fixed it up (for $3k) during settlement and then shortly after had it revalued and topped up to 90% of new value. This provided enough funds to buy similar again with little to no input from me. My skin is removed from the deal and the cashflow is still coming in each week.
No maintenance issues either, because when it starts being bad I'll just demolish it and build 2 there.
Brady has hit the nail on the head with the above. 
The economic status of an area doesn't necessarily play heavily into vacancy rates etc, as it's more a function of supply and demand. Anecdotally I've seen this repeatdly, the number of inner suburb blue chip properties I've known to sit on the market untenanted for 4+ weeks, compared to most of my cheaper investments which have 6-10 applicants over a 5 day period.
A quality property manager will be able to keep the tenants in line with their responsibilities, or go through the correct procedures to re-mediate the situation.
Horses for courses as usual however - I've seen all the 10-11% yield freestanding properties disappear from the outer north from all the increased activity - sometimes it'd be nicer if everyone else followed Xenia's advice.
The economic status of an area doesn't necessarily play heavily into vacancy rates etc, as it's more a function of supply and demand. Anecdotally I've seen this repeatdly, the number of inner suburb blue chip properties I've known to sit on the market untenanted for 4+ weeks, compared to most of my cheaper investments which have 6-10 applicants over a 5 day period.
A quality property manager will be able to keep the tenants in line with their responsibilities, or go through the correct procedures to re-mediate the situation.
Horses for courses as usual however - I've seen all the 10-11% yield freestanding properties disappear from the outer north from all the increased activity - sometimes it'd be nicer if everyone else followed Xenia's advice.
Thanks. Hope you do well with yours as well! If I bought a pair of duplexes I'd definitley be pulling in at $100-$140 a week in rent more. Maybe in the future I'll consider that as an option.
The property I bought is on a 800+sqm block with around 23m of frontage.
