That's an excellent and extremely valid point, Peter.
I would add that people could even continue to rent CBD if they chose to, while leasing their new high yield investment at pretty much neutral without the requirement of having much down to begin with.
Most people wouldn't entertain this concept though, and to this day I still don't understand why
It's because high yield typically comes with high risk or low prospects for rental income growth.
For example, if I were to buy in the rural town where my folks live, I could easily get $200/wk on a $140k house (7.5% yield) and if I bought well, I could do even better. Rentals are perpetually tight there. However, englobo land there costs essentially nix, and because the place is so small, no part of town is really any better than any other part of town - even if the place doubled in size (which it won't) you wouldn't get any of the location creep in rent (and hence price) that you'd get in a capital city. And my sell price just after renovation will always be somewhat cheaper than the cost of building a new house on englobo land less than 1km away.
But suppose the citrus industry was destroyed by a new root rot, I'd be in a situation where I could neither sell the place nor rent it out. There would be empty houses everywhere.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
It's because high yield typically comes with high risk or low prospects for rental income growth.
For example, if I were to buy in the rural town where my folks live, I could easily get $200/wk on a $140k house (7.5% yield) and if I bought well, I could do even better. Rentals are perpetually tight there. However, englobo land there costs essentially nix, and because the place is so small, no part of town is really any better than any other part of town - even if the place doubled in size (which it won't) you wouldn't get any of the location creep in rent (and hence price) that you'd get in a capital city. And my sell price just after renovation will always be somewhat cheaper than the cost of building a new house on englobo land less than 1km away.
But suppose the citrus industry was destroyed by a new root rot, I'd be in a situation where I could neither sell the place nor rent it out. There would be empty houses everywhere.
That does make good sense in that scenario. My point was that many people who feel they are priced out of property altogether still have options, which they wouldn't usually consider. To my way of thinking 'anything' has to be better than 'nothing'.
Almost anyone could find something they could afford to lease out if they looked hard enough (and more importantly kept an open mind).
Some mid size regional centres are self sufficient and commutable with pretty impressive yields compared to Sydney and Melbourne ATM
be sure to do your due diligence / risk assessment ...
It's all good man. I've had my eye on the area for some time - we basically bought the cheapest thing we would be happy enough to live in. It's very modest but in a great spot and was extremely well priced for what it is
I don't care about its market value, I don't ever intend on selling it.. We will likely move into it as soon as we 'get our shit together' - like that's going to happen any time soon lol
Personally having a great time renting in a nice area, saving, spending, and watching most mortgaged people live out their dull pointless lives of austerity and fear because they've been sold the dream that property's the one way ticket to happiness.
Each to their own i guess.
NOTA BENE: will happily concede there are people on this forum making a good living through a property portfolio.
They are however the minority.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
This article is weird, when I was and ENDIE and on the dole in London in my formative years I found it to be quite enlightening. Fabulous memories of days gone by, it was. I wouldn't have missed them for all the tea in China and look back on them fondly.
I see people buying houses under $100K even below $50K - anyone with a full time job and no debts can afford those homes. Why not line up a job in the country and move?
Peter, how many employment opportunities exist in a lot of places you can buy a (not-about-to-fall-down) house for under $100k?
The rural branch of Jobs Australia lampooned the coalitions ridiculous plan for forcing the unemployed to apply for huge numbers of jobs per month because in most rural areas, the jobs simply don't exist in any quantity.
Which is one main reason why houses are cheaper in many rural places. I walked through an absolutely beautiful old sandstone block house in Iron Knob, the picture of perfection (and quite large too) - he told me he wouldn't accept any less than $25k for it. A ludicrously low price for such a lovingly cared-for (almost lavish-looking) home. The reason - no one wanted to live there because there were no jobs and therefore, no means to pay for a house or anything else for that matter. The place boomed after that when the mine was re-opened and the price went through the roof but seems to be heading south again now with the end of the mining boom.
Seriously Peter, that would have to be the most throw-away comment I have heard you make in a long time.
The reason - no one wanted to live there because there were no jobs and therefore, no means to pay for a house or anything else for that matter. The place boomed after that when the mine was re-opened and the price went through the roof but seems to be heading south again now with the end of the mining boom.
Sounds similar to Orange, where my parents have an IP. There are some beautiful colonial era sandstone properties up there, and during the boom time sale prices for these properties increase in value at a rate disproportionate to other less attractive places.
People seem to forget that the return on these places is purely related to the utility they provide - an itinerant gold miner (which is most of your market for higher priced rentals in Orange) is in all likelihood not going to give a hoot about the aesthetics of it. They're more likely to be after a slab of concrete with a double lock up garage to park all their weekend toys.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Seriously Peter, that would have to be the most throw-away comment I have heard you make in a long time.
Certainly, if you're employed in a knowledge industry, you need to be located in the metro area. The decline of Australian manufacturing has seen knowledge jobs increasingly concentrated around the CBD. This is one of the reasons for the surge in inner-city house prices: everyone wants to be where the jobs are.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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