Would You Buy Positive Cash Flow Property In a Suburb With a Vacancy Rate of 6%?
Would you consider buying a positive cash flow property in an area where the vacancy rate is 6% but there are promising future suburb developments?
Would you consider buying positive good property in a high, currently six percent plus Perth vacancy rate for the area, even though future developments are looking promising. So to clarify, would you consider buying positive cashflow property in a suburb with a vacancy rate of six percent? Plus? My answer to that is a resounding no. I would never look at a property with six percent plus vacancy rate in the area that’s just, that’s really high
are be looking at it. I wouldn’t buy an area for myself personally with a longterm vacancy, right above two percent. Six percent is like a three percent is the complete oversupply a good rental return on the works. If you’re getting 50 to 52 weeks a year of return, if your in an area like that six percent, it might take you 12 weeks to find your tenant. Every single time you lose one, a six percent yield becomes a four percent. Even really quickly if you’re losing 25 percent of the rental return over 12 month period.
Yeah, and that’s the thing, like even if future salvo developments look promising, you’ve got to weigh that up with the fact that this property, if the vacancy rates are so high, it means there’s already an oversupply in the area which can cause issues for capital growth because there’s already too many properties in that area as well as
brand new area. Then there could be a raised in, there’s a vacancy rate that high life because everyone’s completing construction at the same time and it’s all coming onto the market. So if you look back at the longterm trend month by month for a few years, you might see that the average is really only two to three percent and that might be acceptable to you. But um, if the longterm average is six percent and there’s a lot of construction activity to commence, I’m a six percent yields extremely easy to achieve. You can probably go find it in a much safer lower risk area.
Yeah. So yeah, basically, again, it’s not like this is the only suburb in Australia that’s going to have positive cash flow properties like we’ve been talking about Julian come properties like there’s lots of areas where you can get positive geared property and you can have a low vacancy rate and you can have capital growth and you can have the opportunity to manufacture growth. So don’t just get like you blink is on only looking at this particular suburb. I know, I don’t know why you want it, but yeah, go broader. Try and find something that fits within your parameters that it has low vacancy rate. That’s what. Well, that’s what I would do personally. Yeah, same.
Well, I hope you enjoyed the answer to this question with Ben Everingham from pumped on property. We’re really having a blast doing these q and a sessions with you guys, so keep the questions coming. If you’re at the point now where you’re ready to purchase an investment property but you think you might need some help, then ben is offering free strategy sessions to on-property listeners. Simply go to on-property dot com.edu. Forward our session. And you can book a time with Ben and you can go through where you’re at, where you want to be, and what your next steps are to get there. So again, that’s on property.com forward slash session. Thanks so much for watching. Until next time, stay positive.