We began investing in property some years ago with a simple subdivision (read my article “so you think you can subdivide”) just north of the city and then we purchased a second property in Brahma Lodge a small suburb 19.5km north of Adelaide in 2016. The house a 1960s cream brick number sits on a corner block of some 700 square metres within the local council area of the “City of Salisbury” We purchased this property in March 2016 for just $263,000 or $375 per square metre. “What” I hear you Sydney-siders and Victorians say “Surely it can’t be true” even better we rented it 7 days after settlement and it’s been cash flow positive from day one.
So what do you get for $263,000 in beautiful Rad-elaide’s north? A 3-bedroom home, solid brick with timber floors a carport a small shed and lots of unused land. You get an easy 25-minute commute to the city with public transport close by, or 5 minutes from the University of SA Northern Campus. Its only 45 minutes from some of the worlds best wineries in the Barossa Valley and there are several large shopping centres and lots of schools close by.
Adelaide’s north is great for small Property Investors
Ok so the North is not as prestigious as the east or inner south of Adelaide. You won’t find too many hipsters or the cafe latte set here but you will find a solid base of hardworking families, singles, young people, old people and immigrants from many backgrounds, all ideal Property Investor customers. House prices in the north of Adelaide are cheap in comparison to the rest of Australia. I conducted a simple search on comparable suburbs in New South Wales and identified Chester Hill in the Bankstown Council area as having a similar profile. Chester Hill has a similar demographic and very similar numbers on market demand for Brahma Lodge in Adelaide. Heres some recent data off “the Google”
Chester Hill NSW
Brahma Lodge SA
Chester Hill has had great annual growth but is it sustainable? would it be a safe bet for a property investor right now? On the other hand Brahma Lodge has lower annual growth but a higher rental yield making you money from day one. You might get more growth from Chester Hill over the years but could you pick up the negative cashflow in the meantime? From a long term perspective and in my personal opinion Adelaide’s north is a safer bet and for the same money you could nearly buy three of them.
What about the economic outlook for Adelaide?
People often hang a bit of shit on Adelaide, what about the decline in manufacturing and the Holden plant closing down? what about the Electricity issues in Adelaide don’t you have blackouts all the time? and what is Fritz anyway?
Im not an economist or an accountant, I’m a self-employed Property Manager and owner of a company 4rooms Property here’s my take on my city. I’ve travelled all over the world and It’s a brilliant city to live in, loads of parks, easy to travel around, arguably has some of the best restaurants and bars in Australia. Other highlights include the Adelaide Festival and Fringe, Womad and many other world class events. Quite simply people who live here LOVE living here in fact it’s ranked as the 5th most liveable city in the world.
Despite the moaning and whinging I hear in the media mostly from the media, I’m proud of the fact that our renewable energy percentage sits at 40% and we lead the way in Australia for this… I’m ok with a few weather related blackouts here and there if it means helping the planet. I went to Nepal a couple of years ago where the power was scheduled off for up to 5 or 6 hours a day every day.
My prediction is business could move here to take advantage of our economic conditions, if they don’t they should. Adelaide has cheap affordable housing, space for manufacturing and other industry, growing transport infrastructure and available labour for hire. The eastern states look unaffordable for all, a recent story highlighted a financial planner interstate who couldn’t take a job for anything under 120k because that was his break-even point just to pay his mortgage, that’s ok but the employer simply couldn’t afford to pay that.
The Holden plant closes later this year out North and many employees have re-educated themselves, retired or moved into growing areas of defence manufacturing the impact on South Australia so far has not been as dire as predictions in 2013 and nor is it likely to be. I know im a contributor to this loss I don’t drive a Holden, Ive got a Volkswagon.
Back to our Brahma Lodge palace, there are lots of options for this house
We could keep it as a rental. I picked up the keys on the 10th of March and held my first open for rent inspection the very next day. We listed the house at $290 per week approximately $5 less than the going rate for similar properties. Not sure what to expect, I was pleasantly surprised by the steady flow of prospective tenants flowing through the door all taking application forms. Now this is not a pretty house, its old very outdated and well let’s just say the previous owners did not have a penchant for cleaning or general maintenance however it was evident to me there were a high number of potential tenants looking for property around this price point in Adelaide. We scrubbed the place mowed the weeds and rented it to a lovely family with a small fat dog named “Chunks” the very next day.
We could sell some of the land. The block size is reasonably large at 700 square metres, it’s a corner block quite long but shallow, the house sits to the right of the centre. With a little bit of creative renovation, we could modify the house (chop off the carport) creating a corner block of land to the left of the house suitable for redevelopment while continuing to rent the existing house.
We could demolish the house and subdivide the block. I can see this already happening across this suburb and its refreshing the overall look of this area in a positive way. Recent research suggests to my surprise that the council has no minimum block size for Brahma Lodge so it is possible that we could divide the block into 3 subject to council approval and either sell off the land or develop the site ourselves.
The exciting point is there are many of these type of properties available. The close proximity to the city, the price and solid yield and all the other benefits of living and working in Adelaide makes it in my opinion a great suburb for ongoing property investment.
This is Fritz
You might be familiar with this mystery meat as Devon, Polony or Stras… but really its all Fritz.
If you are looking to buy an investment property or already have one in Adelaides North and need a high value low fixed price Adelaide Property Manager to care for it, message me or give me a call any time.
Paul Haigh is a Registered Land Agent RLA 277315 and owner of 4rooms Property an Adelaide Property Management company serving the whole Adelaide region.