Is it wise to invest in a regional shack?
So you've given up on your dream of buying that property with a picket fence and enough room to erect a shiny new Hills Hoist. It might be off the cards in the city, but it's not necessarily out of the question in regional towns.
The Victorian Government recently upped the First Home Owners Grant (FHOG) to $20,000 , which is a tempting offer for many millennials that are desperate to get into the market. But should you take them up on the offer? Well, yes, if you've done your research and you're ready for a lifestyle change. Here are some things to think about.
You'll get more bang for your buck
Not only will you get the $20,000 boost, you'll also be able to get a house for the same price as a shoebox in the city. But, to get the grant, you'll need to live in the property for at least 12 months. That means you'll either need to be able to work in the area of commute daily. Currently, you can get a new four-bedroom home in Geelong, for about $400,000. If you can handle the commute, you could be onto a winner.
Invest in an area that's growing
This is essential. Not all regional areas make for a good investment, so pick a spot that's primed for growth. That means a place that's got more economic activity than a seasonal tourist offering. It might't grow as fast as the city, but as long as it's on the up, it'll pay dividends. In some areas, prices have spiked fast. Take Stanwell Park north of Wollongong in NSW. As of early 2017 prices had grown by 59.9% in just 12 months. Oh, to have backed that bad boy...
If you don't intend to stay, pick a spot that's has a strong rental market
When you plan to buy a place that will ultimately become an investment, you want to be confident that it'll attract quality renters. If you fall in love with a home in a remote location, it could quickly turn into a heartbreaker if there's no one to rent it. If you get stuck paying a mortgage on an empty property while you're paying rent in the city it's going to hurt. So look at locations that have a decent population of renters or spots with a consistent holiday market so you can whack it on Airbnb.