Cash Positives in Lower Socioeconomic Areas
CASH POSITIVE PURCHASING . . . WHERE TO FIND THEM AND HOW THEY WORK
Lower socioeconomic areas will tend to give you a higher yield than more prestigious areas. Lower socioeconomic areas will generally have a lower entry point for purchase, but the rents normally are not that much lower. If you want to live on Sydney Harbour, it might cost you many, many millions to buy, but it will only cost you $1,000 or $1,500 a week to live there.
Comparatively, the differential is quite a lot. Whereas, if you want to live in a lower socioeconomic area, it might only cost you a couple of hundred thousand dollars to buy the property, but the rents are still going to be up there, they are going to still be $350 a week.
If you are looking for yield, your lower socioeconomic areas are certainly going to have a higher yield. They will not, in normal circumstances though, have the degree of growth that a more prime property might have, unless (and this is something that you should watch out for right now) some of those previously low socioeconomic areas are having an influx of big money; an influx of government money, and influx of industrial monies, private monies. If the big companies are going in there, employment’s going in there, factories are going in, government departments are going into those areas, so the people are moving in too. Rentals will be in demand and the prices go up. That’s where you’re creating a change, and it will not happen overnight, but just having those bigger monies moving to that area will change the psyche of the area. There will be more money available in the area and over time, it will change from a lower socioeconomic area to more of a mainstream area.
There are a number of examples of that happening around Australia at the moment, where previously lower socioeconomic areas are now getting huge influxes of funds from a lot of government departments. Follow the money; follow the ‘big boy’s’ money, and when you start following the ‘big boy’s’ money, you can actually jump on their coattails.
We always recommend that you seek professional advice as this blog is for general information only