Expert Advice: by Lindy Lear
Property markets are always changing. Smart investors are adaptable and have a different perspective on what types of properties can add the best value and growth to their portfolios. They are looking to get the best “bang for their buck” and are always open to new opportunities. Thinking smaller in terms of land content and housing footprint could be a good investment option. It may help you to invest in areas that might otherwise be out of reach.
There will always be a demand for traditional 200 sqm housing on large 700 -800sqm blocks in many areas both regional and around capital cities. However demographic changes have been driving owner occupiers and investors towards apartments and townhouses for the lifestyle benefits they offer of living closer to the CBD, their place of work and transport links. Even in large regional centres apartment and townhouse developments are becoming more popular for the same reasons.
Affordability an Issue
In potential growth areas where the population is increasing and where housing is in strong demand, affordability can become an issue. Investors may feel they are being priced out of the market, and that they have to settle for a more affordable lower growth area.
Smart developers are addressing this by offering another alternative – smarter more sustainably built housing on smaller lots of land. They could be terrace-style, semi-detached or even freestanding villas with their own title in normal residential estates or suburbs. For an investor willing to look at these options, it can open up areas of high growth and high yield previously thought of as unaffordable.
Smaller housing options come in many forms. I recently settled on an “eco” townhouse built on the model of “The Smarter Small Home”TM in Qld. Not only was it cheaper for the developer to build using more sustainable materials with less wastage, it was also an affordable investment with many money saving benefits for the tenant, better energy efficiency and many extra lifestyle features. Some see this model as the way of the future for housing with a smaller “footprint” by building a double storey house that requires less land content, keeping costs down, and giving sustainable energy efficient benefits to all.
Finding affordable housing in growth areas
Most investors would love to have a “star performer” in their portfolio in an area where there are strong drivers of capital growth and high rental yields. However when they look for areas with a diverse economic base, growing population and high infrastructure spending they can find that they are priced out of the market in the traditional housing market.
For example in the large regional “powerhouse” city of Gladstone in central Queensland, the billions of dollars of infrastructure spending committed to the region has made it an investment hotspot. Investors wishing to enter the market can pay $475,000 upwards for a new apartment, and $530,000 upwards for a new House & Land package. The rental returns are also very high from 7% to $10% making these investments positively geared for most investors and giving great cashflow. This is wonderful for those who can afford it!
For those investors who feel they have been priced out of this type of growth market, take heart. Developers in many areas are addressing affordability issues and for those willing to look at these smarter smaller housing options there are opportunities to enter the market for up to $100,000 less than a more traditional purchase. And they still get the high rent returns and great cashflow.
When investing in a growing portfolio it could pay to be mindful of what will be in demand for accommodation in 15 – 20 years time. It could be that a growing demand for non - traditional types of sustainable, energy efficient, smarter housing makes you glad that you added something different to your portfolio when you had the opportunity.
If you would like to know more about these options please go to the Rocket website and register for the latest Hot to Buy Bulletin. Happy Investing!
Lindy Lear is a successful property investor who had a late start into investing, yet has grown her portfolio to eight properties in three years. She is a qualified property advisor and general manager of Rocket Property Group, and she won the Reader’s Choice Award in 2009 & 2012 for Property Investment Advisor of the Year. Lindy is passionate about helping others realise their goals through investing in property, and can be contacted at 02 8012 9669 or visit www.rocketpropertygroup.com.au
To read more Expert Advice articles by Lindy, click here
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property
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