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Help! Newbie to property investment! Sydney or Qld for investing....

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bronput | 17 Feb 2016, 08:12 PM Agree 0
Hi there,

I am a newbie to property investment. We live in Menai, but currently own a property in Adelaide, and we have the ability to obtain up to about 650k funding.

Do we:

a. Buy an apartment in Sutherland to live for 3-5 years, then rent this property ($575k max for an apartment?)
b. Buy an investment property in Sydneys West (i.e. near penrith) and rent
c. Buy an investment property in QLD and rent

Concerns I have, Sutherland has a low rental yield and overvalued market, but still potential for growth if price is right.
Risky in other markets and potentially less renters


  • Cat | 18 Feb 2016, 08:30 AM Agree 0
    Hi there,

    I don't know much about the Adelaide market but no a fair amount about the Brisbane, Sydney & Melbourne.

    I think there are two ways to look at property -
    1) It is a home for me that doesn't always have to make financial sense because this is where I sleep, raise my family and have my friends over etc
    2) It is a property that I want to earn money from and therefore want the best return on investment for the risk I'm prepared to accept.

    When I say "best return on investment" for the "risk I'm prepared to accept" - some people are happy to take risks so they will buy in mining towns and get great rental returns knowing that at some point they could lose significant capital value but are prepared to take the risk. Others don't want to lose capital value so will then settle for capital city rental yields knowing that it is unlikely to be vacant or lose value. Risk is very dependent on your investment period, investing short term is very different to investing long term, you can lose capital value on a property (given it is providing the income yield you require) if you are in for the long haul because over 10 - 20 year time frame it will go up in value (given you've got a reasonable buy price) - you only lose capital value if you sell.

    So I think the first question you need to ask yourself is how long do I want to invest in this property? What is the minimum rental yield that I want to accept? Will depreciation off a newer property provide a tax advantage to me because of my income tax position?

    Property development has been hot in Melbourne and Sydney however over the last 12 months it has really dropped off now and property developers are now moving to Brisbane to make gains. We've just built a unit complex in Queensland and we have a property manager that works Gold Coast through to Brisbane. 90% of her rent roll has had rent increases in the past year and depending on the area vacancy rates are low given you have the right product at the right price. We put 5 on the rent market and filled them in 2 weeks at the price we asked. Demand for properties close to the M1 between Brisbane and the Gold Coast is high as there just isn't any land through that section the only way we can supply more is units, townhouses etc. There are some developments with house and land packages, I know agents are struggling to fill them with tenants because the supply is outstripping demand however for properties close to the M1 generally demand does outstrip supply. I would say the biggest issue with investing interstate is not having the local knowledge of the area and real estate agents tend to push you in the direction they want. If you are prepared to do your homework I would say Brisbane is a good place to invest right now unless of course you want to move to Sutherland but then that should be a personal preference given the overvalued market and low rental yield. Just keep in mind the tax implications in a property that you've lived in and then tenant out, I'd speak to your accountant about that.
  • RealEstate | 02 Mar 2016, 01:17 PM Agree 0
    Hello Bron,

    Hope you are doing well.

    Based on your question I can give you a short answer without getting into too much detail. Based on statistics there is a demand in Queensland for properties due to an influx of jobs becoming available and the lack of rental properties to service the increase in population in this region. As Cat mentioned in the previous post there is in particular a demand between the Gold Coast and Brisbane corridor therefore should you be interested in looking at investment property that would be the most ideal location to invest in.

    Please feel free to get in touch should you want any specific information regarding any properties in Queensland.

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