High Yield Investment Properties

Starting with a sample of 10,000 recent sales, PriceFinder ran rental estimates against each property to see how many offered yields above 10%. The data suggests that double digit opportunities are still very rare, with less than 3% of total properties sold matching our search criteria. Being so hard to find, investors will need access to tools like PriceFinder to help research markets and analyse listings quickly.

A key difference to our approach was that the median rental price and median sale price for a suburb were not used as the basis to calculate yields. Instead, individual properties that sold in the last few weeks were analysed. Taking the actual sale price and estimating the rental price, each property had its yield calculated. 

For an investor, this is typical of what you would do – looking at a specific property rather than a suburb level measure.

Working with a sample of around 270 properties that matched our above 10% yield requirement, we set out to analyse the data and draw some conclusions.

Summary of our results:

  • Fewer than 3% of recent sales would offer gross rental yields of 10% or more
  • 75% of the high yield sample were located in regional areas
  • 25% were located in city areas
  • In the regional areas, 84% of the properties were houses and 16% units.
  • In the city areas, 41% of the properties were houses and 59% units.
  • NSW provided most of the high yielding sales with 41% of the total. Next highest was WA with 24%, then QLD with 16% and SA with 11%. VIC offered just 5% and NT came in at 2% of the total sample.
     

Typical rents and purchase prices

Our sample of properties was analysed to see what the typical sale price and rental price was. Surprisingly, the house price for both regional and city markets are very similar and well below $200,000.

The typical city based house representing the best yield was located in the Outer Western Suburbs of Sydney. For units, no one area stood out. If we had to pick a ‘typical’ unit, it would be a 1 bedroom closer to the CBD or a lower priced 2 bedroom in the Western Suburbs of Sydney.

The typical regional property was no surprise given the resources sector boom. WA mining regions are still offering high yields, even though sale prices in many of these towns has increased substantially in recent years.

 

Region

Type

Median Rent

Median Sale Price

City

House

380 per week

175,000

City

Unit

440 per week

203,000

Regional

House

380 per week

162,000

Regional

Unit

244 per week

115,000

What to look for

  • If high yields are your primary criteria, here are few tips to assist you in your search;
  • Look at regional areas linked to the resources boom
  • Expect to pay $500,000 or more if looking in WA.
  • If your budget is a little tight for WA, look at regional NSW including The Hunter, Moree and towns with expanding infrastructure and population growth.
  • Ifl ooking at metro areas, look at well price units in near transport. This includes 2 bedroom units in the outer suburbs or 1 bedroom units closer to the CBD. Alternatively look at lower priced houses in some of the outlying suburbs.

Kent Lardner

www.pricefinder.com.au

 

The above information is supplied by PriceFinder.
Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Investment Property.

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