Your Investment Property's sister magazine MPA has spoken to brokers about the suburbs their investor clients are pursuing, issues they should consider and the kinds of properties that appeal to them
Despite the brokers working in different suburbs all around the country, common themes arose, indicating that Aussies everywhere are becoming more interconnected with their investor plans.
Depends on experience
Where property investors choose to buy often depends on how experienced they are, says Ben Kingsley of Empower Wealth in North Melbourne.
“Novice property investors tend to stick to looking local for their initial investment because they get comfort from what they think they can understand, since the surroundings and values are familiar to them,” he says.
“However, smart property investors know that to get a great property investment, it’s best to not just look in your own backyard, as you are potentially limiting your investment returns by doing so.”
Cheaper alternatives to the city
Monica van Riet of Mortgage Choice in South Melbourne, says a lot of her clients are choosing an investment property as their first property. Moreover, they are commonly located in regional areas.
“Instead of buying a home they want to buy an investment property in somewhere like Ballarat or Bendigo
because they can get that property for about $300,000 and that might actually cash flow,” she says.
Rob Lees, also of Mortgage Choice, deals with clients in the Blue Mountains, NSW, and says that Penrith has become a popular choice for a number of reasons.
“It’s very attractive for investors in the city because it’s lower value and you could get a unit for below $300,000 and be making 6% return,” he says.
“There is a fairly mixed bag of properties available there, from older style units, to villas, established properties and new housing releases in the wider region.”
A lot of investors are finding Sydney too expensive to buy in, plus the market there is overheated at the moment, adds Lees.
Houses vs units
Empower Wealth’s Ben Kingsley says both houses and units can be good investments. Choosing between the two really depends on the goals of the investor.
He believes investors should first consider whether they want to chase growth or yield from the investment property, as the locations and type of property play a role in this.
Before investing in houses or units, Phil Couch of Loan Market in Adelaide
says investors should consider their financial situation, their proposed investment time frame and any potential risks.
“My key business area consists of small one bedroom units, to large multi-million dollar beach side properties or developments. I have investor clients that purchase either, or anything in between,” he says.
But one thing investors should consider with units are changes to legislation, says George Collings of Charles Knight Finance in New Farm
“I see so many units in Australia go into self-managed super funds and you have to say to yourself: Are any of these going to achieve in the next ten years any capital growth, given the fact that in Sydney, Melbourne and Brisbane, there is change in the legislation with local government to height restrictions?” says Collings.
Proximity to trains
Grant Matthews of Smartline has investors looking for properties throughout Victoria. He says his investors are concentrating on the inner-west and north-west, because that’s where the future population growth is.
However, he believes the real drawcard for investors are suburbs within 12km of the city, particularly those close to the train station.
“With the lagging infrastructure in roads and traffic flow and also the diminishing availability of parking in the CBD, we generally say to our clients that it’s something to consider, being near a station,” he says.
“I talk to a lot of real estate agents who say that more than 50% of people who walk in say they want to rent something near the station.”
Mortgage Choice’s Monica van Riet says that in addition to regional areas of Victoria, people are seeking one or two bedroom apartments within a 5-10km radius of the CBD.
Perth – the new Sydney?
Sarah Wells of Rate Detective Finance, who recently located from NSW to Western Australia, says that like Sydney, the Perth CBD (especially the eastern parts of the city), is becoming more recognised for its trendy lifestyle aspects, such as restaurants, riverside walks and cosmopolitan life.
She cites Maylands, Rivervale, Belmont
as popular suburbs with investors in WA at the moment.
“In Sydney I was a buyer’s agent as well, so I would look for one-two bedroom apartments close to the station and CBD that suited a professional renter,” she says.
In Sydney, she says the most popular spots were the Inner West, Lane Cove, Artarmon and Woolloomooloo.
What suburbs do you think are ripe for investors at the moment? Share your thoughts below.
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