By Julian

Is $600k enough to succeed in property investment?

Absolutely.

It’s just the right amount that will allow you to shop around for much more than a studio or one-bedroom inner city off the plan apartment. And, the repayments and deposit are not going to break you like they will when you edge closer to the $1m mark.

For that kind of money, you’ll be able to acquire a property with sufficient land content, the right home for someone in a quality school zone or a property within walking distance to public transport. And I’m talking houses here, not apartments.

Below are my top three picks of how you can maximise your return on that kind of investment….if you spend wisely, that is.

 

Geelong

The Detroit of Victoria is morphing into an outer suburb of Melbourne with more white-collar workers choosing to commute from the regional centre or take up one of a growing number of employment opportunities that have spawned from greenfield investment and strong job growth.

Greater Geelong’s population of 240,000 is forecast to exceed 320,000 by 2036. That’s not hard to believe when you consider over 6000 Melburnians relocated to Geelong over the past 12 months according to ABS data. That growth has a direct correlation to property so it’s no surprise to see the property market increased by 10 per cent across greater Geelong in 2017 and 22 per cent along the Armstrong Creek corridor.

 

“But it’s so far away…”

When you consider the investment choices Geelong offers to someone with $600k to spend, that one-hour commute is going to seem negligible. Affordable housing in this region often comes with character and land content, great ranking schools, new hospitals, a performing arts and events centre all while being only a short drive to one of Victoria’s best coastlines. There is a lot to be said for investing in a property that affords people a lifestyle away from the city.

 

“But isn’t capital growth strongest closer to the city?” 

If you have $500-600k and want a house less than an hour from Melbourne’s CBD the options are limited to the inner West regions such as Deer Park, Hoppers Crossing and Werribee. These suburbs have already moved well above average growth, meaning it may be a while before they increase in value again. Plus, they can’t compete with the level of services and lifestyle that Geelong offers. If proximity to the city is important, the high speed train between Geelong and Melbourne could make that a non issue.

Keep in mind, properties still pass in at auction regularly and agents are willing to get deals done. Be patient and always get a building and pest inspection. We have left many deals on the table due to structural issues

 

Brisbane: an affordable capital city investment

Free standing houses inside 15km of the CBD, top ranking school zones and decent yields, make Brisbane a very compelling case for property investment.

With the market historically performing below Melbourne and Sydney, especially in the past 4-5 years, we expect this to change with interstate migration strong and Queensland overtaking Victoria with new job growth in the past 12 months.

The Brisbane property market has many layers which is why you need to be smart about your suburb and property selection. General data will show a growth rate of zero per cent in the March quarter, whereas we are seeing very strong demand in the northern suburbs for double story brick homes with renovation potential. Closer to the CBD, renovated homes in the suburbs such as Wavell Heights are fetching huge premiums where you’ll often see sales ranging from $600,000 to $1.2m. This is a ‘buy and improve’ opportunity.

Melbourne and Sydney made property investment look easy over the past few years – almost everyone had at at least 20 per cent returns. In Brisbane, however, you have to work hard to find the opportunity.

But, as I have said before, stick to the irrefutable facts: people migrating to Brisbane have money and want to be close to good schools, transport, lifestyle drivers and the CBD.

Just tread with caution in the Sunshine and Gold Coasts where many investors notoriously sell down if rates rise and supply increases, and be very wary of ‘new property’.

 

Melbourne: the villa unit market

With a majority of new development in Melbourne being apartments or double story townhouses, we are finding unwavering strong demand for single level villa units. Having the bedrooms, kitchen and living space all on one level is attractive for young families and our increasing market of downsizers.

Who are the downsizers?

The 5.5 million people, born between 1946 and 1965, have begun to turn 65 years of age and forecasts are showing that more than 50 per cent will need some level of social security support. Many will be selling their larger family homes to fund retirement. And even the ones that don’t will often want a smaller home. Get inside the mindset of a retiree!

Sure, there is plenty of apartment stock around but in the conversations we have, retirees just don’t want to be in a densely populated building close to main roads. Well located villa units in the suburbs will always present good value. Poor rental yields are the only detractor here, but with vacancy rates at 1 per cent and below in most quality areas, you can expect to see some increases soon.

If you’re still not convinced, get in touch for a solution that fits your budget and priorities.