Buying to live and for investment
Before making a decision of where to purchase and their budget, Janet and Richard explored several suburbs with close proximity to work and high demand from tenants offering significant opportunity for capital growth. Thorough education and research was done to cover:
- the capital growth of different property options within their budget, personal taste and desired suburbs
- their ability to fund the cash flows from purchasing a property in comparison to existing rent and savings
- objective price assessment to ensure they did not overpay
Client property criteria:
At least 2 bedrooms and a single garage. Within a 30minute commute from Sydney CBD. Growth suburb where capital return is good. Good potential to rent out the property as an investment at a later stage.
Cash flow criteria:
Ability to put in an additional $400 per week over and above their current weekly rent of $800 per week
Budget:
Sufficient cash and savings to purchase up to $1,200,000
Location:
Lower North Shore, Sydney
WHAT YOU NEED TO KNOW
Do your research and be emotionally resilient
Purchasing property within 15kms for Sydney CBD is highly competitive, especially if you are purchasing under $1.5m. Being emotionally resilient and quick to make a decision is key. This means that you really need to have done your research thoroughly, understand fair value, and know what you want.
Be prepared for higher monthly costs
Property in these suburbs tend to attract rental yields of 2% to 3.8% which means that you will be negatively geared. If you live in the property, be prepared to pay in additional cash over an above the rents that you are used to paying.
Strong capital growth in these areas
Due to the high demand for housing in these areas and the shortage of good properties, capital growth in these areas tend to be strong. Be very careful to avoid oversupplied areas where new units are being built. You may experience 1 to 3 years of subpar capital growth while these units are completed.
Check your proximity to transport and amenities
Sticking to high demand, owner-occupied areas will serve you well. Selecting the right street and proximity to shops and transport will ensure a fantastic return over the long term.
Investigate how properties are being maintained
These areas are well established and do have some much older properties. Be careful to ensure that the roof of your property or building is sound and that there are no issues with cockroaches, pigeons, possums or rodents in the neighbourhood. Concrete cancer is a key issue if you purchase a property near the water.
If you’d like more information, please sign up for one of our property education workshops.
