NSW Investment properties

Hi All, I am looking to buy an investment property ,budget is approx 1-1.5 Million. I live in Sydney but i am okay for interstate investments as well. My goal is capital growth.

Could you please advise which state /suburbs i should be looking at. I bought a unit in sydney (my 1st property) 5 years ago and price has gone down. So trying to be more careful in my next investment.

I found a 645sqm 60 year old clad house + 2 year old clad granny,1.5 kms from Seven Hills station,rental yield of $810 per week, price guide : 1.05 million. But iam not sure if this is a good investment option.

So could you please pour in your suggestions for some good investment properties.

Thank you very much in advance.

 

Hello, welcome to the forum

What is it about this property that you feel makes it a good investment?

 

Hi skater, Thanks for the reply.
To be frank, im not sure if this is a good investment. I can see other properties in seven hills (550sqm clad house) for 950k & this one comes with granny for 1 million. So, i was considering it initially. Then i have gone through previous posts in this form & could see the suggestions for interstate investments. So, looking to get some suggestions for my next investment.

 

My best suggestions are to read, read, read, read. There's a lot of learning here. Do some research and get an idea of what you want, and where you want it. Don't just choose the first property that comes up.

 

Where and what did you buy...?

You won't be able to be more careful until you've increased your knowledge and you're able to at least avoid some of the obvious risks.

 

The risk with asking 'where should I buy' is you end up with 'yeah, that sounds good, I'll buy that' without knowing how to evaluate the responses. You end up chasing recently hot markets or property types.

e.g. buying an older unit in a brick 6-pack 5 years ago in Sydney would have been a 'good' choice in that all the fundamentals are there. But prices have been flat, while houses have risen strongly.

Does that mean it was a bad choice? Not on the fundamentals. It doesn't mean it will perform badly in the future either.

New H&L in Syd / Mel have performed well recently. But does that mean you should buy new H&L going forward?

 

The amount of those posts at the moment is ridiculous. While some of the posters listen and have a good attitude, others are entitled twats, that get narky when you ask questions.

To the OP, in no way am I referencing you in this comment, so don't take offence. It's just a general observation.

 

Think part of it is frustration for newbies because the market is acting so strangely. The right or wrong buy (or not buying) has resulted in huge differences in the short term.

Which is hard when property should be for the long term. So they want to buy the ‘right’ property and reap double digit returns, without spending the time to learn the basics, maybe because they feel it will be easy if they just buy the ‘right’ property?

 

I bought in Mays Hill in 2015

 

I think you are on the right track with a House + Granny Flat in Seven Hills for that budget.

Seven Hills is a really good investment suburb and growing quickly. Also, there are a few house+GF options so you should have some options, particularly when lock down ends. Find something in the right pocket, and you should be on a winner. You can afford to be a bit selective with that budget, so don't buy anything.

 

You are looking in the wrong market...you are better off in Adelaide, Brisbane, or Perth.... Sydney/Melbourne at the top of their cycles. A budget of 700k will be you in a really good area in Perth/Adelaide...and a decent areas in Brisbane.

 

Haha, I didn't want to TELL him that. I wanted him to think, and work it out for himself.

Which he did.

Now, get onto it. You've stumbled onto the fact that many are currently looking interstate, comfirmed by @sash above. Start some research on which options work best for you, in your situation.

 

I would disagree. Many on this forum have been banging the drum on interstate for many many years now, while Sydney has quietly and routinely outperformed.

The trap is in people's perception of what "expensive" vs "over valued" means - most confuse the two.

 

Would love to hear your thoughts here John - for around 1m in Sydney, we have to go Western suburbs or Central coast or South coast; and even then it will be negative CF for quite a margin unless we can get a property with a granny. People say Sydney usually outperform many markets - but is it more higher end of Sydney or the low end of Sydney have also consistently done well? Plus Sydney markets have moved a lot more than many other intestates in this cycle; getting relatively unaffordable; there is a good chance we have to fund this negative CF for sometime even no price correction. That seems higher risk than interstate? Of course, I am ignoring the existing portfolio for whoever that is (if you have more in NSW or somewhere else and might have different objectives). But all things equal, you still think 1m in Sydney has better value in medium / long term than interstate such as Brisbane or Perth where we can get a decent property for that price?

 

Hi Alex,

Great question, and difficult to answer without understanding the buyer's objectives etc.

When buying a property you are always working to a budget, and interstate might be the best option for you at any given price ($1m in your example). So I don't want to dissuade you from buying interstate because your budget requires it. The other capitals are great and they will all take their turns being the best performing market.

My point is that Sydney's status as the most expensive capital often gets mistaken for being the most over valued city. And this isn't true.

Sydney offers a deeper more liquid and more international market, with lots of diversity. There are more economic and demographic drivers in Sydney than the other capital cities, and therefore it commands a premium.

Your question about yield is a good one: yields are lower in Sydney. But this is because Sydney is the lowest risk market in Australia (yield being a proxy for risk). If you think of yield as a compensation for risk, there are fewer risks in Sydney and therefore lower yields.

True, the "upper quartile" has performed the best, but the ripple effect will ensure that the benefits cascade in time. The "upper quartile" is outperforming in all of the capitals, and it also reflects that houses are booming, not units.

Overall, all of the capitals and quite a few regionals in Australia are great places to invest. I am really not trying to claim that buying inter-state is a mistake. But Sydney is the top of the pecking order for a reason.

 

Thanks John. I did interstates recently and want Sydney next but can’t see value and understand the drivers or know enough to evaluate risks yet. Need to research, watch and learn more for now.
But I agree, higher price does not mean overpriced.

 

Do yourself a favour and check out the house price data over the previous 30 years (the data is available if you know where to look).

So many people chortle about markets that have outperformed over the last 5-15 years...but if you look at the 30 year data though...you'll gain a useful perspective that many people are unaware of...and the numbers may surprise you.

Best of luck.

 

If you look at history there is a pattern....believe it or not in the next 12 months...markets like Brisbane....Geelong...Perth....Newcastle/Maitland.....Adelaide...Darwin will outperform Sydney.

Sure if you spend $1m in Sydney...you may make a profit of say 100-150k. But for that amount you many be able to get 2 decent properties in the areas above you could make 400-600k in the next 2-5 years.

 

Yep! Once again, I totally agree.

 

Sydney numero uno!

In all seriousness....... have you had a look at the Central Coast...insane....houses in some areas 2.5-4m!