IP within 600k for capital growth

Hi All, am looking to buy my next IP within 600k budget. First 2 are in North Brisbane and Geelong.
My goal is to create a passive income in next 12 to 15 years to be financially free.
Not expecting much growth from Brisbane property but okish yield around 5.5%.
I want this next property to provide good capital growth to get some boost for portfolio. Not looking to be highly negatively geared so that servicability can be maintained.
I hope to buy in some decent areas where tenants would have decent income so that I can avoid tenancy issues.
Please suggest where would you buy in this budget. Would have loved to buy in Sydney or Melbourne but seema hard in this budget. Also, both of these might have some quiet years now for capital growth with wages not growing and property already expensive here. But then you never know!!!!

Thanks...

 

If I was still accumulating, I'd be looking at Perth right now.

 

Yes Perth and Adelaide are good to begin the search.

 

Cant edit the original message.
From numbers perspective, looking at something giving yield around 4.35% - 4.5%. Anything above would be cream
From CG perspective, looking at 5% - 6% average annual capital growth for long term period. I know property does not increase linearly so expectation is of average annual growth over longer term, also enabling me to pull equity in between for more purchases down the lane.

 

Thanks @Rolf Latham , @skater @Cousinit for your responses.
As all of you have brought up Perth, a curious question from my side please. Is nt Perth largely dependent on mining and had Boom and Bust cycles in past. I agree that it is at the bottom of Property cycle but whatever I have learned so far (I may be wrong), one should avoid buying in cyclical mining cities and buy in areas with consistent growth.
With Adelaide, do you guys see getting an average growth of 5% and above over long term of say 12 to 15 years. I have read that it is more sort of in range of 2-3% average growth.

Thanks!!!

 

I think you misunderstand. I haven't bought in Perth, but I would if I was buying at the moment.

 

Thanks @skater , I got you
What I meant was what are the factors in favour of Perth which would have made you bought here if you were buying.

 

The problem with Perth is that you'll be paying 15-20% in management fees (all in)

 

So expensive! Is this generally the case across most of Perth?

 

Having been depressed for a long time, I believe that Perth is in store for growth.

 

Yep! I believe so.

 

Whilst I agree at a high level with Perth - I feel you have to be very picky when markets are recovering like this as growth in the early stages of an upswing can be patchy. This is when areas really leap ahead and form new perceptions of themselves and others get left behind and become downtrodden.

For areas a little further along (where it is easier to pick the actual suburbs which are demonstrating growth signals) I agree with Adelaide.

I would also add to the mix GC (got to be very picky - in the established areas only) and some regional centers benefiting from Tree/Sea Changers in NSW and QLD.

 

Thanks @Jacob Field , can you please throw some more light on your comment related to Tree/Sea Changers in NSW and QLD. Also, if you could name some areas in NSW where you see this happening.

 

What is this?
CG average of 4-5% with Yield of 5%?
Never heard of it before in 2020.

 

@Gen-Y did not get you.
What I meant was that I am looking for an asset giving rental yield of above 4.35% and average growth of around 5% per annum.

 

https://www.onthehouse.com.au/suburb/nsw/liverpool-2170
@SydneyInvestor More than welcome to pick a suburb of your choice.

 

That CG is going to be a tough criteria especially over such a long term of 12-15 years. I'm assuming you mean 5% every year which could be 10% one year, 0% another year but on average 5%.

I'd still probably pick Perth at that price point as yields on CG stock do tend to be better here (even with horrendous PM fees).

 

I have my doubts you can achieve both at 5% average for yield and capital gain going forward from year 2020 with such a low interest rate environment.

Before someone smart says they have achieve that in the past 10 years. Geez what was the average interest rate during the last 10 years?
You can't compare apple with orange.
With today's interest rate of say 2.5% - which say could be the average at best for the foreseeable future - Just look at the 10 years bond rate to give you a forward guidance.

PS: trend is your friend - just look as it is very obvious.

 

Not sure I agree with this. Owner Occupiers will drive the capital growth of an area. Lower interest rates and further loosening of the handbrake from APRA will only improve borrowing capacity (which is being assessed up at 6% anyway, so probably similar to the preceding 10yrs).

Population growth is the key factor for me and that would probably see me going Adelaide>Perth. I would also be looking at SE Queensland.

Of note from the OP's posts are the desire for a passive income I presume into perpetuity, so those management fees and boom/bust nature in Perth is not exactly conducive to the desired outcome.