Is RP data alone sufficient at finding high CG areas?

I need to positive gear property for the sole reason of capital growth. Not interested in yield. (although will be good)

Can I simply use RP data as a tool to list the highest areas of capital growth in Australia and just pick the top one on the list and look for suitable properties in that area?

I don't have the energy to micro study areas and look at infrastructure to try to determine which areas are most suitable.. So I was hoping I could rely on RP Data alone.

For example.

Corelogic is listing Frankston North in Vic and Bellambi in NSW as the 2 top capital growth areas in Australia for Houses. Can I safely just buy a suitable house in one of those areas and be satisfied that I have done the right thing?

Or is there much more to it than this.


-Frank

 

If only it was that easy......

Sounds like you may be best using a BA

PS positive geared is directly tied to yield not CG

 

Only reason I want to positive gear is so that I can put down enough of a deposit so that the rent will cover 100% of the loan repayments. I want to use the bank's money to hold the property for the sake of long term CG.. I don't want to pay interest out of pocket.

Is this a logical strategy you think? I'm no expert I just figured that this might be a good way to hold property for CG


-Frank

 

XXX

No

 

It depends.

I know what your thinking, but it depends on what else you do and what loans you have that may not be deductible.

There is no shortcut to all the reading and time required to learn if you want the best results, unless you pay for that advice from people such as the ones here on the forum.

If you have a home loan, and you have cash, it is better to borrow all the funds for the IP.

If you have no home loan or non deductible, then your idea is not a bad one if your just going to have this one IP.

 

Would you buy a house each year based what the last RP Data stated as the area had the greatest growth or the lowest growth areas that are likely "to catch up" with the other markets in the coming year ?

 

U'd be making a big blunder.

Engage BAs for nsw and vic and tske decision based on your conversation and suggestions.

 

I own my own home and have $1.6m to invest but with this I also need to set up for retirement as I don't have any super. I'm 50yo so not retiring just yet but I no longer want to rely on income from my work (self employed)

My plan is to use the bank's money to hold 2 investment properties. SO lets say I use $600k of the $1m for deposits. Do this for capital growth so that I have a foot in the property market.

With the remaining $1m I was going to invest it in other asset class to bring in higher return than property and use the return to live..Hence why I'm not interested in yield from the CG properties.

Any flaws with this strategy you think?


-Frank

 

I'd venture to say that CG is the ONLY reason you should consider investing in property. IMO investing in property for rental yield only is flawed. You need a lot of properties paying you $10pw cash flow positive to survive on.

Frank, you have to be interested in rental yield. It allows you to hold the property long enough for CG to have time to work.

No, if it was that easy everyone would be doing it.

Then outsource the work to a trusted buyers agent.

Hope is not a strategy.

No, these areas change from year to year and are often skewed by new builds, holiday rentals, etc. They are SNR - statistically not reliable.

There's much more to it Frank.....

 

No. As the saying goes, past performance does not guarantee future performance.
There are many reasons that an area may have higher CG (some one-offs). Re-zoning, new infrastructure (train lines, shopping centres), boost in employment opportunities, gentrification of suburb, etc. Does the past 8yrs of CG in the Sydney north west due to the train line, etc, guarantee that level of CG in the future?

By your method, you would have looked and listed the CG of the mining towns on top in 2011. Bought there for CG based on past performance. How you would have 50% of the money.

 

The problem with many CG data graphs is that they simply look at and compare the selling prices of properties over a certain time frame.

This completely overlooks the costs of any renovations.

Many areas showing spectacular capital gains are also areas undergoing many significant and expensive renovations.
Marg