Large house in good location as investment property a bad idea?

I recently found a 12 year old house within walking distance to a train station advertised at about 630K for 600m^2, which I thought was not a bad deal.
I'm hearing arguments that investing in a large property is a bad idea because renters aren't looking for large properties so the yield would be extremely poor. There might also be poor demand for it if I ever decide to sell it as larger properties tend to be more expensive than smaller ones.

This led me to wonder whether large investment properties are just bad investments in general.

Thoughts?

 

Large property: generally I thought 400sqm was standard
Rental yield: Good point, I admit I have not specifically looked into rental yields. Are there any websites you'd recommend to do this? I did come across some numbers as a by-product and it does tend to be $350. I'm assuming the market rent would be very close between 400-600sqm properties
630k for 600sqm: This is in reference to houses I have been looking at in the Wyndham vale/outer Werribee area.

 

Ask yourself what sort of property you'd like to live in if you were renting?

In general, tenants want the same things that owner occupiers want. Everyone wants to live in a big house, that's in great condition, close to where you work and where the kids go to school, for as little cost as possible.

Getting everything you want isn't always possible, so people compromise to various degrees depending on their circumstances.

The idea that a property is 'investment grade' is really just a marketing expression to get you to buy a crappy property that you can justify because you're getting a little rent. It's my observation that premium properties attract premium rents and premium tenants. Granted they're more expensive and thus cost more to hold, but quite often the rental income grows a lot faster than the cheaper properties.

Don't get sucked into the future affordability argument either. I'm working on 5 loan applications today, 3 of those 5 are for properties worth over $1M.

 

Have you considered a DHA property for investment with guaranteed returns over its rental life plus capital growth? What is the view from others on these for a property portfolio? my partner has a 4 bed 2 bath 2 car garage modern home in the hunter valley that is DHA leased

 

Very useful points there, thanks Peter! Just one thing I didn't understand was the "future affordability" argument. Would you mind elaboration a bit more on this one?

 

I'm assuming you are asking about this to confirm the potential for it to be converted into a two unit landscape? I'll need to find the ad again but sadly it was under 600sqm. I think it was 590sqm

 

Thanks for sharing DHA properties! This is actually the first time I had heard of them and it is great to know about their existence. I do notice that DHA properties tend to be in regional areas though so I'm not too optimistic about their capital growth (I very well could be wrong about this given my very limited knowledge so please do argue against me!). And sadly as my first VIC home, it makes more sense that my first purchase is an owner occupied property for the first year so I unfortunately don't have the option of renting it out

 

I'm referring to how much it will cost you to own the property. Rental income doesn't usually scale up with property values.

More expensive proprety -> larger loan -> lower cash flow for you (whilst the property is negatively geared).

 

"More expensive proprety -> larger loan -> lower cash flow for you (whilst the property is negatively geared). - this bit definitely makes sense to me

"Rental income doesn't usually scale up with property values." - would I be correct to interpret this statement as meaning capital gains could increase at a faster pace than rental income? So that it doesn't make sense to rule out premium properties because that could be sacrificing long-term for short-term gain?

 

Thanks for sharing! That's another vote against the voices around me telling me anything over 400sqm is an awful idea