Newcastle-Investing in Units

Been reading up a lot on the Newcastle market including recent threads on this forum with some good advice. Looking to invest in units with a price range <$460k so certainly not the high end of the market and not something off the plan. Realise capital gains will probably be subdued to non-existent for the next 5 or so years, but this is an investment more about positive cash flow and with expectation for CG's in over 10 years+, so very much long-term (and yes, I realise the CGs won't come close to a house).

Specifically I'm looking at roomier 1b (provided it exceeds 50m squared) or 2b units in suburbs immediately surrounding the CBD, particularly older ones. Would like some thoughts/advice on this?. I've listed some of the pros and cons below.

Cons- *The sheer number of units coming online over the next 2 years, particularly in the West End and in the CBD. What I'm looking for is different though I imagine this still negatively affects rents and capital gains in the surrounding suburbs.
*Forecast for units in capitals for next 5 years looks negative in the capitals (according to Corelogic) so imagine similar dynamics apply in Newcastle. Newcastle is probably close to its' peak (Herron Todd White).

Pros-
*Still a lot of Sydney money finding it's way into the Newcastle market.
* The number of buyers priced out of Sydney in the long-term. Most migrate to other capitals like Brisbane given the smaller jobs market in Newcastle but Newcastle still stands to benefit from this given it's continued diversification into services (namely education and health).
* Long-term Newcastle will continue to be desirable in terms of lifestyle and beauty (I've done a lot of travelling in my lifetime and I still consider it one of the most beautiful places I've ever visited).

Also have 60% LVR for a property at 460k (I'm a conservative investor), so interest rate moves won't affect me greatly. In any market downturn I imagine units are quite safe in terms of tenant demand provided you're willing to take a haircut on the rent?

Many Thanks

 

Beachside suburbs (merriwether) or near the uni can be seasonal for tenants especially for one bedders.

 

@George Smiley i agree with @Scott No Mates i would stretch your budget to low 500's and buy an older style 2bd apartment in Merewether. I think these units still represent great value compared to 2-3 year old apartments in Newcastle & Newcastle East selling for similar money for 1bd apartments.

1/5 Merewether Street Merewether NSW 2291 - Unit for Sale #127200170 - realestate.com.au

Rent return isn't going to be fantastic, i would estimate around $400 p/w but with a 60% lvr it will be well and truly be positive.

 

Give thought to buying an older 2brm unit within a close walk to the eat streets of either Darby St City or Beaumont St Hamilton.