What is the best Capital Growth property?

Hey Everybody,


What’s your suggestions on the absolute highest grade long term Capital growth investment? (regardless of cashflow shortfall)


My planned strategy is as follows:

1. Buy unit blocks for $5-20mil in the most desirable arears in Sydney (eastern suburbs, manly, inner west etc)

1. Buy houses around the median price in exclusive, high income suburbs – eastern suburbs, inner west, northern beaches etc

I have a very high income and pretty young so not bothered with any income producing assets at this stage. Just want very safe, very solid, long term buy and hold investments.

 

Buy something like this .
https://www.domain.com.au/news/live-for-the-moment-20110408-1d6j2/
The land not the building.

 

How high and how young?

 

https://www.realestate.com.au/sold/property-unitblock-nsw-maroubra-135342894

This one looks like a good one - 1000sqm R3 block in this pocket has a lot going for it long term, decent area, etc etc.

 

I don't follow? You mean find land at the beach? Not familiar with leasehold

 

The best idea would be to announce on a public forum that u have oodles of $$ and don't care about holding income but would take a really big step based on a promise.

You are sure to find a lot of spruikers, from which u can match ur lack of interest in holding income with their slickest promise.

Bulletproof.

 

Would you suggest this over a couple houses in say Bondi, Dover heights etc? Or both in order to diversify?

 

Such a pointless comment.

 

Speak to a few rental agents too (there's a good one in the area from Belle Randwick who gets top $). It may not be relevant re cash flow, but it does factor into pricing/growth too. These areas have taken off as they're literally some of the worlds finest real estate with positive rental yields with rates going low and expats driving the market in 2020. I couldn't believe that you could get 1%+ yield spreads here, much harder now though given values have skyrocketed in the detached home market in particular (but across the board). I think there may have been some tail off in rents which may mean current timing in these areas may not deliver on the long term growth as much.

I do like the apartment market hereabouts because values hadn't taken of as much, and the lifestyle element should drive demand over time and be resilient long term too.

Personally id be going OO house with as much as I can get (CGT free, etc) and apartment complex for long term landbank/yield (I'd develop it though). If the OO part doesn't work, I'd probably be looking at older apartment complexes. Randwick has a few too. Long term, the apartment site with a decent yield content may have further development potential than low rise housing areas. This increased productivity in the land is a driver of higher capital growth too.

 

Buy the freehold not the leasehold (land appreciates buildings depreciate)
That is what I think will have the best growth.

 

Neither are the best growth.
The best growth comes from future change of use from non urban to residential land. Sydney is in dire need of more housing sites.
These tend to be about triple the gain of all other real estate over the long term.
The reason being is that they are expensive to buy, they return a very low % return, if you don’t put some effort into starting a “ primary business” you will pay a high land tax.

but here are some examples that will prove that you can’t beat unimproved land as a worry free investment if you can afford to keep it long term.

This one was 175 X in 19 years
https://www.domain.com.au/property-profile/60-terry-road-box-hill-nsw-2765
the rest were more moderate.
https://www.realestate.com.au/property/webview//20-hynds-rd-box-hill-nsw-2765?client=ipad
https://www.realestate.com.au/property/webview//6-nelson-rd-box-hill-nsw-2765?client=ipad
https://www.realestate.com.au/property/webview//8-nelson-rd-box-hill-nsw-2765?client=ipad
There are hundreds of examples in areas where they are subdividing now. You just have to buy where they will be subdividing in 10-20 years. IE Rouse HIll Heights, Vineyard, Marayla.

 

I found you had to be the be the leaseholder of the land to get the opportunity to buy and get freehold title. To get the lease I had to buy the adjoining land which included the the land lease in the deal, if you didnt want the leased land you had to fence it off. You can get unbelievable capital gains, but I am not sure you could buy the lease for peanuts in Sydney.

 

Probably not while interest rates are low but maybe when the interest rates are high.

 

Yes that seems a great strategy, however, it primarily relies on the land being rezoned from rural to residential. Without 'inside info' how does one know if this is likely to happen in 10-20 years? If at all?

 

IF you believe there will be continued population growth in the future…. Where else can people go?

think about it, you are assuming that economic growth will continue if you think the eastern suburbs or north shore will continue to go up.

 

Vacant Land. That's it.

When and where is the question for you to work out.

 

Perhaps an open plan house in Mt Druitt?

 

Because you read the future releases from the nsw growth centres, local councils etc. It’s not “inside info” it’s homework for investors.

This is a typical release. It is actually the one I studied. It took me about 10 minutes.

https://www.planning.org.au/documents/item/1497

I then bought 8 properties that fell into this area by looking on line over the next 16 years. I bought these properties between 2002-2018 since then seven have been rezoned one has not been rezoned yet.

I spent $14.5 million on all 8 properties and have achieved over $40 million in returns from the sales on 5. I expect about $48 million in returns on the disposal of the last three. Later properties were purchased with some of the proceeds of earlier sales.

 

Nice little project for you there Datto

 

Great post!
What sorts of "primary business" have you been able to start on such properties to help you hold onto them?