Where to invest about 500k in Australia for CG & yield?

I have around $500,000 set aside to re-enter the property market. I intend the property to be an investment.

As a self funded retiree in early 50's (disability) I need a reasonable yield to live off . Capital growth is in important consideration.

I did own a unit in Sydney which I sold as part of a strategy to take tax free capital gains (took capital gains as a PPOP in case I become a non-resident later on - Morrison government has removed PPOP CGT exemption for non-residents and replaced it with no tax-free threshold foreign resident rate of CGT).

But I am now wanting to get back in. I have no real preference to location, except that I have an investment property in QLD that is around $100,000 short of kicking in Land Tax. So buying anything further in QLD, I would not be wanting land value to be too high (something like a unit or townhouse).

I know Sydney reasonably well, but am open to good growth areas, inner, middle ring suburbs. Was also looking at Gold Coast if it is a place for potential? But this is purely to help me get through to the end of life in comfort. Only other good option for self funded retirees is shares which I am exposed to but want to diversify.

Hoping some of you gurus can gives some opinions that I can analyse. Thanks everyone.

 

Alot of hassles for IP's, repairs/tenants/management costs, which can severely erode your return per year.

Have you considered financial advice to invest in LIC's/ETF's that would produce yield and growth without the hassle of tenants etc.

Perhaps read up on the forums about them, I'm not experienced in shares, but from an aerial view for your situation, dividends seem to be a better route to take IMO.

 

Whats the minimum income and cg you need from this 500k?

 

$500k cash or leveraged? If cash then look at ETF/LICs.

 

Hello,

I might suggest the Greater Western Sydney region in NSW but you may be looking around $650k mark. I see good thing given the airport being developed.

Regards,
Henry

 

One bedroom units in Brisbane or Perth.

Caveat is the choice of unit would have to be faultless and tick every box on fundamentals - and sure there is the risk prices do not go up in the future.

 

Isnt there an oversupply?

 

Most certainly not.

Can't comment on Brisbane but $500k will go a long way in Perth to get something with good yield and CG prospects. 6% yields with long term CG prospects are not that hard to source and I am not talking units.

 

There are risks, its a more volitile part of the market, but the previous oversupply has kept prices down for 10 years so it looks like value

And as long as supply/demand is trending in the right direction and current vacancy rates are low, should be all ok. (like they said on the Titanic )

 

Thanks for the advice. Went the financial advice route and sick of advisers just wanting to steer me to packages that have massive fees with average returns. Have ETFs, not LICs. But also quite heavily exposed to shares as a percentage of wealth. Would like to diversify risk if possible!

 

Perhaps consider the regionals - Ballarat, Bendigo, Orange, Dubbo etc. Can find decent yields and opportunity for growth in most major regional towns these days as the capital cities get ‘full’ and too expensive for most.

Ballarat for example has decent stock at the $500k range and a very tight rental market. Great fundamentals as it is only 1 hour 20min from Melbourne (or 1 hour on the train) and has beautiful architecture, great parks, schools, hospitals. It is currently attracting a lot of capital leaving Melbourne. I would go for the largest block with a solid but basic house on it. Not hard to find.

Not as familiar with the NSW regionals but I would imagine lots of potential positives out there too.

Just something to consider, hope it helps in the thinking process

 

Are you joking? I can’t tell if your being serious or not. But if not, quite possibly the worst advice I’ve seen on here for awhile.

 

I second Ballarat. We recently did a feature report on the area and the market fundamentals are solid.

 

Perth? I am interested to know how can you achieve 6% yield in Perth.

 

Buy 2 older studio apartments in St Kilda and you'll get 6-7% gross. These will also appreciate in value and you'll have nil vacancies.

 

I’m not familiar with these towns but with the recent drought and bushfires, aren’t regional cities generally exposed to these risks and potentially affect tenant and buyer demand? Also do they have a diversified economy? Given the OP is a retiree he would need something low risk and low maintenance. Wouldn’t a coastal city eg Wollongong or Newcastle be better, or stick to cheaper capital cities like Brisbane with a townhouse? $500k won’t get you anything decent in metro Sydney.

For those thinking of a (unlisted) commercial property fund, there is a risk of redemptions being frozen - that’s happened during the GFC. For listed funds, volatility may be a factor and a retiree don’t have the investment time frame to recover from any loss compared to a full time worker.

Btw I also doubt 1-bedders will work for Brisbane or Perth if they’re oversupplied high rises. 1-bedders work in select buildings in high demand single demographic inner city suburbs like Surry hills in Sydney, but they’re $700k plus.

 

Just hang out in the two main Perth threads. Myself and others have and continue to post interesting bargains.

 

1 br units in Perth City and East Perth can get you 6% yield if you're lucky.

 

The thing with 6% yield is that it doesn't stay high for long in 80% of scenarios. Are rents likely to rise or decline in these suburbs? This question needs to be answered first.