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Australia’s top suburbs for investment property

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    The current economic climate has created a market that is conducive to property investment – and if done right, investing in real estate can provide property owners a great opportunity to build wealth and secure their financial future.

    However, investing in real estate is a complex process that requires careful planning and unyielding commitment. The key is picking the property that is ripe for investment. Here are five indicators of a good investment property, according to experts.

    1. Location

    A property’s location has a major impact on the rental demand, tenant quality, and rate of return. If the property is in a high-growth market, rental price, tenant quality, and the property’s value will likewise increase. Some good indicators of a high-growth area include large and rising population, proximity to public amenities, vibrant job market, low crime rate, accessibility of public transportation, favourable taxes, and affordable insurance rates.

    Lloyd Edge, director and founder of buyers’ agency Aus Property Professionals, advises investors to look for areas that have “all the fundamentals of good growth.”

    “Find properties near universities, hospitals, and school catchment zones, or areas with a higher-than-average median income for a city and with an average of two incomes within the household,” he said. “This provides much better stability, as there is less chance of renters not being able to pay if there are job losses. Many people don’t look at that avenue when buying properties.”

    2. Condition of the property

    When selecting a rental property to invest in, experts also recommend conducting a thorough home inspection to see if the property is in a sturdy condition and tenant-ready as repair and maintenance expenses can eat into an investor’s funds and can have a huge effect on cash flow.

    Property marketplace Urban.com.au noted the importance of having a property inspection checklist to make the process faster and easier.

    “A homebuyer inspection list isn’t just there to ensure everything is ready for you to move in, it’s also to alert you to any significant issues that may mean you shouldn’t be buying the property at all,” the company wrote in a blog post. “This is particularly pertinent if you are dealing with a potential investment property as the new tenants will be coming to you with any issues.”

    3. Number of listings and vacancies

    An area with a low number of listings and vacancies shows a strong rental market. Low vacancy rates also allow property owners to raise rental prices to boost returns.

    4. Positive cash flow

    An investment property should be able to generate a strong positive cash flow every month. This means the income a property generates is more than enough to cover everything that the property owner puts into it.

    Over time, the value of the rental property may go up, along with the rent, especially if the property is in a high-yield area. This means cash flow can also improve, leading to positive cash flow, which can then be used to finance more investment properties – a strategy that Edge advocates.

    “You need to understand how each property will get you into the next property,” he said. “You will need to build up from that by purchasing other properties that have a clear purpose and their own strategy to achieve that long-term goal and acquire financial freedom at the same time.”

    5. Potential for capital growth

    Apart from cash flow, investors should be able to generate profit from the rental property. The most common metric used to determine profit is cash on return because it factors in how the investment property is being financed. Experts say a good rental property can make cash on return of about 8% or more.

    What are Australia’s top suburbs for investment properties?

    The key to finding high-yield rental properties is to look for suburbs that have both affordable property prices and relatively high rental returns. These areas are typically located outside major capital cities, which often have expensive housing and lower yields.

    Your Investment Property, Mortgage Professional Australia’s sister publication, uses the latest industry data to identify suburbs that deliver the highest yields across Australia. Here are the top suburbs in the country based on rental yield according to data gathered by the consumer intelligence website.

    New South Wales

    Suburb

    Property type

    Median price

    Rental yield

    Lightning Ridge

    House

    $82,500

    13.46%

    Bourke

    House

    $103,750

    13.03%

    Broken Hill

    House

    $120,000

    11.70%

    Cobar

    House

    $121,000

    11.60%

    Narooma

    House

    $567,500

    10.90%

    Source: Your Investment Property, June 2021

    Victoria

    Suburb

    Property type

    Median price

    Rental yield

    Point Lonsdale

    House

    $895,000

    11.04%

    Warracknabeal

    House

    $149,000

    7.85%

    Nhill

    House

    $160,000

    7.56%

    Moe

    Unit

    $145,000

    7.35%

    Portland

    Unit

    $195,500

    7.05%

    Source: Your Investment Property, June 2021

    Queensland

    Suburb

    Property type

    Median price

    Rental yield

    Blackwater

    House

    $140,000

    10.86%

    Point Lookout

    House

    $830,000

    10.65%

    Holloways Beach

    Unit

    $157,000

    10.43%

    Cloncury

    House

    $170,500

    10.32%

    Manunda

    Unit

    $133,750

    10.30%

    Source: Your Investment Property, June 2021

    South Australia

    Suburb

    Property type

    Median price

    Rental yield

    Solomontown

    House

    $107,500

    10.64%

    Port Pirie West

    House

    $110,000

    9.57%

    Normanville

    House

    $385,000

    9.45%

    Crystal Brook

    House

    $177,500

    8.79%

    Port Augusta

    House

    $145,000

    8.61%

    Source: Your Investment Property, June 2021

    Western Australia

    Suburb

    Property type

    Median price

    Rental yield

    Derby

    House

    $141,250

    11.78%

    Kambalda West

    House

    $117,000

    10.67%

    Newman

    House

    $250,000

    10.40%

    Merredin

    House

    $144,500

    10.08%

    Moora

    House

    $150,000

    9.71%

    Source: Your Investment Property, June 2021

    Tasmania

    Suburb

    Property type

    Median price

    Rental yield

    Zeehan

    House

    $122,500

    9.98%

    Rosebery

    House

    $105,000

    9.16%

    Queenstown

    House

    $112,500

    8.32%

    Acton

    House

    $214,000

    6.80%

    Ravenswood

    House

    $220,000

    6.38%

    Source: Your Investment Property, June 2021

    Australian Capital Region

    Suburb

    Property type

    Median price

    Rental yield

    Denman Prospect

    House

    $539,950

    8.19%

    Chifley

    Unit

    $312,000

    7.83%

    Curtin

    Unit

    $267,000

    7.30%

    Lyons

    Unit

    $286,500

    7.08%

    Hawker

    Unit

    $314,000

    6.71%

    Source: Your Investment Property, June 2021

    Northern Territory

    Suburb

    Property type

    Median price

    Rental yield

    Tennant Creek

    House

    $230,000

    9.58%

    Katherine East

    House

    $310,000

    7.88%

    Johnston

    Unit

    $275,000

    7.56%

    Sadadeen

    House

    $375,000

    7.35%

    Darwin City

    Unit

    $318,500

    7.35%

    Source: Your Investment Property, June 2021

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    Original Article