If life is like a box of chocolates, Brisbane’s inner city is the variety pack!
Property investors can choose from modern studio apartments for $140,000 or six-pack style apartments from the 1970s for $350,000. Modern high-rise apartments range from $350,000 to $7 million. Or for those who crave their own piece of dirt, houses are generally priced from $500,000 upwards.
As a property investor do you see yourself as a small business person? You should. Your annual rental income will likely be $25,000 or more, so it’s worth having a good hard look at the rental marketplace and working out what product offering you’re going to make.
Some people dream of owning a riverfront penthouse, but for rental returns they’re lousy. There are not many tenants wanting to spend $2000 per week. Median priced homes are the safest territory as this is where the majority of people live. Around the CBD and surrounding suburbs the going rate is $430-$520/week for a 2-bedroom apartment. Have a look at www.WhatRentMyHome.com.au for median rents in all inner city suburbs.
Tenants don’t have the long term focus of a buyer, so while future improvements like new bridges, tunnels or new shops are all a key part of your capital gain plans, they’re not going to earn more rent for you today. A suburb like Woolloongabba might not earn top rent today, but what if that new subway goes ahead with a station in the suburb linking it directly to the CBD’s Riverside Centre?
We see investing in property as a balancing act, capital gains being the main aim and rental returns important to your holding costs.
So why choose the inner city over a modern house in the ‘burbs? Like many purchasing decisions your location choice is probably more about your own needs than the final property you buy. Is it a set-and-forget investment where you have minimal involvement? Or do you want to add value to the property by spending your weekends labouring at plastering walls or back-breaking paint work? (Okay so I’m giving away some bias here!). Your decision will vary too if you’ll want to make the place your own home one day.
What the inner city clearly offers investors is Brisbane’s largest rental market. We survey tenants regularly and a home’s proximity to their workplace always ranks highly in their decision making.
The CBD is our largest workplace by a country mile, with St Lucia’s University campus also a massive pool of potential tenants. We don’t believe rental returns will make you rich but, for peace of mind, keeping your cash input to a minimum, and simply having the largest choice of potential occupants, it’s hard to beat the inner city