While it’s becoming increasingly difficult to find fairly valued property in Sydney right now, there are still some good investment opportunities to be had – provided you know how to look for them.
When you’re buying an investment property in Sydney’s eastern suburbs, it’s important to choose one that’s going to provide a good flow of revenue and show plenty of capital growth by the time you want to sell.
Here’s what I often tell investors to watch out for during their search for the ideal investment opportunity in one of Sydney’s most sought-after areas:
Research, research, research
Research is key. Find out exactly what makes a particular suburb ‘tick’.
Is there a university, a shopping district or growing business infrastructure nearby? Are there regular community events that would attract renters to the area? Is the neighbourhood in the process of being gentrified? Are there plans for improvements to transport infrastructure?
For example, the forthcoming light rail network connecting Anzac Parade and Randwick with Central Station make it a good area for strong capital growth. Arm yourself with the key facts for a particular suburb and you’ll be able to more accurately predict the key demographics of potential renters within that area.
Which brings us to the next point…
Know your target audience
Ask yourself who is most likely to be renting in a particular area. Are they young families, students, or working singles?
For example, Kingsford’s proximity to the nearby university makes it a popular suburb for students and young people, while Potts Point tends to attract a more urban, affluent crowd – and they’ll each desire very different things from a potential home.
Once you know what types of people tend to inhabit a given area, you can focus your search with much greater confidence, knowing that your investment property will have widespread appeal.
Target key features
Once you’ve set your sights on a particular suburb and demographic, it’s then a case of finding the property that will create the strongest demand. If you’re targeting young families, a place with a backyard, on-site parking and a spacious kitchen could make for an attractive proposition – while similarly-sized bedrooms and a second bathroom could make your property a popular choice with students or young professionals wanting to share.
Prioritise public transport
My advice is to buy near public transport. Obviously, places like Potts Point and Elizabeth Bay are extremely well-served by public transport links, being so close to Kings Cross station and a myriad of bus routes. Bondi Junction is similar. And the new light rail coming to Randwick and Kingsford is set to increase its appeal too.
Set your sights on Sydney’s east
Apartments in the inner city – especially in Sydney’s east – are nearly always a good option, because vacancy rates in these inner areas tend to be lower, and the return on investment is often relatively high. Sydney’s east also continues to be a relatively tight rental market, and that doesn’t seem set to change any time soon.
Eastern suburb hotspots include Maroubra, which is currently still developing, and yet relatively undervalued – and Randwick, with its close proximity to a large hospital, university and the racecourse, which will continue to grow in popularity.
Don’t make an emotional purchase
Resist the urge to ‘buy from the heart’. Always keep in mind your target market, and buy according to the likely appeal for them, not you. Remember that your number one priority is to make money. Becoming emotionally attached to your investment property can cloud your judgement and lead to rash choices.
Success in property investment means remaining acutely aware of your number one goal: your property’s ability to generate revenue from both rental returns and capital growth. Remember that golden rule and you’re on the right path to making a strong return on your investment.