Backed up by the power of research, there is no reason why you can’t add an inner city pad to your investment property portfolio
If you’re looking to purchase an investment that offers high rental yields and strong capital growth, then the inner city markets could be a good place to start.
Over the past decade, markets close to CBDs have seen some of the best performances in terms of capital growth.
And since they also have some of the tightest rental vacancy rates, you can be sure you will have little to no trouble securing a tenant willing to pay a generous rent.
Inner city locations are often seen as a goldmine for investors due to their close proximity to transport hubs, places of work and study, restaurants and entertainment – many of which can be difficult to find out in the suburbs.
The big sting for investors searching for an inner city property, however, is often the price tag associated with these sought after locations.
Don’t let this deter you. The capitals’ inner city markets can offer affordable options for investors seeking maximum leverage from their portfolio. You do, however, need to know what you are looking for.
One common mistake made by investors is failing to look beyond median house prices.
While median house prices certainly hold their weight in terms of a research tool, far too many investors will make their purchase decisions based solely on these figures.
In order to gain an accurate picture of house prices in any given market, you will need to asses these figures in conjunction with a full spectrum of local sales results.
Be sure to analyse all sales figures from the market in which you are interested – from the most unaffordable property sold to the cheapest. This level of diligence should allow you to cluster together several streets and locations that offer affordable options in even in the most expensive inner city suburbs.
This method can also be applied to any suburb you are considering as an investment location – not just those in the inner city.
Before making your move, however, it is also important to take into account an area’s vacancy rates, stock on market and location within the CBD as well as looking for the factors, such as population growth, that would in turn support capital growth for a property.
All of these factors will have a direct impact on the type of tenant your property is likely to attract and the amount you are likely to earn in weekly rent.