From western Sydney granny flats to East Brisbane workers’ cottages: 15 eclectic investment opportunities under $500,000: HTW

From western Sydney granny flats to East Brisbane workers’ cottages:  15 eclectic investment opportunities under $500,000: HTW
From western Sydney granny flats to East Brisbane workers’ cottages: 15 eclectic investment opportunities under $500,000: HTW

There is a wide range of opportunities for property investors with a “lazy” $500,000 to invest and a creative mindset, according to the July edition of the Herron Todd White Property Market report.

Herron Todd White says the results of this year’s “lazy half million issue” show that “market performance has varied as much as the landscape”.

Investment options range from buying an older house in western Sydney on a large block and adding a granny flat, investing in four-bedroom homes near Newcastle University and converting them into student accommodation or considering a worker’s cottage in East Brisbane.

Here are 15 eclectic investment opportunities for savvy investors with $500,000 to invest:

Build a granny flat in western Sydney (rental returns of between 6.5% and 7%)

Investors should consider purchasing a circa  1960s to 1970s dwelling on 650- to 700-square-metre allotments and erect granny flats on the rear of the allotment, thus creating two separate tenancies. According to HTW, this type of investment has grown from a trickle to a flood and is mainly taking place in the Penrith Council area, although it has started to creep into neighbouring Blacktown Council area as well. Typically the investor is paying somewhere between $280,000 to $330,000 for the existing dwelling and between $60,000 to $80,000 for the granny flat plus spending an extra $25,000 on sprucing up the original dwelling. According to HTW the dual tenancies can generate monthly rent of $600 ($350 for the main house and $250 for the granny flat) with vacancy rates at practically 0%. HTW considers granny flats the “best investment from a rental return basis in the western suburbs”.

Convert a four-bedroom house close to Newcastle University into student digs

Investors should look at the Newcastle suburbs of Birmingham Gardens and Jesmond close to Newcastle University in Callaghan. HTW says investors are buying four-bedroom homes and turning them into six- and eight-bedroom residences and then renting the rooms separately to students. “Although rental returns are higher (as, however are the management costs), it is important to ensure that the right approvals  are in place otherwise you might find a nasty surprise  when the bank comes to value the property and you find its still valued as a four- bedroom home,” warns HTW.

Buy a pre-1980s houses in Port Macquarie and Forster

Investors should look for houses close to either the town centre or beach priced from $270,000 to $340,000 in Port Macquarie and Forster on the NSW mid north coast. HTW says the remaining $160,000 to $230,000 could be used to acquire a pre-1980s two-bedroom unit within the same location parameters. According to HTW, houses in the low to medium price range offer the greater likelihood of lower vacancy rates, higher yields and better potential for capital growth. Investors should avoid modern high-rise units in Forster in the $400,000 plus price range, as the market remains oversupplied.

Buy workers' cottages in East Brisbane

HTW says entry level workers cottages with two-bedroom, one-bathroom configurations can be bought below the $500,000 mark. “The suburb is frighteningly close to the CBD and facilities abound. Renters are readily available so the upside is once again a good thing,” says HTW.  For something a little bit more flash in the same suburb HTW suggests a circa-2000 unit with a two-bedroom, two-bathroom layout for around the $425,000 to $450,000 mark would rent for around $440 per week.

Buy a detached post-war home in Camp Hill or Coorparoo

Investors can pick up a detached post-war three bedder in Camp Hill or Coorparoo on a 600-square-metre block.  The suburbs are about 1o kilometres south east of the Brisbane CBD, with “facilities are around the corner” and “renters keen to be there”. According to HTW, these assets also look good for a long-term future sale.

Buy an older house close to the beach at Wollongong

Investors should consider buying an older house close to the beach at Towradgi, Fairy Meadow and East Corrimal just north of the Wollongong CBD. From an investment perspective good capital gains coupled with high rental returns can be found in Fairy Meadow, with the suburb benefiting from the expansion of the University of Wollongong, Innovation Campus and an improvement of public transport to and from the suburb. It is also close to the F6 freeway to Sydney.

Source: HTW


Buy one- and two-bedroom unit in Brunswick, Melbourne

Brunswick, Brunswick East and Brunswick West “tick a lot of the boxes” for investors looking to get maximum capital growth and good rental returns. More specifically investors should look to purchase a one-bedroom, one-bathroom apartment built within the last five years, or perhaps an older-style (10 to 25 years old) two-bedroom apartment. Brunswick and the surrounding suburbs are among one of the best served by public transport, with a train line and tram service running into to the CBD, further enhancing and strengthening the suburb’s desirability.

Buy a one- or two-bedroom unit close to Sydney CBD

Investors should consider one and two-bedroom units close to Sydney CBD, in the inner west as well as around the inner-city suburbs of Redfern, Waterloo and Zetland.  HTW valuers say it is a good time to buy in these areas because they offer strong rental returns with low vacancy rates. “What’s more, the market has softened resulting in the ability to achieve good purchase prices.”

Buy a semi-modern project home in East Bowral

Four-bedroom detached houses in East Bowral in the NSW Southern Highlands are selling for between $420,000 to $450,000 and generally secure rental rates of between $400 to $500 per week, equating to a gross yield between 5.2% and 5.7%

Renovate an older building in Goulburn

For investors seeking capital growth older-style dwellings in Goulburn in the NSW Southern Tablelands sell for between $250,000 and $320,000, suggesting that significant value uplift may be possible through renovation. Currently houses priced between $330,000 and $450,000 attracts rentals of $350 to $450 per week, representing a gross yield of around 5%.

Buy two or three units in Goulburn

Another option in Goulburn for investors would be to purchase multiple residential units or townhouse/villa properties for between $150,000 and $200,000 each and rent them out for between $150 and $200 per week. According to HTW, this market has shown good capital and rental growth earlier this year and is now considered to be steady.

Look at properties priced above $350,000 in Ballarat

HTW suggests investors look at properties over $350,000 as they appear to represent the best opportunity with fewer buyers in this market segment, more homes to choose from and more time to negotiate. The overall Ballarat market looks strong with yields of up to 8% on offer on units in the outer suburbs.

Consider south Perth suburbs close to airport

HTW suggest investors consider the Belmont, Cloverdale and Kewdale areas south of the city. In these suburbs there is strong demand for rental properties from the state’s "fly-in fly-out" mining workforce and they are located close to Perth airport. Furthermore, generous density allowances and a cooperative council mean that many properties within this area offer good short to medium term redevelopment prospects.

Buy two modern townhouses in Mildura

Investors should consider buying either two modern townhouses, each on around 350-square-metre lots, or two older three-bedroom homes, on larger lots of around 700 square metres. HTW says a tight rental market has pushed up rents up in the past 18 to 24 months, with gross rental return of 6% on offer.

Buy a newer home near Wyong on the NSW central coast

HTW suggests newer areas like Woongarrah, Hamlyn Terrace, and Wadalba near Wyong on the NSW Central Coast are “loaded with good value homes in and around the $500,000 mark”. These are areas popular with young family areas and populated with four- bedrooms, double garage on good sized blocks. “These are the areas which stand to benefit from future infrastructure projects courtesy of a progressive council. The government’s new first home buyer scheme that commences in October is also likely to play a big role in these areas. Early risers and the astute will certainly benefit here,” says HTW.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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