Which property investments are good if you are looking to maximise on capital gain? There are hot property markets that are generally quite rewarding for the discerning investors. The location of the property is always key to hitting that real sweet spot that will keep on giving.
For example, a location close to a university, a train station or bus stop will typically give you the best bang for your buck. If you are looking for high rental yields, buy property in the hottest suburbs that will guarantee you a good demand for the foreseeable future.
You should also hunt for property in locations that have very good amenities and excellent growth prospects. Great capital gains can be realized in places where the amenities are renter-focused. The amenities must appeal to the eventual renters as opposed to the investor so you shouldn’t factor in your personal tastes and preferences when shopping for investment properties that will give you the best capital gains.
In Australia, you are going to get the best capital gains if you purchase an investment property that is at least 500 metres from the nearest train station. The further the location shifts from this radius, the lower the rental yields and capital gains.
Best Locations in Cities
In Sydney and Melbourne, the best capital gains can be found close to the cities’ main universities such as the University of Melbourne and the RMIT University. In these locations, you get a top yield of up to 6.5% on your property. As you move away from these university locations, the yield begins to decrease gradually with the lowest yields being in locations that are farthest from the universities.
Renters in these “high yield” locations are generally willing to pay a premium price to get into these areas where they can easily access the universities and other amenities. The locations are also popular with the international students and the rents are comparable to those of the rest of the world so the rental units are snapped pretty fast due to high demand. For a property investor, this is a dream come true.
Low yields can typically be found in areas with expensive amenities and fewer renters willing to pay a fortune for the luxury amenities. Homes in these parts of the city are costly, typically in the range of millions of dollars and you simply cannot charge enough rent to recoup your investments.
Homes Close to the Beach
Proximity to the beach is also an important factor in property yield. When buying beachfront properties, an optimal spot is generally properties that are within three to four blocks from the beach area. These generally give the best yields for buyers because renters want properties that are a short walk away from the beach.
As long as the buyer can get a view of the beach, expect the prices and the yield to go up. On the downside, these properties also tend to be quite costly. Depending on the type of property you are purchasing, you are likely to pay a premium for these properties.
Investors buying on the beach are more concerned with the capital gain as opposed to the rental yields. These investors are usually after real estate that will appreciate in value over time and can be resold at a premium and with a good margin.