1, 2 or 3 bedrooms for a Brisbane investment property?
When determining the type and size of your Brisbane investment property is there a rule of thumb to follow to boost your bottom line?
While there’s not necessarily an easy answer, there are indicators that can determine what size property will suit your investment strategy. Determining the size of your future investment property can be a good starting point in your property search. Below we will outline how you can know which type and size of property is best for your investment strategy.
When investing with a long term strategy it’s likely your goal will be capital growth. For Brisbane investment property this means you’re likely to see better results from a house.
Brisbane’s median sale price for houses increased between September 2012 and September 2017 from $508,500 to $665,000 respectively. This represents an increase in capital value by almost 30%.
For the same period Brisbane’s median sale price for units increased from $407,500 to $440,750. This represents an increase in capital value by only 8.2%.
The theory is that houses offer more stable results than units. In part this can be explained by the value of the land that comes with a house. Land value will often add capital growth over time and houses enable more freedom to add value through renovations, extensions and upgrades.
If your goal is capital growth but you don’t have the budget for a house, a unit can still work. Generally units located close to the city represent good opportunities for capital growth. This comes down to the transport, amenities and infrastructure on offer in Brisbane’s inner city suburbs.
Alternatively, look for a region where people are moving to if they’re priced out of the inner city suburbs. For example, the following suburbs had huge growth in the median sale price for apartments between 2012 and 2017 –
Bridgeman Downs 40.6%
Holland Park West 31.1%
If you’re looking to earn a regular and steady income from your Brisbane investment property then your goal is rental yield. Rental yield represents the ratio between your costs and your income. The higher the rental yield, the more income you earn. Unsurprisingly, the size of properties can impact rental yield. For example, in Brisbane in September 2017 the gross rental yield for –
houses – 3.3%
units – 4.9%
In addition to the size of the property the location can also impact the rental yield. In September 2017 the following rental yields were recorded –
Gold Coast: houses 4.1% and units 5.3%
Sunshine Coast: houses 4.1% and units 4.7%
Cairns: houses 4.8% and units 7.1%
Low vacancy rate
If your investment goal is to have a reliable and steady income then one of your key factors will be a low vacancy rate. A low vacancy rate hints at high demand for rental properties in the area. Having a steady stream of tenants paying market rent rates for your property is definitely a popular investment strategy.