Why are investors back?

                                                  Geoff Grover Property Talk – May 2013


They are returning, but the flood gates are not open. The initial interest is because rental yields are on the rise, it is very hard to find a rental property today, and confidence is returning that we are past the bottom in prices, so capital growth, albeit modest, is now seen on the horizon.

Both factors are important to investors- rental yield provides the cash flow to support the investment, capital growth is the real reason to invest long term.

The REIQ December Qtr Gross Rental Yield report shows more than 150 suburbs are on average achieving 5%, and anything less will not attract investors - this does not include purchase , management or maintenance costs, just rental income before deductions.

Qld`s 5 Best Performing Post Codes
Postcode Median Sale Rent Gross Yield

4415 $360,000 $640 9.3%

4184 $130,938 $228 9.0%

4714 $119,500 $201 8.7%

4455 $320,000 $496 8.1%

4825 $371,600 $575 8.0%

What is immediately apparent is that the high rates are mainly unique mining areas or very high rental areas like Woodridge that have variable price growth prospects, and that to get those yields, the buy prices are very low, all well under $400,000.

What does this mean for Coolum?

The most attractive rental propositions will be those between $400- $500,000 bigger type, well presented houses returning around $430 to $480 per week, yields over 5% but under 6% preferably unique growth features as near the beach, offer views or have a high Walk Score.

Reasons? $500+ per week rental is hard to get, renters are better off buying, & whilst an investment buy of $600,000 invariably means a better home with higher depreciation to offset against your tax liability, the cash gap between mortgage payments & rental income widens.

Potential sellers should be aware how astute agents can maximize sell potential by informed marketing & buyer negotiation.- new investors need this assistance.

www.geoffgrover.com.au

Mobile - 0414 337 402

E mail – geoff@mountcoolumrealty.com.au