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Eight great renovation suburbs in the sub-$500,000 club

Eight great renovation suburbs in the sub-$500,000 club

In the April issue of API magazine, our cover story asks experts around the country to reveal their pick suburbs for sub-$500,000 investors. They came up with 21 locations offering a range of properties with terrific upside.

BY KIERAN CLAIR

Among the number were addresses in which buying a renovation project allowed you to stay within a reasonable budget and end up with a holding in one of the country’s best localities – a sound approach for anyone building their long-term portfolio.

Bankstown, Sydney – Rich Harvey, CEO of PropertyBuyer, says Bankstown provides those under $500,000 with a great opportunity and recommends investors look for old, established apartments that are at least 70 square metres – and preferably 80 square metres – in boutique blocks.

“Make sure the apartment has parking, a good size balcony, good storage space, and is close to transport nodes and shops,” he says.

Harvey also advises ensuring your investment has the ability to make cosmetic upgrades to get the best out of the venture.

Sunshine, Melbourne – Cate Bakos, principal of Cate Bakos Property, says this outer Melbourne suburb gives entry-level homebuyers a foot into the market. She says Sunshine is currently “on one of the sharpest gentrification upswings” of any area in Melbourne, boosted by infrastructure investment from the government in the development of the shopping precinct, train stations and parklands.

Turn-of-the-century character homes are the go for those handy with a hammer. Bakos says the likely find would be an unrenovated brick two- or three-bedroom house, a three-bedroom weatherboard or a standalone townhouse.

Coburg, Melbourne – Bakos again says there’s real estate gold in renovating in this area, but suggests going for townhouses in the sub-$500,000 bracket.

Investors will probably need to outlay between $450,000 and $500,000 for a townhouse here, and it will likely be dated – built around the 1970s or ’80s – so a smart renovation can add immediate equity.

Zillmere, Brisbane – Zoran Solano, a senior buyers’ agent at Hot Property Buyers Agency, says the entry-level price for a house in Zillmere is between $400,000 and $500,000. He notes the potential for capital growth for this type of property is strong, especially given the proximity to the CBD at that price level.

That strategy, he says, often involves a small cosmetic post-settlement renovation, which can boost rental yields.

“[A renovation] results in reduced downtime, increased rental return and a better class of tenant,” he explains.

Ascot, Brisbane – Solano says proximity to the CBD ensures long-term growth potential in Ascot.

“The area’s considered blue-chip.”

Investors can secure an entry-level unit from around the low-$400,000s here, though Solano stresses you’ll need to spend another $40,000 to $60,000 doing up your purchase.

“This strategy is dependent on the buyer undertaking a full head-to-toe renovation on the property,” he adds. “Strip it out and start again.

“Rental yields are really dependent on the level of renovation you undertake,” he adds.

Tuart Hill, Perth – Momentum Wealth managing director Damian Collins believes villas are the best option for renovators in this suburb.

It’s “blue-chip”, he says, close to not only the city but employment centres and A-grade infrastructure.

Collins believes the ideal villa would be standalone, with no common walls and within a complex of four or less.

“Purchasing a villa on a survey strata lot gives the investor more options with regards to redevelopment and renovation, which may increase yields and capital growth prospects compared to a built strata.”

Torrensville, Adelaide – property lecturer and author Peter Koulizos sees housing in the suburb as providing upside for anyone keen to invest a little sweat-equity.

He says Torrensville has some lovely historical buildings in need of renovation, and while gentrification is under way, there are still plenty of houses that need fixing up. He views this as a real buy-renovate-and-hold proposition.

“Gentrification takes decades to go through the full cycle and in Torrensville there’s at least another 10 to 15 years to go,” he explains.

“As everyone else fixes up the houses around you, it helps to lift the value of your property.”

Mile End, Adelaide – Sitting west of the city, this suburb is certainly on the Koulizos radar. He suggests purchasing a two-bedroom cream brick unit in the suburb – a couple if your finances will allow!

Koulizos advises buying in small complexes of less than eight, buying on the ground floor and ensuring the unit has a car park. He also says that the industrial section of Mile End should be avoided.

While the potential for capital growth is good for units in Mile End, largely due to the suburb’s proximity to the city, he warns it won’t be as good as a house, although there’s the opportunity to increase the property’s value and rental return through renovation.

About Kieran Clair

Kieran Clair is the Editor of Australian Property Investor. He had almost 23 years experience as a registered property valuer, freelance writer and commentator before joining API in 2013. After three years as an award-winning journalist with the magazine, he was appointed Editor in 2016.

Original author: Kieran Clair
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