Tips for Buying a CBD Investment Property In Australia 2022

7 Tips for Buying a CBD Investment Property

The biggest secret in Australian property investment is a location so unexpected that many investors are scratching their heads. But why are property prices in the CBD now so reasonable?

For the first time in many years, Australian CBDs are becoming affordable investment property locations. The reason behind this shift is the Covid-19 pandemic has caused many CBD residences to empty out across Australia, this is due to several main factors:

• Workplaces are shifting from physical workspaces to working from home arrangements;
• International students have been forced to leave Australia; and
• People who have been unfortunate enough to lose their jobs have moved back to suburbs or country towns to live with family and friends.

But Australian cities are coming back to life. Slowly, CBDs are becoming more multi-use, and international students are returning to their studies. Tourism is growing, workplaces are opening up, and retail is once again able to operate. With all this in mind, inner-city rental markets are set to recover from their current slump and will soon become highly profitable again. If you are able to purchase an investment property, you would be wise to consider buying in your capital city. Here are seven tips for buying a CBD investment property.

Tip #1: Know your budget

Although CBD investment properties are more affordable than they have been in a while, Australia is still experiencing a seller’s market. Property is a large investment, so you need to be clear about what you can afford. Without a thorough investigation of your finances, you may find the ongoing cost of owning a CBD investment property is too much, especially because many of these properties are apartments that come with fees towards the facilities that are available in the building. While the rental income usually covers these costs, you still need to be prepared in case your investment is untenanted for a time. Before signing a sale document, talk to your property conveyancer about the ongoing costs and obligations of owning your chosen investment property. They will be able to decode the fine print, allowing you to make an informed decision.

Tip #2: Map your CBD

CBDs have pockets of preferred living areas, meaning that some locations will be worth more than others. It can be difficult to know where these are as an outsider, so it can be worth asking a local rea; estate agent for advice to best understand your CBDs most profitable areas.

However, this doesn’t necessarily mean you should only buy in the most popular pockets. Any pocket that is now considered to be inferior is unlikely to stay that way forever. Cities are constantly changing, with neighbourhoods transitioning from undesirable to up-and-coming within a few years.

When considering a location for your investment property, you need to consider what the area might be like in ten years, rather than just what it is like now. Instead of paying more for location now, you could invest a smaller amount or into a bigger property in a less desirable area if you see signs that it will soon become a popular location – perhaps near infrastructural improvements or new entertainment venues. While it may take longer to see a profit, your goal is to see better long-term capital gains.

Tip #3: Consider lifestyle attractions

If you aren’t very familiar with your CBD, spend some time getting to know where the hot lifestyle spots are. Renters tend to favour areas of the CBD that offer lifestyle attractions. Think sporting venues, theatre districts, restaurant districts and shopping precincts. These are areas that are seeing the best rental returns as renters moving to the cities are looking for homes convenient to their lifestyles and work.

Tip #4: It’s all about the view

If you have been looking at CBD investment properties, you’ll likely have noticed that views can range from sweeping ocean vistas to the neighbouring brick wall. While having a great view will improve your rental returns, you don’t need to wait for the perfect outlook. Instead, ensure you only invest in a property with a majority of open views – that it, views are not immediately obstructed by walls or neighbouring windows.

You would also be wise to consider future developments. While your property might look across the city to a nearby mountain range or ocean, you may find the view obstructed in years to come by infrastructure. Consider possible future construction when choosing the perfect property by contacting your local council, noting what already exists in the area and trying to buy properties directly facing a street or park.

Tip #5: Follow the locals

When investigating a new area, think about why people like living there. Take your time to sit in nearby cafes and visit local gardens or picnic areas to find out what exactly makes this area favourable. You’ll be able to get a good idea about the demographic drawn to the area and make your decision about what kind of property would attract renters. For example, if you notice a lot of families in the area, choose a property that supports a child-friendly lifestyle, such as multi-bedroom residences and apartment buildings with elevators.

Tip #6: Transport is important

Even though you are buying in the CBD, public transport is essential. Not everybody who lives in the city works in the city, so having many transport options available close by makes it easier to find good tenants. You should also consider drivers – whether the property has parking facilities and whether it is easy to access major outbound roads from your chosen property. The easier it is for people to get around from your property, the more likely they will want to live there.

Tip #7: Don’t listen to the cynics

Not everyone will agree that the CBD is a good investment. Then again, not everybody has done the research to back up their doubts. Viewing your CBD through fresh eyes gives you the advantage of impartiality, rather than listening to someone who had a bad property experience from decades ago when the market was entirely different. Don’t forget, stigmas will always be forgotten in time because neighbourhoods are constantly evolving, so rely on your own research and the advice of property professionals rather than that of well-meaning family and friends.

Are you considering buying a CBD investment property? Contact Jim’s Property Conveyancing Melbourne and Property Conveyancing Brisbane to look over your sale documents before you sign a contract, phone 13 15 46 for more information.

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