Every investor knows to carry out thorough research when looking for their ideal investment property, but with the number of properties available on sites such as realestate.com.au, it can be difficult to know which property listings to investigate further and which to put aside.
As part of their new segment on analysing property listings for investment potential, API Magazine asked our opinion of a 1 bedroom, 1 bathroom unit in the beachside suburb of Cottesloe, with an asking price between $550,000 – $600,000. Advertising seasonal rents from $800 – $900 per week, this listing seems an attractive investment. Read some highlights of our analysis below, and pick up API Magazine’s May issue for more information.
Do you think this property listings advertised rent is about right?
There are better quality, more spacious 2×1 apartments the same distance to the beach for $650-$750 per week. For example, a furnished, spacious, quality renovated 2×1 on Marine Parade, directly facing the beach, with ocean views, is offered for $680 per week. As such, the advertised rental of $800-900 per week appears too high and $550-$580 per week would be closer to the mark.
What is the market outlook in this suburb and for this property type?
As a premium coastal suburb that has been underperforming in recent years, now is a good time to buy in Cottesloe.
However, since the apartment has little land value, it relies on scarcity value and location to drive capital growth and rental income, and high growth is not guaranteed. Achieving rental returns of $570 per week at an asking price of $570,000 is an above average rental yield at 5.2%. However, higher management costs apply to furnished property, which would reduce the money going into your back pocket to around an average return.
What sort of investor would this property most suit?
Someone looking for a property they can “set and forget”, who is seeking a reasonable rental return, has a low risk profile and has confidence in the location.
In their June 2014 issue, API Magazine included the following update on the current status of the property:
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