While Sydney's rental yields remain low, investors are adding amenities to improve their potential returns, according to the latest study by Herron Todd White (HTW).
Citing SQM Research figures, the HTW study shows that average home yields in Sydney have gone from 3.7% in 2009 to 2.8% this year. Over the same period, unit yields declined from 4.9% to 3.7%.
In order to boost returns, investors take advantage of grandmother's apartments. The report indicates that properties with grandmother flats are becoming increasingly popular among large multi-generational families and investors seeking higher-yielding properties.
Read also: New property hot spots will emerge in Sydney
The strategy of building apartments for grandmothers has also become popular among daredeval investors who want help with mortgage payments or extra income for retirement.
"An example of this higher yield is a three-bedroom brick dwelling and a rented bathroom at $ 430 a week in Colyton, with a modern two-bedroom self-contained apartment and a rented bathroom for $ 300 per week. "This unit sold for $ 660,000, reflecting a gross yield of 5.75%," said HTW.
However, because of this healthy appetite for high-yielding properties, many buyers are willing to turn a blind eye to unapproved structures such as garages, storage areas and main homes illegally converted into independent apartments .
"Unfortunately for them, the investment experts do not hide these changes and are not at risk or commenting on this unapproved work," the report says.
Read more: A clever trick you did not know could triple your rents
Another way to maximize potential returns, particularly in the high-rise segment, is to invest in double-key units.
This trend, which is popular in West Sydney, involves buying a property with a one or two bedroom unit upstairs and an independent studio downstairs, each with separate access.
"The dual-key market is experiencing more limited growth than the enlarged market due to the unconventional floor plan limiting the overall market attractiveness, the restrictive lending policies of some banks for this class. asset and lending policies vis-Ã -vis investment properties, "HTW said.
Depending on the specific needs of each investor, it is also possible to attack units in smaller scale developments.
According to the report, seeking top-ranking properties in Torrens titles, such as terraces or self-contained housing, allows investors to avoid paying high fees for shared facilities. This also opens up opportunities for renovation.
"Smaller scale developments and Torrens' properties also tend to generate stronger capital growth over a long period of time," HTW said.
Check out the latest episode of YIP Talk where we teach investors to spot a growing real estate market.
Top suburbs:
emerald
,
East Victoria Park
,
Mt Lawley
,
Midland
,
Flemington
Get help for your real estate investment
Do you need help in finding the right loan for your investment?
When you invest in real estate, it is important to make sure that you do not only have the lowest available rate that you can get, but you also have the features of ready adapted to your needs.
Just fill in a few details below and then we will arrange for a local Australian mortgage broker to contact you and sort out the problem What features or what types of loans are suited to your needs? We will even help with the paperwork. In addition, an appointment is free.
We value your privacy and treat all your information seriously – you can check
our privacy policy here
