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By Caroline James
Many investors fix on properties
earning deep rivers of cash flow,
or properties with a gargantuan
capital value growth clout – even if it
means living on baked beans forever and
a day to cover a huge debt gap.
But what about Australia’s middle
ground nest-eggs, those ‘set and forget’
beauties? Why should we consider adding
them to our portfolios?
“I personally invest in, and advocate
buying properties that are neutral or
positive cash flow producing,” Mark
Kelman, of Sydney property investor
network Achieve Property, says.
“For most investors to build a
successful portfolio, properties need
to be able to sustain their own finance
and management costs, and capital
appreciation over the short to medium-
term will then give you the profit
Kelman personally owns 15 properties
including a low-maintenance block
of six units he intends holding for the
foreseeable future. He wouldn’t reveal
the geographic locations he targets when
buying “set and forget” properties, but did
advise on how to buy for good long-term
capital growth prospects.
“Look for signs of money coming to the
area whether that’s new roads, hospitals,
infrastructure – not housing stock”,
and look for low rental vacancy rates to
stimulate steady rental income growth.
Catherine Bakos from Empower Wealth
in Melbourne recommends buyers, who
want a relatively passive investment
that will experience capital growth over
a decade or more while quickly paying
its way from rent, should consider select
suburbs in growing regional cities.
She says it’s even possible to find a
balanced asset in some inner suburbs
in capital cities. Regardless of your
investment strategy, set and forget
balanced assets create an important
low-risk, long-term equity base for
“Capital growth and cash flow isn’t an
either/or proposition,” Bakos says.
“You can still have growth from a neutral
or slightly positive cash flow property,
but I like to say it’s moderating growth,
because if you go for just cash flow you
tend to get just a little bit of growth and it
can be volatile like we often see in mining
towns,” she says.
“Your balanced investment properties
aren’t going to deliver this big rental
income injection every week.
“But you also don’t need to chip in very
much from your net income, which may
mean your financial ability to make further
property purchases and service their loans
However, Bakos cautions about buying
set and forget rental homes in holiday
areas. “There has got to be solid demand
for year-round rental homes to sustain
rental returns,” she says.
Inner Sydney buyers’ advocate Lisa
Bradley of Finders Keepers says reliable,
consistent performers are a crucial part
of any growing investment portfolio and
that’s also true with property.
“While some locations might come
with the promise of spectacular price
rises and rental returns in the short-term,
these are typically areas that carry high
risk because of exposure to changes in
employment and other key variables,”
Bradley says. “Your property portfolio
should be built on properties whose
location and type give expectations of
ongoing solid returns.”
If your budget extends to it, inner
suburbs around the big capital city CBDs
and their other major commercial centres
provide the steadiest rental demand and
mid to long-term growth, she says.
¿ KINGSTON, HOBART
Located in one of the fastest growing
regions of the Apple Isle, Kingston topped
RP Data’s list of 10 best metro suburbs for
families this year, making it a prospect
for a solid cash-flow producing and value
About 12 kilometres south of Hobart
CBD, in the Kingborough Council area,
the suburb was home to about 11,200
residents in 2012.
Rob Zubin of My Property Hunter agrees
Kingston has solid economic drivers
supporting a good solid rental market,
including money being spent on sports
facilities and infrastructure.
On the heels of the state election and
subsequent change of government, Zubin
notes property prices are finally moving
up again after several years languishing in
“You’re paying $340,000 to $380,000 for
a typical entry level established three-
bedroom house on 650 square metres and
we’re getting about 5.5 per cent rental
yield, so it’s not too shabby.”
Investing in middle of the road suburbs doesn’t necessarily mean average returns. As
API discovered, sometimes set and forget suburbs are beautiful for your bank balance.
FEATURE // SET AND FORGET SUBURBS
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