Meeting with a client earlier this week, we were discussing a pending sale and her intentions with the money afterward – shares, cash in bank or more real estate.
Having made the decision to step out of her current investment properties after an ownership that’s had more birthday candles than I have, she is keen to keep her toe in property, but having been out of the (buying) market for the 21st century thus far, its interesting to look at the difference in expectations given that time difference.
Looking for a good home, but nothing all that special used to mean something with a “4” in front was comfortable in most suburbs (5 years ago at least, pre-GST era that likely had a “2” or even a “1”). Today, that same house (which might even look the same now) is more likely to start with a “5”, if she’s lucky.
Rent-wise at least the growth has been a little more positive, with the old 5% gross (renting for 5% of property value – i.e. $400 per week for a $400,000 house) a bit more outdated as the yields have run with strong demand. Rents, insurance and other maintenance though? Well, that’s run a bit faster than any of us might have liked….
Minimum housing standards and other tenant protections have been a positive change, but substantial change to how rentals are regulated mean that self-management is pretty much off the table – after 50 years of handling things in-house. Some of these changes can be challenging enough for property managers to get their heads around, let alone expect an owner to has down pat.
Location-wise, where the view 25 years ago might have seen somewhere like Bentley Park or Edmonton as pretty “rural” (and to be fair, a lot of it was still under cane production), today these areas are likely to be well targeted for investment, with comparative value on purchase, strong rental demand and much better access to services. Cairns might have had a long period of “cash flow or growth – pick one” but the current market seems to offer opportunities on both sides, which is a pleasant scenario for all but those that find themselves chasing their tails (and prices) in a rising market.
It will be interesting to see what this exercise looks like in another 25 years – here’s to still being around to see it!