Key measures of success in the Queensland market

Distance to CBD

Investors tracking down high yields cannot apply the same strategies that work in NSW or Victoria, she said, as these areas are more commonly found at least 40 kilometres away from the CBD.

While public transport may not make this much of a deal breaker in NSW or Victoria, for Brisbane it could make all the difference.

“A lot of people from Sydney and Melbourne do chase the yields in Brisbane, and potentially that can be at the compromise of capital growth,” Ms Jennison said.

“They don’t know the area and they think 40 kilometres or whatever from the CBD, ‘Well, that’s not too bad’, but in Brisbane, it’s actually not that good.

“You still want to be 20 or 30 kilometres at the most from the CBD to be getting capital growth, and you still want to be on those transport corridors.”

Tenant tips 

With areas that do have high yields, Ms Jennison also said that finding tenants may prove to be a difficult task, as these areas tend to skew towards lower socioeconomic conditions where property ownership can actually be cheaper than being a tenant.

“If you’re buying in an area where it’s actually more expensive to rent than it is to own, then you have to have a think about who would be renting that property, what’s the demographic of that area, and therefore how is that asset going to perform over the longer term?” she asked.

“That can also have an impact for adding value to the area, because owner-occupiers generally spend money on their homes when they’re in areas where their incomes are above average. They’re improving their homes, which improves the suburb overall, and it adds value to an area.

“So it’s also something to be aware of for investors.”

Dual occupancies and the exit strategy

Investors up in Queensland also are likely to consider dual occupancies, as this may seem like an opportunity to double a rental yield over the short term.

However, when it comes time to selling the property, this could prove difficult, as Ms Jennision has seen in the past.

“When you’re buying those dual [occupancies] where you do get a much higher yield or a return on your investment during the holding period, you’re actually limiting the market upon resale to an investor, and that’s only about 30 per cent of the market,” she said.

“Home owners don’t necessarily want to buy a property that’s got an associated or an attached dwelling, so I think that it’s understanding what you’re trying to achieve as a property investor.

“If it is income now, then those dual occupancies might be a strategy that you would consider, but if it is capital growth and if it’s a longer-term strategy, then you really need to think about whether holding a product that appeals predominately to the investor market is going to be right for you.”

Looking to the south east

Investors who are looking in Queensland may find shedding the capital city mentality and looking towards the south-east corner of the state could end up being more profitable.

“There are lots of opportunities for investors throughout the whole south-eastern corner of Queensland. I think it depends on what an investor is trying to achieve that will then determine which suburbs might suit their strategy,” Ms Jennison said.

“So an investor always has to keep in mind whether they are after income now, which is a high-yield strategy, or if they’re after a wealth-creation strategy, which is a capital-growth strategy, which is building wealth for the future.

“Some people like a balance of both, so they want to grow the value of their property over time, but being able to have a fairly neutrally geared property helps them to hold that property, particularly in today’s serviceability environment.”