By Gittoes Property Management
Buying an investment property can be an effective way to build long-term wealth, but a good investment involves much more than choosing a property that looks appealing or has an attractive advertised rental return.
On the Central Coast, suburbs, property types and even individual streets can perform differently from a rental and resale perspective. Before buying, it is worth considering who is likely to rent the property, what it will cost to own and maintain, and how attractive it may be to future buyers.
Quick Answer
A good Central Coast investment property should balance rental demand, realistic rental return, manageable ownership costs and long-term resale appeal. Look beyond the suburb alone and consider the property’s location, layout, condition, parking, ongoing maintenance and likely tenant market. Before committing, obtaining an independent rental appraisal and completing appropriate building, pest, strata, legal and financial due diligence can help you make a more informed decision.
1. Start with the tenant, not just the property
One of the most useful questions an investor can ask is:
Who is likely to rent this property?
A property can represent good value to an owner-occupier without necessarily being the strongest rental investment.
Think about the type of tenant the property is likely to attract and whether its features suit that market.
- proximity to employment, shops, schools and public transport
- easy access to Gosford, Erina or major transport routes
- off-street parking or a garage
- practical bedroom sizes
- usable outdoor space
- air conditioning and good natural light
- a functional floorplan
- low-maintenance gardens and finishes
There is no single formula that applies across the Central Coast. A unit close to Gosford’s transport and employment precinct, for example, is a different investment proposition to a family home in one of the Coast’s established residential suburbs.
Understanding the likely tenant before buying helps you assess whether the property’s design, location and asking price make sense.
2. Research the individual location
Looking at suburb-wide statistics is useful, but property markets become much more local once you start comparing individual homes.
Two properties within the same suburb can have very different rental and resale appeal because of their street, outlook, accessibility, noise, elevation or proximity to amenities.
Before purchasing, consider:
- recent comparable sales rather than relying solely on automated estimates
- comparable properties currently available for rent
- how long similar rental properties appear to remain available
- proximity to schools, shops, transport and employment
- traffic and road noise
- nearby railway lines or major infrastructure
- flood, bushfire or other location-specific considerations
- future development and planning in the surrounding area
Speaking with local sales and property management agents can also help identify differences within a suburb that may not be obvious from online research.
3. Look at rental return, but don’t stop at the yield
Rental yield is important, but it should not be considered in isolation.
A property with a strong gross rental yield can become much less attractive once its expenses are taken into account.
Consider likely costs such as:
- council and water charges
- strata levies where applicable
- landlord insurance
- property management fees
- repairs and maintenance
- borrowing costs
- periods when the property may be vacant
- land tax where applicable
Land tax is particularly worth discussing with your accountant or adviser because liability depends on factors including the combined taxable land you own and how the property is held. Revenue NSW applies land tax to combined taxable NSW land values rather than simply assessing each investment property separately.
The better question is therefore not simply, “What rent will I receive?”
It is, “What does this property look like as an investment after realistic costs?”
4. House, townhouse or apartment?
There is no rule that says one property type is automatically a better investment than another.
The old argument that houses always provide better capital growth while apartments provide better rental returns is too simplistic.
A well-located apartment with good tenant demand may be a much better investment than a poorly positioned house, while a quality house on useful land may have advantages that cannot easily be replicated.
Your budget will naturally influence your options, but the quality of the individual property matters more than simply choosing a particular property type.
For houses, consider the land, maintenance requirements, layout and future buyer appeal.
For apartments and townhouses, consider the location, building quality, strata finances, ongoing levies and whether the property has features that distinguish it from competing properties.
5. Be particularly careful with strata properties
When buying an apartment, villa or townhouse in a strata scheme, the purchase price is only part of the equation.
Review the strata levies and understand what they cover, but do not assume unusually low levies are automatically positive.
A strata search can reveal important information about the scheme’s finances, insurance, building defects, planned works, legal matters and meeting records. It can also help you understand whether sufficient funds are being set aside for future capital works.
A building with low current levies but inadequate reserves for future work may ultimately cost owners considerably more through increased or special levies.
Look at the building itself as well. Its general condition, common areas, maintenance and presentation can tell you a great deal about how the scheme is being managed.
6. Prioritise the things you cannot easily change
Paint, carpet and outdated fixtures can be replaced.
A poor floorplan, difficult access, excessive road noise or an undesirable outlook are much harder to fix.
When comparing investment properties, separate cosmetic problems from fundamental ones.
A dated property in a good location with a practical floorplan may offer an opportunity to improve both its presentation and rental appeal.
By contrast, spending money renovating a fundamentally compromised property does not necessarily turn it into a good investment.
This is also why investors should be cautious about overcapitalising. Improvements should make sense for the likely tenant market and the value of the property.
7. Think about maintenance before you buy
Investment properties need to be maintained throughout your ownership, so consider what is likely to require money and attention over time.
Large gardens, swimming pools, ageing decks, retaining walls, older roofs and complicated landscaping may all be attractive features, but they can also increase ongoing costs.
For an investor, a simpler property that tenants find comfortable and easy to live in can sometimes make more sense than a property filled with features that are expensive to maintain but add relatively little rent.
Condition also matters from a tenancy perspective. NSW rental properties must meet prescribed minimum standards, including requirements relating to structural soundness, lighting, ventilation, utilities, plumbing, water and bathroom facilities.
This makes proper building and pest inspections particularly important when considering an older property.
8. Don’t forget about future resale appeal
Even if you intend to own the property for many years, you should think about the person who might eventually buy it from you.
Properties with broad appeal give investors more options.
Consider whether the home could appeal not only to investors, but also to first-home buyers, downsizers or families depending on the style and location.
Features such as good parking, natural light, sensible bedroom sizes, usable outdoor areas and a functional floorplan can matter to tenants today and prospective buyers later.
Buying with both rental demand and future resale in mind can help avoid becoming overly dependent on one narrow section of the market.
9. Get a rental appraisal before you commit
Online rental estimates can be useful as a starting point, but they do not replace an assessment of the actual property.
Before exchanging contracts, consider asking an experienced local property manager to assess:
- the likely weekly rent
- the type of tenant the property may attract
- comparable rental properties
- presentation or maintenance issues
- features that may help or hinder leasing
- improvements that might increase rental appeal
At Gittoes Property Management, we provide rental appraisals for Central Coast property owners and prospective investors. Having someone assess the property from a leasing perspective before you buy can provide another valuable piece of information when making your decision.
10. Surround yourself with the right advisers
An investment property is a significant financial decision and there are several areas where specialist advice can be valuable.
Depending on your circumstances, your advisers may include:
- a solicitor or conveyancer
- accountant or tax adviser
- mortgage broker or lender
- building and pest inspector
- strata inspector
- property manager
- local real estate agent
Each looks at the purchase from a different perspective.
A property manager can help you understand rental demand and likely rent, but financial, taxation and legal decisions should be discussed with appropriately qualified advisers.
Before buying an investment property on the Central Coast
Try not to judge an investment on one number.
The highest advertised yield, cheapest asking price or largest parcel of land does not automatically make a property the best investment.
A stronger approach is to consider the property as a whole:
Is there genuine tenant demand? Is the likely rent realistic? What will the property cost to own? Is it straightforward to maintain? And will people still want to buy it when the time eventually comes to sell?
Answering those questions before you purchase can help you make a much more informed investment decision.
If you are considering buying an investment property on the Central Coast, the Gittoes Property Management team can provide a rental appraisal and local perspective on the property’s likely tenant market before you commit.