What’s the best capital growth decision for a ~$900,000 budget?

When I met with our lovely prospective client two weeks’ ago, she asked me a great, candid question. Being new to Melbourne from Sydney, and having made the decision to invest for capital growth, she meant business and was keen to strike up a plan.

“Cate, what is the best property for me to spend $900,000 on?”

Often we’re asked by clients to give them a ‘hotspot’ tip, or share our favourite picks. My response is always the same; “no two client’s briefs are ever the same. It depends on your cash-flows, any other properties in your portfolio, your current savings or equity, and most importantly, your future plans.”

But on this occasion, we had a prepared investor with a great capital growth opportunity. Cash-flows were not so sensitive for her, and preapproval and available deposit meant that she was ready for me to commence immediately.

Rather than specify one single suburb, I decided to adhere to the 9km radius and target all inner suburbs from Thornbury, anti-clockwise around to Newport. Adhering to these inner patches, and picking out the neighbourhoods which were snugly surrounded by rail, cafes, shops and residential villages meant that amenity would be a major draw-card for her investment’s performance. Furthermore, targeting 2BR, freestanding Victorian houses in picturesque streets would enhance her chances of having a property which would always be tightly held, because a property which is rich in ‘owner occupier appeal’ will always give an investor the advantage.

Similar houses in the same street which capture hearts and sell for strong prices will underpin the value of the investor’s.

After visiting and shortlisting one in Brunswick and two in Ascot Vale, our client’s enthusiasm was still not quite ignited. However a late decision to inspect 40 Hotham Street Seddon (in the face of an auction just days away) changed the pace of our week. Seddon, just a tiny pocket wedged between Yarraville and Footscray is home to less than 5,000 residents, yet gets itself on the Melbourne food stage quite readily with it’s exciting abundance of cafes and restaurants.

Happily, 40 Hotham Street appealed to our client, who caught the train just four stops out of the city to Seddon and appreciated the short walk from the station and the pretty streetscapes along the way. Our twenty minute drive around Seddon’s quirky shopping strip, Middle Footscray station and surrounds, Yarraville’s village and the gorgeous tree lined residential streets in Seddon’s south/west quartile gave her just the confidence she was looking for to back the decision to have us bid the next day.

The vendors and agents were obliging with after-work inspections and with special thanks to the conveyancer and building inspector who squeezed in a late Friday inspection, we were able to bid at auction.

The things I liked about this house were numerous. The pretty facade, north facing rear yard, gorgeous row of period houses on either side, and the location were all scoring points. But better than a single-fronted Victorian floorplan with bedrooms down one side, this house boasted not just two bedrooms, but an additional study or nursery space, and also offered two living areas. The rental potential and the breadth of tenant-types would be a positive for our client.

Happily our swift action with the due-diligence did reward us and we secured 40 Hotham St within budget.

Wishing our client years of capital growth….