Exploring St Albans…

Yesterday was a significant day for two of our lovely investor couples, and an exciting afternoon for us.

Both secured their properties under the hammer on the same day, in the same suburb.

One couple’s strategy was based on locating a property offering a strong combination of growth and rental yield within a gentrifying, metro growth suburb at a price not exceeding $350,000. Based on their current portfolio being restricted solely to apartments, we made the decision to target a house on a subdivided block with public transport within easy walking distance. Searching for a yield of 4.5% required us to target a property which could rent for above $300 per week.

The other couple’s strategy required us to identify the best growth option for them with a $500,000 budget.

We chose to search for a sturdy, renovated house on a full block in St Albans.

St Albans is just 15km from Melbourne’s CBD, and in a city which now has an urban boundary exceeding 35km, we’ve identified St Albans as a changing area with growth drivers now being observed; much like it’s neighbouring counterpart Sunshine exhibited five years ago.

St Albans sits on a patch of some thirteen square kms and offers not one, but three rail stations. From CBD, each are the seventh, eighth and ninth station on the Sunbury Line, which places the suburb in a convenient commuter option. Much like Sunshine, the shopping precinct has not pre-empted the gentrification, but builder, developer and buyer activity certainly has. Locating a block suited to subdivision is a difficult task in this highly competitive space and beating a local builder to an off-market is a challenge for any buyer or advocate.

Not surprisingly during this highly fueled growth in Melbourne, the sales data supports our observation at the coal face. First home buyers are taking the opportunity to buy a house on a full block within their $600,000 stamp duty concession cap, investors are pouncing on strong growth and yield options, and developers are land banking the next few years’ projects.

Located near the Metropolitan Ring Road, easily accessible by car and rail, and offering eight primary schools, a local secondary school and even a Tafe campus, the area is poised to meet the demands of new families moving into the area.

St Albans’ median house price growth over the past 20 years has averaged above eight per cent per year, and the most recent twelve months has shown a growth rate of above 15%.

Our first acquisition yesterday was this renovated brick 3BR, dual living area house on 535sqm for $507,000. With an anticipated rental return of $340pw, our clients’ yield expectation was surpassed. Pete fought it out above the reserve with another bidder and secured the property swiftly with his rapid-fire bidding strategy.

Two hours later, I fought off three other bidders for this renovated 3BR cutie and the hammer fell on my bid of $335,000. With an independently assessed rental of $310 per week, our clients’ gross rental yield sits at a stunning 4.8%.

An impressive yield for a property targeted for growth!

Wishing our investors some exciting out-performance capital growth, particularly over the coming years…