Geelong Gentrification

Back in late 2015 Amy and I met a fantastic investor client who’s apportioned savings, borrowing capacity and cashflow position placed her in an exciting and unique investing position.

She desired reasonably healthy out-of-pocket cashflow (not exceeding $650pm before tax benefit) and had targeted a spend of around $500,000. Our client valued the idea of a house in a gentrifying but pretty area, and being interstate-based for her work, she really wanted to ensure that her quality of tenant and surrounding community would be reliable for her as a long distance investor.

Our task was to tailor a strategy to these metrics and goals.

We could have canvased units in Melbourne’s middle ring South/East, or even inner ring north, in fact we could have considered townhouses in the west, but the best match for our client’s combination of metrics and goals was in fact a period house in East Geelong.

We chose Geelong because firstly, our client’s desire for a quality period house could be met. Knowing that period houses in quality neighbourhoods and character streets outperform just about any other type of residential asset in any given suburb, we knew that we could meet this challenge with her budget in this suburb. Geelong’s rental returns are a bit sharper than Melbourne metro returns, and in the older, established communities in Geelong’s inner ring, the quality of tenant, rental demand and tenure of tenant can be encouraging for a first time investor.

From a macro viewpoint, Geelong has experienced considerable change over the last decade and the recent Ford plant closure has not adversely effected the inner ring suburbs, nor has it slowed down the rate of Melbournians who are opting for the sea-change with their young families.

Geelong based commuters spend less than an hour on a VLine train.

Combining the benefits of a city within walking distance, an emerging (and enticing) food culture with great cafes and delis, surrounding wineries in the stunning Bellarine wine region, great schools, and of course the upgraded rail service, Geelong starts to become an attractive consideration for many. The superbly developed water precinct at Eastern Beach is a great drawcard for locals and a magnet for daytrippers who come into town. The art precinct and beautiful Geelong Gallery is not to be underestimated too.

From a micro viewpoint, we had to focus on the suburbs which we felt would offer the strongest growth, optimum yield and tightest vacancy for our budgeted $500,000.

We targeted four suburbs which were handpicked based on their proximity to town and array of period houses. Geelong West, South Geelong, Manifold Heights and East Geelong.Our inspection list featured seven shortlisted properties… but the last on the list was the obvious winner.

Upon first inspection at Grey St East Geelong, we knew we’d found ‘the one’.

This beautiful three bedroom, rear lane right of way, period family home sat proudly in arguably one of East Geelong’s most beautiful streets. The floorplan was family-friendly with an enormous rear living area. The kitchen and bathroom were neat and inviting and the north facing backyard would enable tenants to entertain and watch the kids play with full sun, all year round.

The area is no stranger to us. We’ve enjoyed assignments in the past in these neighbourhoods, and we’ve always managed to squeeze in time to pop in to one of the best deli’s in town – Fig and Vine in the cluster of Ormond Rd shops.

This exciting purchase marked the first acquisition of 2016 for us and we’re proud of this purchase for our lovely client – at $470,000 and with an anticipated rental return of $380pw we are excited to watch on over the years and we wish our lovely client a successful and low-stress journey as she embarks on her portfolio.