The Gill family: Kiama
Prospective sea changers, the Gill family, were keen to secure a foothold in the coastal property market before orchestrating the big move.
A fire fighter originally from Bowral in the picturesque New South Wales southern highlands, David Gill had just been transferred to the coastal city of Wollongong. Realising that it could take up to two years to sell their home, the Gills immediately decided to secure a property in the vicinity of Wollongong.
The plan was to rent the property out until the Bowral house was sold, and then move there permanently. Rather than buying in a suburb of Wollongong, David was lured by the rolling green hills and beautiful white sand beaches of the coast immediately to the south.
“I was looking to buy anywhere along the coast from Minnamurra, which is just north of Kiama, all the way down to Huskisson in Jervis Bay,” says David. “Prices are fairly similar all the way along the coast – even as far south as Batemans Bay, because it’s a popular holiday spot for people from Canberra.”
As the Gills were investing primarily for capital gain, they sensed that it was the perfect time to jump into the market and snare themselves a bargain. “I think it’s a good time to buy because the market is quite flat. I was in a good position to make offers that a few years ago would have been ridiculous,” says David.
The Gills bought an unrenovated four-bedroom house in Kiama, about a half-hour drive south of Wollongong. The range of amenities both within Kiama and in nearby Shellharbour, notably including a good primary school, helped the family make up their mind.
“I bought one of the ugliest houses in the right street. I’m buying for the long term: I’m not trying to rent it out for a couple of years and get out. I’ll probably rent it out for two years, as long as it takes to sell the house at Bowral, and then move in,” says David.
Although the Gills were shopping around for a house in which they eventually intended to live, they didn’t feel at a disadvantage in being able to select a property that would be attractive to potential tenants.
“I’m of the opinion that if I like it, then chances are that someone else will like it. It’s not the sort of place that would appeal to retirees because it requires a bit of work. I think the property will attract a young family like us – the parents would probably commute to Wollongong,” he says.
For the Gills, finding a long-term tenant was the obvious choice over letting the property out as a holiday rental. “It’s not suitable for holiday rentals, because it’s not an attractive-looking property! But the house is a two-minute walk to the beach, and has filtered water views. It will do us for the next 10 years or so, until I’m ready to think about downsizing,” explains David.
Richard Salmon: Port Macquarie
If you’re a young first homebuyer and you’re noticing that house prices are increasingly spiralling out of reach, the answer to ‘how am I going to get on the property ladder?’ may lie with a coastal investment.
This is how Richard Salmon made inroads into the property market – like many twenty-somethings, he couldn’t afford to buy where he wanted to live in Sydney – instead he cast his eye along the New South Wales north coast.
“For me, the choice was easy because I have relatives living in and around Port Macquarie. Port Macquarie is a sea change area – it’s right on the beach,” he says.
By and large, the NSW property market is currently flat, so for the immediate term Salmon set his sights on generating a solid stable rental return while waiting for the market
to recover.
“It’s four hours away from Sydney, so it’s a bit far for a weekender. I decided to rent the property out to a long-term tenant – generally if you want your place to be available for holiday rentals, it needs to be fully furnished and I didn’t have enough cash left over for that,” says Salmon.
Deciding to opt for a long-term tenant has also meant that Salmon didn’t need to spend a great deal on cosmetic repairs and maintenance. “It’s an older place – there are bills for standard wear and tear such as electricity and plumbing, but besides that there’s not too much upkeep. When I bought it, it was ready to rent,” says Salmon.
Significant growth in the Port Macquarie region has buoyed Salmon’s hopes that rents will follow an upward trajectory in the coming months. “Where I bought was actually in a satellite town of Port Macquarie. Enormous amounts of land are being opened up and people are looking to rent while their house is being built. So there is strong demand for rentals.”
Besides yield, Salmon is hoping that development on these land releases will soon translate into capital growth for existing homes in surrounding areas. “Lots of infrastructure is being put in the area to support the developments. There are now bigger retailers, hotels, pubs and more investment generally,”
he says.
As a first-home investor, Salmon found the local knowledge of friends and family invaluable in selecting a property. “Obviously, it helps to know people in the area – they can set you up with real estate agents, solicitors and other professionals who you can trust, and who can advise you along the way.”
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Gus and Sue Halbwirth: Coolum
The more Gus and Sue Halbwirth thought about retiring, the more they were determined to factor in
a peaceful lifestyle in an idyllic coastal location.
As retirement was still a few years off, the Halbwirths decided firstly to invest in a smaller coastal property before they sold the family home. The idea was to establish a base in a coastal location in order to gauge whether or not to settle there.
The Sydneysiders were keen to escape the competitive, flashy environs of Mosman for a more low-key existence. Tying this in with an envisaged strategy to eventually sell their existing home, buy somewhere cheaper and invest the rest, buying in Queensland seemed an obvious choice.
To research suitable locations, Gus did what any astute investor would do and booked himself a holiday – visiting a number of coastal towns from Hervey Bay to Moreton Bay near Brisbane.
The Halbwirths honed in on the Sunshine Coast, after deciding that far north Queensland was too hot and that Hervey Bay was unimpressive. Zooming in further, they discovered Coolum.
The Halbwirths quickly settled on a modest house in Coolum priced at the lower end of their budget. Coolum proved to be a winner on a number of fronts: “The amenities are very good – it’s close to Noosa and Mooloolaba, and you can drive back to Brisbane in one-and-a-half hours,” says Gus.
The Halbwirths tried to align their choice of property with their investment strategy.
“We’re mainly in it for capital growth. We wanted a house over an apartment, because you can potentially make a higher capital return off a house – they are easy to renovate, whereas it’s more difficult when you own a unit.
Of his experience in researching coastal locations and selecting a property, Gus says that the trip up the coast was invaluable. “Visiting Queensland really helped give us a feel for the area,” says Gus.
Helen and John Albion: Bargara
Sunshine Coast couple Helen and John Albion, on the lookout for an investment property that they could eventually move into, were hunting for something a little off the beaten track.
Having concluded that their locale had become too hectic, the Albions cast their net a little further along the coast of central Queensland, and discovered the potential of Bargara, a coastal settlement just outside of Bundaberg.
“I bought an apartment in a development called ‘C’ Bargara off the plan. It’s a two-bedroom plus study apartment on the third floor. The property was holiday let for the first nine months,” says Helen.
In early 2006, Helen was offered a one-year teaching contract at a school in Bundaberg. Leaving the rest of the family behind on the Sunshine Coast, Helen has been living in the apartment and working in Bundaberg for the past six months.
“Living in it gives me the perspective of what it’s like to live in the area. It’s helped me work out how friendly the locals are, and what the facilities and amenities are like. It gives you a better insight into the area,” says Helen.
There’s just one downside to this strategy, she says. “Now that I’ve been living in the property, it might be harder to detach myself emotionally when I move out of it again.”
At the end of the year, when her contract is up, Helen will re-join the rest of her family in the Sunshine Coast, and will put the apartment back on the rental market. “It would be good to get a long-term tenant, but people would have trouble paying the amount of rent that we’re charging. There are no other long-term tenants in other apartments in the complex.”
Holiday letting is a sure-fire way to achieve a solid rental yield if you can attract enough vacationers, but it’s also a good idea to invest with some hope that your property will appreciate in value.
“We are hoping that the area will really go ahead in terms of population growth. It’s a 10 minute drive to Bundaberg – there are a lot of things happening in town. A huge shopping complex is being built, and the port is being developed. The redevelopment is bringing more restaurants and creating more of a village atmosphere,” says Helen.
Mark Barrington and Jasmine Zawitkowski: Cape Jervis
Ever holidayed in a picturesque location and had that niggling thought pop into your head: “If only I could just pack up and move down here permanently.”
Young couple Mark Barrington and Jasmine Zawitkowski couldn’t help thinking along these lines when they were on a fishing trip on the Fleurieu Peninsula, a one-and-a-half hour drive south-east of Adelaide.
“We like the coastal lifestyle – one time we were down there we noticed this shack on the beach for sale – it’s a three-bedroom house really,” says Jasmine.
They were particularly drawn to Cape Jervis, a small holiday town on the peninsula near the larger centre of Victor Harbour. “It’s predominantly a tourist destination – lots of people go there for a holiday. The Kangaroo Island ferry leaves from Cape Jervis, and it’s a great fishing area. Kangaroo Island is getting more and more popular.”
Assessing their situation, the pair decided that it would not be overly difficult to up and move to the area to buy their first home.
“I’m a teacher, so I can work pretty much anywhere, and Mark is a landscaper; he’s a jack of all trades really so he can find work easily as well. Also, Cape Jervis is reasonably close to Adelaide so I could still commute back there if I needed to,” says Jasmine.
With a lack of rental accommodation on the peninsula currently, and with more and more tourists flocking to Cape Jervis to board the Kangaroo Island ferry, Jasmine believes the house could easily work as a holiday rental.
“The people who owned it before us used it as a holiday house – the layout is perfect to use for short-term rentals, but obviously it’s also set up so you can live in it long term,” she says.
Michael Hassett: Ocean Grove
Melbourne mechanic Michael Hassett dreamed of one day beating the rat race and transplanting himself to a nearby coastal retreat.
Sensing that he couldn’t achieve this straight away, Michael kept his eyes peeled for a property he could easily rent out, at a location where he could see himself relocating to later on.
“My main criteria were: I wanted to be a maximum of one-and-a-half hours from Melbourne, so if I decided to move there, I could commute if I needed to. Also, the area needed to have good infrastructure, doctors, supermarkets, that sort of thing,” he says.
Michael went shopping for properties as an owner-occupier, but in the back of his mind he was also weighing up houses from a potential tenant’s point of view. “I bought the place with a view to renting it out initially and then potentially moving in. So my criteria were mainly based on how I wanted to live, rather than what would make a good investment.
“I thought about the type of person that I wanted to attract as a tenant before I bought the property. I aimed to buy a place that would appeal to an upper executive that commutes to Geelong,” says Michael.
Michael scoured the coastline to the immediate west of Melbourne, taking in the Great Ocean Road and holiday resorts around Geelong. “I bought a three bedroom, two-storey townhouse in Ocean Grove – a small town near Geelong – about one kilometre away from the main street,” he says.
Since purchasing the townhouse three years ago, Michael has seen the population of Ocean Grove swell from 10,000 to around 12,000 people. “It has a lively main street with lots of cafes and shops, and they’ve just opened a new pub, which is very popular. There is a good, safe surf beach – it’s very family friendly,”
he says.
By investing in a recently built townhouse in a secure building with ocean views, Michael was effectively able to charge $100 more than an average rental would fetch – and hasn’t yet had a problem in finding suitable tenants.
