My friend has two investment properties in Cairns, which he purchased for approx $200k. The two properties are positively geared. My friend is suggesting that I look into buying in Cairns as it only requires about $10-$15k to invest in a property.What are your thoughts in this area? I wonder what sort of capital growth can we expect in northern QLD?Thanks for your time.
February 12, 2013
Asked by Kate, Professional, Sydney, NSW
Hi Kate, I would definitely not consider investing in Cairns. As you imply, the rental return is around 7% gross which is strong. However, the capital growth is dreadful. The median 5 year growth figures for units in Cairns City and Cairns North are around -25% and – 24%. The 10 year average annual growth is only 2%. If you are looking for good capital growth, I would not buy here. (Data sourced from Smart property investment, February 2013).
The other important thing to consider when you buy an investment property is that you spend enough time researching the local market and the property itself. Once you have bought the property, you need to think about how it is going to be managed. If you are buying interstate, this will make things a lot more difficult and challenging.
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