Nailing Your Investment Purchase – Cash Flow vs. Capital Growth & How to Pick the Right Location (Ep. 296)

Show Notes

Matthew is looking to buy an investment property in Melbourne with a $1.2M budget, but where should he invest for the best capital growth and long-term success? The Trio break down key investment advice, covering location selection, property types, and the importance of a well-structured investment plan.

Structuring a Property Plan & Investment Strategy

Dave kicks off the discussion by emphasizing the importance of property planning before jumping into a purchase. How does this investment fit into Matthew’s long-term financial goals? The Trio explore how to assess affordability, borrowing capacity, and future portfolio growth. Just because Matthew can borrow $1.2M, does that mean he should?

Location, Location, Location: Where Should Matthew Buy?

Cate takes a deep dive into Melbourne’s investment hotspots, weighing up the pros and cons of Matthew’s two main options:

• A single-fronted two-bedroom cottage in the inner north (Coburg, Preston, Pascoe Vale)
• A 3-4 bedroom freestanding house in Bayside (Cheltenham, Chelsea, Kingston region)

While both have merits, the Trio explore rental demand, capital growth potential, and affordability in these markets. Could Geelong be a better alternative for strong returns?

House vs. Townhouse: Which Investment Property Performs Best?

Mike unpacks the debate between buying a freestanding house vs. a well-located townhouse. Is Torrens title always preferable to strata properties, or could a strategic townhouse investment outperform? The Trio highlight key investment advice for avoiding costly mistakes and maximizing returns.

Balancing Capital Growth & Cash Flow

While capital growth is often the primary driver for investors, Dave explains why rental yield and borrowing power matter just as much. The Trio explore the cash flow vs. capital growth trade-off, breaking down how different property choices impact future borrowing capacity and investment strategy longevity.

Should Matthew Consider a Value-Add Opportunity?

Cate introduces the concept of renovation potential—is Matthew better off buying a move-in-ready investment property, or could a small renovation boost capital growth? The Trio discuss the challenges of renovating in the current market, including costs, builder shortages, and rental vacancy risks.

Melbourne Market Insights & Growth Hotspots

As Melbourne’s property market heats up, the Trio explore:

• Current demand and competition for investment properties
• How interest rates impact investor confidence
• Which suburbs are showing the strongest growth potential

Could outer eastern suburbs or West Melbourne offer better value than Matthew’s initial choices? The Trio compare capital city vs. regional investment strategies.

Final Investment Advice: How to Make the Best Decision

Wrapping up, Dave and the team offer expert investment advice on structuring an investment property strategy, choosing the right asset, and managing risk. From understanding loan structures to finding the right buyer’s agent, the Trio share actionable steps for Matthew and any investor looking to buy.