NSW investors looking to grow their wealth despite ongoing inflationary stressors are looking to regional areas with positive cash flow.
Cash flow positive suburbs generally have higher yields and returns for investors in all property types.
According to Helen Tarrant, founder of Unikorn Commercial Property and buyer’s agent, buyers should look to NSW suburbs such as Wagga Wagga, Albury and Maitland for a successful commercial venture.
Ms Tarrant said she was prioritizing NSW suburbs with higher business yield where there is more money coming into the business than going out, enabling long-term sustainable growth for investors.
“Wagga Wagga is an incredibly stable town to place a business investment with a yield of 6.5-7%. It has a military base and is a hub for many out-of-town investments,” Ms Tarrant said.
“This high yield really outperforms Sydney – you should look to Newcastle or the northern beaches for five or six per cent yields – many office and retail spaces in Sydney’s CBD have vacancy rates students.”
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Albury was considered a bubble economy for the commercial real estate investor, as one of the largest regional towns in the state attracted a large number of medical professionals.
High profile commercial trades like Harris Markets and SuperCheap Auto had also moved to Albury to cater to the growing population and occupy dwindling available land space.
“Many commercial investors are looking for the magical 7% return, but that’s only really possible in sparsely populated regional cities. Places like Broken Hill that receive 8% returns are the outlier, not the norm.
While Tarrant herself started small, she used equity from her existing portfolio to buy more properties, renovate and refurbish them to add value to get the most out of her investment.
Tarrant’s own portfolio is now 80% office and retail, with the remaining 20% invested in industrial space.
“It’s not about whether you should buy it today rather than tomorrow or next month. It really comes down to where you want to buy and what kind of return you want.
“Diversifying your commercial real estate portfolio could mean having property in regional and metropolitan areas.”
“It can also mean buying a retail business, offices and even a warehouse. Once you have the right mix, they balance out.
“You can leverage each other over the years to come and get cash flow and growth all the time, and then you can continue to refinance each other by withdrawing equity to do more deals in the future.
Experiencing the highest growth of any region during the pandemic, Maitland has fallen slightly from 7% to 6% this year.
The mining and defense industries drove production in this area, with yields declining as commercial purchase prices rose.
Ms Tarrant thinks more big brands should invest in Maitland to avoid severe contractions in the retail market.
Originally published as NSW’s regional suburbs top the list of top locations for investors statewide