Buying Below the Median House Price
Buying Below the Median House Price is a method of purchasing an investment property that is low-risk with the potential for a high reward. It is based on identifying suitable homes within an established suburb whose values are less than the median house price. The result of this type of investment property purchase is that it will always be in high demand as there is always a greater number of people trying to either purchase or rent a property in a suburb that would generally be above their affordability level. The second benefit of this type of property investment strategy is that the property will always be surrounded by far more expensive homes which will lift the value of this property at a higher rate than homes closer or above the median house price.
There are a number of Golden Rules to property investing and the first rule I always apply is Distance to Capital City which Budget Allows for and then the second rule is Biggest Block of Land Budget Allows for and this property meets all those requirements. The below map shows the location of the property and suburb with the Brisbane CBD in the background.
This is a real-life example of purchasing a good investment property in a suburb called McDowall. A very nice leafy suburb 14 Kilometers from the Brisbane CBD. The median house price for a 3 bedroom property in Mcdowall is $640,000. This property was purchased for $510,000 and whilst it is not the best property in the suburb, there is ample room for property improvements which will increase the value and returns.
When Buying Below the Median House Price it is important to consider the construction type of the property to ensure low maintenance or ongoing costs associated with the property. In this case, the property is a brick and tile construction of a good standard.
Return on Investment
Purchase Price: $510,000
Rental Return: $480 per week (This is the lowest Rental Return for the Suburb)
Return on Investment: 4.9%