Loan pre-approvals by banks can be confusing. They aren't a rubber stamp to buy whatever you want, but some buyers are being a little too cautious.
What are the pros and cons of investing in larger regional towns?
In the current market, a budget of around $350,000 will buy you an entry level investment grade one bedroom apartment in an inner suburb of most of our capital cities, with a little more required in Melbourne and a fair amount more in Sydney.
For those whose budgets don’t reach this threshold, an investment in a larger regional city is an option. Consider those regional cities that have a larger population and a diverse range of economic activity and avoid one-industry conurbations such as mining or resort towns.
Be aware that due to the compromise in location, you are unlikely to attain the capital growth in a regional city that you can expect from the capital. The aim should therefore be to pay off debt quickly. With the acquired equity, you can then use this first property as a stepping stone into a capital city market.
Good options are Newcastle and Wollongong in New South Wales and Geelong, Ballarat, and Bendigo in Victoria. One must focus on property close to the town’s CBD, often within 1 kilometre of centre.
A word of warning. It is much easier to pick a quality asset in a capital city than in a regional centre. Follow the fundamentals for inner suburban investment and the risk is low. An investment in a regional town is far more problematic.
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