I’m often asked by client’s, what land size is ideal for an investment property. This is a loaded question as the answer can be subject to the client’s personal investment strategy, for example they may intend to later develop or subdivide the land. My approach is straight forward, I purchase investment properties for my clients that are set and forget, low maintenance and easy to rent out, although the land size is definitely important to get right.
New data confirms lot sizes continue to shrink. A report, sponsored by the Urban Development Institute of Australia shows in the past 3 years the median land lot size has shrunk from 458m2 (2014) to 428m2 and then 407m2 nationally, lot sizes were lowest in Perth, at 375m2 but I’ve seen micro blocks advertised and these are 80m2.
From my experience, there is a fine balance between having a lot that is too small or too large. For a property to be more attractive to tenants, there needs to be enough space for kids to play ball or for a small pet to run around. On the other hand, tenants won’t pay a premium just because there’s more land, it gets to a point where they will look at a property less favourably if they will need to spend all their weekend maintaining a big yard.
It’s important to be mindful that the investment property you purchase, needs to be what tenants want if you are to achieve the highest rent and keep the vacancy period to a minimum. Focus on a property that will appeal to the type of tenant that you want to attract, think low maintenance but with a land size big enough so the occupants don’t feel that they live on top of their neighbours.
My rule of thumb is 400m2 as a minimum lot size and I don’t go above 800m2, the larger the lot the more Council will charge for rates as their calculations are based on square meters.
Got a property investment question? I’d love to help. Send me an email and we’ll set up a time to chat.
“Simon, I just wanted to thank you for the outstanding job you did with my recent purchase of an investment property. Your approach was thorough and professional, taking all the stress out of sourcing, negotiating and completing the purchase. You were always available to respond to any questions I had and kept me informed during the whole process. Once again, many thanks.”
John Derrick – Bangor, Sydney