Mum and dad investors quit housing for fast food and petrol stations

Falling house prices and increased regulation are driving mum and dad investors out of residential property and into higher-yielding commercial assets like fast food outlets, petrol stations and childcare centres which come with long leases to major brands and sit on prime land banks.

“I was in the room when contracts were being signed and many of those people were first-time investors in commercial property,” Ms Filmer toldThis anecdotal evidence is borne out in research done by research house PropTrak.It shows that investors’ share of total housing purchases has fallen from about 15 per cent in late 2018 and early 2019 to just 5 per cent at the end of 2022.

Many of the buyers, Ms Filmer said, were paying with cash, and therefore not impacted by rising interest rates.“These are mum and dad investors who were previously negatively geared in residential property. They can put the same money into something like a Subway restaurant and get a higher return and not have to worry about anything.”

She added that the increase in average yields from 4.88 per cent in December to 5.41 per cent last week was also encouraging other cash buyers back into the market on the perception that there is “value for them”.However, whilst yields have increased, analysis of Burgess Rawson portfolio auctions going back a year, shows the average yield has bounced around between about 4.75 per cent and 5.5 per cent, whilst the Reserve Bank has increased the cash rate by 325 basis points over that time.

Is this why we have a rental crisis? Wait a minute,the properties investors are not buying are still there to be rented. Aren't they? There is too much fast food and it does even more damage to property than residential

The same hack real estate agents who spruiked fixed 2% rental increases on these assets 3 years ago, only for inflation to leave them in the dust. Nerds.

Petrol stations? I thought we all drive EVs soon 🤦‍♂️

JaimeeVey

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Source: FinancialReview - 🏆 2. / 90 Read more »