I don’t know the area you are considering, and as I read there are several questions/concerns popping into my head:
1. Are these properties at or below the market price.- Although my opinion is subjective, I believe they are slightly below market price.
2. Is the rent estimate actual or just an estimate from the agent. (sales agents quite often don’t know or lie). – One prop is currently tenanted & the new prop is an estimate independently confirmed by me. One agent tried to tell me rents were at $340 – yeah right!
3. Is there a good rent history and demand in the area for your selected property type. – I was told there are waiting lists for renters & didn’t believe it until I asked my brother to call 2 seperate agencies & pose as a rental applicant.
4. Is this the average rent return for the area or can you do better (to me these are not a very good rent returns – they may be ‘good for the area’. – good for the area with some big increases due in 07.
5. Are both built after 1987 to maximise depreciation claims for tax (I noticed one was new, so it will have good depreciation). -yes
6. Do you plan on using cash for a deposit or equity in your house. Using equity will make the I.P very cashflow negative and may affect your lifestyle considerably. -equity in my PPOR subject to an accountant’s advice (Any suggestions?)
7. Have you talked to a good accountant about your purchase structure to maximise future investing and asset protection and which type of loan is the best for you to use. – I have an appointment this week.
8. Have you talked to a good mortgage broker about the same as point 7 – they often know the best lenders to maximise borrowing power. – same as above, have an appointment this week.
9. Do you know a good insurance broker to help you with the all important coverage and landlord’s insurance. – Haven’t considered this. Thanks for the heads up.
10. Is there good prospects for cap growth in that area – to me, you would want very good cap growth to offset the poor rent return. (tip; if an agent says the rent return is good, ask them how many properties they own). – again, my subjective opinion is these 2 suburbs will have significant cap growth in the next 5 yrs.
11. Can you add value to the property to accelerate it’s value and rent return. – I plan to add air con to the rental so I can increase the rent on renewal.

A lot of your decision making will be determined by whether you are a cashflow investor or cap growth investor. – My strategy is to use cap growth as a wealth creation vehicle at this time.

BTW, I really appreciate both your & QLDs007’s detailed responses to my initial post. Thanks!