Advice appreciated re investment properties – Kealba and Glenroy

Hello all,

I have recently purchased a block of land in Kealba. It is directly opposite Brimbank Park and is the last area that can be developed directly on the park.

I also own an investment property in Glenroy -2 bed, 2bath, street frontage townhouse on block of 3 about a year old that is currently rented at a good yield.

I am looking to off-load one of these in order to focus on other business ventures but am struggling to decide which way to go.

I can either keep the Glenroy townhouse and sell the Kealba land when it settles in the coming months, or sell Glenroy and build on the Kealba land and rent out.

I am struggling to find much data on Kealba and this property would be quite unique in the area, which makes it even more difficult to compare.

The land is small being 360sqm, but as it fronts onto the park, I dont feel this is a major problem. The house I would build is 4bed, 3 bath double storey with balcony and luxury finishings including landscaping, fencing, deck and all quality internal fixings. I have a fixed price contract for this should I choose to proceed. All up for house and land, finished product would cost around $520,000. I can consolidate the loan so would not pay any interest until finished and hopefully rent out soon after.

The mortgage will be more to service than my Glenroy townhouse but I also see more potential for capital growth in the Kealba property. One, it is on its own title on a larger parcel of land, and two it has a major point of difference being the park. It is also a well designed house with quality finishings.

My concern with Glenroy is that the townhouse, although one of the nicer and larger ones, will have no major point of difference in 10 years time. It is likely to be a suburb of townhouses so what will differentiate it…Hopefully there would still be demand but it is hard to say. Both properties will be similar distances from the city 13km Glenroy versus 15km Kealba, though Glenroy is slightly more convenient with the zone 1 train line. Both have good access to major roads. So, going on all that, I see more upside with Kealba.

However, my concern with Kealba is whether there are a few fundamentals that will prevent it from ever taking off. I worry about the proximity to the flight path for Melbourne airport, as well as the visible power lines in the area. Also, from my research the rental yield isn't fantastic, although I have not been able to find comparible properties that are new and on the park, so possibly that would improve the yield slightly.

I am however unsure if people want to pay $600k+ or rent for $400 a week+ in that area. Part of me thinks the things like distance from the city, the park, nice house design etc will win out, but the power lines and flight path do bother me and I would certainly prefer to buy or rent on the other side of town. I guess however, that a house of that quality, on a park would be significantly more to buy or rent in the SE / E and so there would be demand for it from people needing to be close to the city and wanting a nice, family home. The surrounding area around Brimbank Park seems quiet and nicely kept properties but it has been a slow growth area thus far from the data I've been able to source.

My main focus is which property is likely to do better over the next 5 – 10 years. I already have some equity in Glenroy from recent rises, but I also hope to have some built in equity in the Kealba property once completed. Rental yield is less significant, but I would need to be able to rent the Kealba property for $360+.

I would greatly appreciate all comments.

Many thanks.