Where are the best places to invest in Melbourne?

You’re probably thinking a four-bedroom home with water views would be any renters dream, but it turns out they are only worried about the simple things.

Surprising new research has found if you rent out a house in wealthy suburbs like Toorak or Balwyn, chances are you’re not going to make your money back.

Melbourne University academics have found where investors can get the best bang for their buck and have proven the house itself is not the most important thing.

Property lecturer Dr Andy Krause and urban analytics lecturer Dr Gideon Aschwanden have found what renters really want are options.

Researchers say renters don’t need water views.Source:Supplied

By using Domain Group data, they found investors with houses within 500m of a train station or near RMIT or Melbourne University, were best off.

“Renters, generally speaking, have lower incomes and are less likely to own a vehicle and are more dependent on public transportation,” Dr Krause said.

“It’s probably safe to say they are generally younger as well and are more amenable to taking public transport — it’s easier for somebody in their 20s than somebody in their 70s.”

People want to rent within 500m of train stations. Picture: Eugene HylandSource:News Corp Australia

Dr Krause said properties around Carlton and even units in the Docklands also stood out as investments that gave back generously.

Balwyn and Toorak are more affluent areas, and the suburbs mostly have amenities that would suit a homeowner, not a renter.

Dr Krause said homeowners were more interested in being in a district close to schools, while it wasn’t a main priority for renters.

Renters don’t care about being close to schools as much as homeowners.Source:News Limited

He said investors wanting the best bang for their buck should avoid south east suburbs and wealthy parts of town.

“I think our research shows if you’re buying an investment — your second or third home purely to rent out — you need to think about amenities renters want, don’t think about what you want,” Dr Krause said.

“An investor needs to change their mindset a little bit and ask themselves what renters pay for, whether that’s proximity to public transport or something else.”

Dr Krause found those who invested in apartments were getting better returns than those with houses and believed it was because they were located in more convenient areas.

“Unit prices are a bit more stable and geared towards renters as well,” he said.

“Rental income is something that keeps coming in every month and if the property is in a decent place, you’re going to get a renter.”

At the moment the academics have only looked at the wants of Melbourne renters, but plan to investigate whether those in Sydney and Brisbane care about the same things, like proximity to universities and train stations.