Hi Wildcat
As with any area, there is Bayswater and then there is Bayswater.
Parts of the postcode are rather shabby, being largely owner built in the post war years when materials were scarce. The suburb then had cheap land, a rail line, and heavy industry, thereby providing work, transport and affordability.
There are many skillion roofed houses in the older parts of the suburb, a dead giveaway that the house was built on weekends with whatever materials there were to hand.
Other parts of the suburb, such as the housing estates of the 50s, 60s and 70s, have substantial brick veneer homes on decent sized blocks and enjoy all the services and infrastructure which have developed over the past fifty years.
The suburb has seen it’s highs and lows, but generally it has matured into a steady, upper working class area of quiet, respectable families and although it is not a high income area most of the dedicated residential areas are good value.
Around the fringes of the industrial or retail areas are most of the older properties, many of which have seen better days. I worked in the area for a while as a Body Corporate Manager and while most of the units we managed (after all, the owners had to be prepared to pay management fees) were well maintained, we were often neighbour to properties which had had no maintenance or improvements since built.
So as with everything, it pays to drive around the area and to choose the street wisely.
As residents age and move on to that great postcode in the sky, new families will move in to the area and with new families will come some level of gentrification. However, it is unlikely that you will see any great capital growth primarily because the suburb’s character and amenities are well established ie no significant new projects which might cause a spike in capital values.
You are more likely to see steady rental growth due to the reasons why the suburb was popular to begin with.
A few years ago I looked at buying a block of units close to the railway station. The most god-awful design you can imagine, in really poor visual condition but structurally sound and fully tenanted nonetheless. The purchaser literally painted the units, did the most basic repairs & maintenance, and put them back on the market at about 50% more than he paid for them.
Buying cheap is neither good nor bad, provided that there is a good reason for the particular property, and provided that you do not think that buying cheap means selling dear.
Go and have a look at about ten assorted properties (for sale and for rent) open for inspection and see what you think once you get there. Interestingly, some of the most stable and sought after areas for rentals are in the really large 1970s developments in and around Glen Park Road and Hamilton Road. These are local communities in their own right, and now with the new Bunnings etc close by have local amenities for the first time ever!
Happy hunting
Kristine
Melbourne Wildcat ! 
