Thoughts on Investing in Waterford West in Brisbane?

Hi Liana,
Personally I like what can be available in WW. It is an area that has more than its share of quite large blocks, along with good, solid homes at affordable prices. The train line is sort of handy (about 1 Km North for those that use it).

You don’t give away much in your question re the property ;) but my questions back at you would be these :-

1. With the median being around $350k, is the lower price reflective of the condition of the house?
2. What is the house’s “makeup”? Give more description
3. What is the land size? (I am seeing NEW houses for about $330k, but as a “cluster home”, perhaps with 200m2 of land – eerrkk!!)
4. Is the land potentially subdividable at a later date?
5. What is your priority/goal? Income or growth?
6. What appeals to you about this property?

Benny

Hi Liana,

Are there any other things I should be considering?

Hey, it is a good start – the rent return sounds good, but why is it above average? Are the figures “fudged”? What is the vacancy rate for the area (your RE agent should provide that info)? Maybe 4bd 2ba 2g homes are at a premium there (?) and can command a higher than average rent return….

Is the vendor “motivated”? i.e. have they bought elsewhere and MUST now sell this to be able to settle on the new place? Or is there another (hidden?) reason for the lower price. And no, that doesn’t have to be sinister – but it helps to be as sure as you can be. Oce you have bought it, it becomes yours, warts and all – good to find out about any warts right upfront.

e.g. Houses next to a school, or on a busy road (with restricted driveway entry/exit), or with a bus stop right outside, or next to shops, or….. (insert other “Eww” thoughts re houses) can see their prices lower than usual. Maybe nothing wrong with the house itself – just its location? Anyway, answers to those questions help you to KNOW why a price is lower than expected. If any “problems” are no big deal to you, then this might be a good buy.

Due diligence is all about “finding out stuff that may be glossed over, or not mentioned” that could affect your decision to buy if you knew it (e.g. was someone murdered in the house?). Hehe – I sound a bit morbid there, but hey, it happens. Would YOU buy a house that had such a history? It is an open question – no answer required.

I am not trying to put you off this place – it COULD be “a good little renter”. But that has yet to be determined….

Regards,
Benny

Good on you !! The first one is always exciting, if a bit knee-trembling too…..

Re vacancy rate, when I have put the question to RE agents, several needed an explanation of what I wanted. In essence, it is a percentage. Suburbs are said to be “in balance” at about 3% Vacancy Rate (3 out of every 100 rental properties are available for rent). So, if an agent has a rent roll of 200 properties, and 6 are available for rent, that is 3%.

If there are only 3 available out of 200, then that is 1.5% vacancy rate, and it indicates an area that renters want and like, and it can follow that rents are higher because of “scarcity”.

But if vacancy rate is (say) 5%, then landlords may even have to DROP rents to get a tenant. Knowing the vacancy rate for Waterford West would perhaps answer one of my earlier questions.

I notice your comment re Buyers Agent – they may have found you a “good little renter” and have already answered many of those questions, so yeah – go have a chat with them.

Good hunting,
Benny