Hi all
Just wondering if those who are in Queensland can provide me some assistance. Regarding to QLD properties, I sort of have someone I know who currently lives in Brisbane, but she only knows as much as Brisbane Metro area, but not so much outside of it.
Where about in QLD are worth putting some investment in based on your knowledge of QLD market?
I had someone who made some referrals for properties in City of Logan and specifically the one I got looked at is in Park Ridge.
The report provided seems to suggest very positive outcome, but I decided to do some offline research on my own.
The report (which uses Residex) suggested properties in that area are projected to have 10% growth for the next 5 years, and the property being looked at is likely to achieve a positive cash flow. (not much, but still positive rather than negative).
I checked on google map, and I can see it is about 30-40 minute drive from Brisbane CBD, but it looks like if taking transport, it would take over 90 minutes.
It also shows the area has a population of some 2300+ as of year 2011, which suggests it is quite a small town. Census data also seems to indicate the median age of that area is 54 years old, so it gives me the impression that the area is mostly people who are close to retiring.
With that information, I am not sure how did that 10% capital growth for next 5 years come about…
If someone who are familiar with QLD and has the necessary experience can help me out in this regard, that’d be great.
Further to that, when I went to some “default real estate” sites such as domain or realestata.com.au, it looks like there are lots of new constructions in that area.
So with a population of a bit over 2300 (median age 54 as of year 2011) and yet so many new constructions happening, wouldn’t that create a over supply of properties than the population/demand?
Hi Steven,
That data is too old to be useful.It also shows the area has a population of some 2300+ as of year 2011 …… and median age 54 as of year 2011……
In 2011, Park Ridge was an older suburb with mainly acreage blocks and old houses on it. Around that time the developers starting buying up the acreage properties, and many “oldies” took the money and went elsewhere. Also, there were probably a few farms that were also sold, as there is a HEAP of land around that suddenly started sprouting “House and Land” advertisements. This has been building now over the last few years.
So what you have in Park Ridge today is a HEAP of new homes being built, but with heaps of vacant land around them. And just down the road is Yarrabilba (the new “super-city” – blech!!) and also more recently, further East are another two suburbs around Logan Village where (again) old acreage properties and thousands of trees have been clear-felled in readiness for yet more new H&L builds.
In short, no scarcity, and I would be guessing that 10% for the next 5 years is akin to “The Impossible Dream” – sounds more like marketeer spin to me. I wouldn’t be buying new there (as an investor) in a pink fit. It may suit some new home-buyers – they tend to not need huge growth in value – they just want a place to call their own, and if it is all a new area, they will be at the forefront of any new School’s P&C groups. They will have neighbours also in nice new homes, and they will form a nice community (hopefully). SHops etc will likely follow, and, over time, the house values will start to move upward. But not in the immediate future IMHO.
The only “increase in value” would come from the marketeers putting up their new prices for next year’s tranche. With wages stagnant, I can’t see how people can pay more and more in years to come. And anyway, with so much land around, there is no scarcity to build a favourable supply/demand curve.
I’d be staying away unless you came across an OLD place with a huge block that allowed YOU to subdivide it – but even then, you would have acres of COMPETITION all around you – so, PASS !!!
Benny
Thanks Benny for the reply.
Actually, I pulled out year 2016 Census Data and it shows the area as of 2016 has 2500 population with median age 58, so not THAT much different from the year 2011 data.
Also, with regards to the 10% capital growth, it is from Residex, which to me looks more like a computer generated figure rather than a figure with human input in it. To be honest, figures generated by Big Data alone without human assessment always makes me feel skeptical to some degree.
Anyhow, compare to capital growth, my primary concern is how difficult is it to get a tenant if I were to buy an investment property (regardless of location really). While having good capital growth sounds good, but if I can’t get tenant and have to feed it with my own $$$ all the time, then that’s bad to me.
So which areas in QLD do you reckon is worth investing in?
How about Morayfield? I was some advertizing going around in that section called “Edge Creek”…
Cheers
StevenCanungra is a relatively lower priced town that still has pretty good yields and is not far from Surfers Paradise (say around 40 minutes). Not much for sale there at the moment, but it might get a boost from the Commonwealth Games next year. Logan area, maybe check out Beenleigh. Solid growth there last few years, on the train line, and I doubt you’d have trouble finding tenants. Regional, Kingaroy might be worth a look. New wind farm approved 50km down the road, new coal mine planned very close by, new Bunnings awaiting development approval, and yields over 6% at the moment.
Just my thoughts, obviously do your own analysis! Good luck!
Thanks Originalsinner.
A bit wary of mining towns. They get good when the miming is happening and become worthless when miming closes… So, if the town has nothing else to offer aside from mining, I get a bit scared, but I will do some research into that.
Do you have any comments in Morayfield by any chance?
Hi Steven,
I can’t help you with any comments re Morayfield, but what I wanted to share was to suggest you look at things from a different angle. It starts with measuring yourself re your skills, risk tolerance, knowledge, and financial capacity. Find out what your borrowing limits are early on – no use researching an area that you flat can’t afford.Next, consider what STYLE of investing you are looking for – growth or income, straight rental, buy/reno/rent or buy/reno/sell, buy/develop/rent or sell, homes or units, etc. Depending on which answers you favour, then you look at the demographics of the different areas.
My own situation called for (initially) buy/rent with a possibility to reno down the track, on good-sized blocks, in older suburbs. As the suburbs had existed for years, I KNEW their backgrounds – and I picked those that were desirable for families. It didn’t matter in my case if it were negative geared, so long as there was to be huge positive growth – but in fact, my first few were well positive (then Brisbane boomed from 2001 on to 2004). The reno’s helped extra with growth a few years later.
So, that was me when starting out – now what about you? Are you looking for straight buy/hold and growth, or are you wanting income? What demographic do you want in your properties? DINKs, YUPPIEs, young families, single person units, etc. Can you handle a long-distance reno if needed or desirable?
As you would have read in my earlier reply – I don’t have a lot of faith in brand new greenfield estates. I think you will likely have no growth in most of them for at least 5 years, and maybe even more (if the developers are “over-doing” the building).
Some developments move along quite slowly and are completed in a very pleasing fashion – Ormeau was one such development that I watched over many years. That is an area that I think will remain desirable (larger blocks and homes) but the facilities remain rather lacking – to me, the one bad part of Ormeau. Still, Beenleigh is not too far away.
Other developments in that area today are being thrown up at an alarming rate – Pimpama, Park Ridge, Yarrabilba…. Awful !! There is said to be a lot of o’seas money yet to be thrown at Pimpama and Coomera – I’ll believe it when I see it. If I were buying and it had to be there, I would be wanting to buy an OLDER property – at least you might then have a hope of a decent price, and a good-sized block.
Benny
Sorry Steven, I know nothing of Morayfield. Not interested at all in Beenleigh or Canungra?
Hi Benny
Thank you very much for your detailed explanation and suggestions.
To answer your first question, my ultimate goal is to be able to survive on comfortable terms even if I get fired by my boss and I am unable to find another suitable job (Imagine if I get fired when I am at age 60 and its another 10 long years before I can retire, there is no way I am going to be able to compete with young professionals in the job market).
So yes, you heard me, I work full time and I am time-poor and nor do is Real Estate my primary profession, thus I need to rely a lot on finding reliable team mates to ensure I invest correctly to achieve my ultimate goal.
As for my strategy, I bought my first investment property in Victoria, but I think it is not a very good buy, as it is both negatively geared and it didn’t seem to grow in terms of capital value. So it was a crappy buy on my part.
I am not into buying today and selling tomorrow style as I won’t be able to expand my portfolio this way, nor can I achieve my ultimate goal.
I need a balance between capital growth and positive cash flow. You see the thing is, in Melbourne and Sydney, both market are too hot and while some areas do have good capital growth, but most of them are too negatively geared for my liking. So even though properties in those areas may have good capital growth, but the rental income simply can’t catch up, which means even if I do manage to get equity released from those properties, I would eventually run out of money when I buy the next property or two as that would just push me deeper into the “negative gear hole”. So from that point of view, I can’t really buy properties that are too negatively geared (even if their capital growth look promising).
At the other hand, while having positive cash flow is good, if the property has no capital growth, then this means it is hard to get equity out of it and thus prevents me from being able to invest further down the track.
So I need a balance of both, but all in all, I am not looking to “buy and sell”, but rather “buy and grow”.
I live in Melbourne, so I have been primarily looking in Melbourne area in the past, but Melbourne market is current too hot and properties are too negatively geared to allow me to expand my portfolio.
The reason I am looking at interstate (QLD in this case) is I looked at data presented by the likes of CoreLogic, RPData, Residex and information referenced by Herron Todd White, as well as interviews and news articles on The Age, Realestate.com.au, etc… which all seem to indicate that while Sydney and Melbourne markets are too hot at the moment, QLD appears to have reached the bottom of the market and are entering “start of recovery” phase of the property cycle, which is the whole reason why I am taking QLD into consideration at first place.
The logic that I was presented when I was doing my research is that when the property market has a “boom factor”, such as to a new shopping centre being built and opening soon, or a railway line being constructed, or an industrial zone recently got re-zoned into a residential zone and thus will start to attract general residents, it makes more sense to enter the market while the boom is “on the horizon” rather than “wait for a few years for market to jump up and then enter” because by then the market may already become too hot and price is already too high to invest safely. An example of such is Cranbourne in Victoria, where people are buying despite it being too far away from CBD and transport is very inconvenient, simply because any closer to Melbourne CBD is just ridiculously expensive, and that pushed a huge number of buyers (especially first home buyers) into Cranbourne despite massive inconveniences. Experts are arguing Cranbourne market will raise on that basis. Maybe not tomorrow, but it won’t be long before it will raise.
Unfortunately, as Real Estate is not my primary profession, so my knowledge in this regard is somewhat limited, which is why I am asking questions here and there when I am doing my research.
I am not 100% sure what sort of demographic would fit the best into my criteria (a balance between capital growth and positive cash flow).
Hi Originalsinner
I will do some research into those 2 areas you suggested.
But based on your knowledge (you are much more familiar with those areas than I do), say Beenleigh, apart from being close to the train line, what else can you tell me about that area that makes it attractive to investors?
Also what about the demographics there?
What type of properties are more popular in that area?
What sort of yields can be expected and the level of capital growth if any?
Sorry for throwing down so many questions…
Cheers
StevenWell, Beenleigh’s on the train line, so convenient to public transport. Infrastructure includes 2 fair sized shopping centres. Logan Hyperdome is also just down the road. An abbatoir is a major employer. BMX track present. Suburb is on the highway, roughly halfway between Brisbane and Gold Coast, so probably something like 30-40 minutes to either if the roads are reaasonably clear. Town centre recently revamped to make a new town square that you’re not allowed to smoke in. New coffee shops and suchlike seem to be popping up; the place seems to be becoming gentrified. There are at least two schools about, and about 5 or 6 trendy gyms. Market on the weekends; Sunday, I think. Houses usually have decent sized yards, and many of them are selling below 300k. Some units are selling for well below 200k. Yields are currently reported as 5.5% for houses (http://www.realestate.com.au/invest/house-in-beenleigh,+qld+4207), and 7% for units (http://www.realestate.com.au/invest/unit-in-beenleigh,+qld+4207). Obviously, those figures vary from place to place, and I don’t think they take expenses into account (e.g. rates, body corporate etc). As for demographics, try here and scroll down: (https://www.realestate.com.au/neighbourhoods/beenleigh-4207-qld).
Would definitely suggest a competent property manager to vet tenants though. Whilst the place is beginning to gentrify, there are still plenty of bogans about. Also, check the flood maps available from the Logan Council website. I nearly bought a ground floor unit there that probably flooded during the last big rain, but I am very glad I passed on it based on structural.
Anyway, again, these are just my thoughts. Obviously, do your own analysis.
Good luck!
I’ll mention something else. A major problem with having a place far away is organising repairs. Basically, you can’t easily do minor repairs or evaluate big ones there yourself. Property manager will probably be happy to organise it for you, but it costs money, and they sometimes want stupid things done, and if you’re far away you can’t really drop by conveniently to see what the problem is. I had a 4 hour drive one time to nail two boards to a fence, which I was told was falling down or something. Another time, they wanted me to hire a gardener for $150 to trim a bush. I recall ringing them, baffled, and asking what was so wrong with a bush that it needs a $150 haircut? Oh, you think it’s a bit messy? Ok, if it’s bothering the tenants, they can trim it. An inch below the ground if they’re so inclined. Another time, I noticed in an inspection photo that an upright had fallen off a staircase. I don’t think they emphasised this in particular; it was just in a photo on the inspection report. They might have had a small mention under the photo, but I nearly missed it, and I regard stuff like that as a big problem that they should have confirmed I knew about. Problems like this seem to occur a lot less if you can easily drop by the property in question. Anyway, good luck!
Hi Benny
One more question if you don’t mind.
Another agent approached me checking if anything pops up in Pallara, whether I would consider. No pressure in buying though.
I checked a few places and here is what I am able to obtain so far:
1. It is only 19KM away from Brisbane
2. Google map shows there doesn’t appear to be any public transport that can go to Brisbane CBD, but car drive is only 30 minutes away.
3. I also looked at realestate.com.au and looks like there is a huge number of new properties coming up. So would you think this is the same story as those a few yukky places such as Park Ridge that you warned me about? Or is Pallara a different story?
4. The agent mentioned Pallara has been rezoned from Industrial to Residential
5. I was also presented with some CoreLogic data which seems to suggest capital growth will be promising but I am not sure if I should believe in it or not.On the surface, it looks like Queensland’s version of Victorian’s Cranbourne, but that’s only a initial feeling. More research need to be performed to verify that.
By the way, my mortgage broker calculated that I can pull about 140K equity from my Principle of Residence, and he thinks I can afford between 400-500K investment property…
I am trying to find out what next would be the best for me, based on my indication of ultimate goal.
Or do you agree with Originalsinner that maybe Beeleigh or Canungra are better picks?
To be clear, I’m not saying that Beenleigh or Canungra are better or worse picks than any other given area. Just saying that they’re worth evaluating. Good luck!
Hi Steven,
As for my strategy, I bought my first investment property in Victoria, but I think it is not a very good buy, as it is both negatively geared and it didn’t seem to grow in terms of capital value. So it was a crappy buy on my part.
My first reaction to that was “Did you buy a House & Land package with that one?” Your comments certainly fit with such a buy – but of course, it doesn’t have to be so. Watch that you don’t “hold on to a dog” if selling it can allow you to better use the money that is tied up in that one.
Mainly though, please don’t go buying another H&L package – and it seems that is what the Pallara development is.
Here’s a question that shows what I mean – Steven, if I could point you to an existing house for $350k on 700m2, would you prefer to buy just a 400m2 block of land for the same price (no house – if you want that, add a further $250k)?
It wouldn’t make sense to buy just the land – but what about the H&L for $600k? Why would you, if you could buy nearly TWO existing homes and bring in two rents for the same price? Steve McK says “Buy problems and sell solutions!” i.e. DON’T buy solutions – and a H&L package is a solution. The developer is solving a problem for a home buyer who wants a new place, but don’t know enough about property to get it built for themselves.
Steve says “Buy a house that has a problem you can solve”. So, you buy from someone who “just wants out” for whatever reason. They are prepared to accept a lower price just to get out of it – who knows why…. It maybe that the bank is about to foreclose and they want to walk away with their name and credit intact. Could YOU solve that problem for them? You sure could, if your finance was already approved and you were “ready”.
Or maybe you find a house where it has a large block of land – right now there is a house that can rent, but over time, you can bone up on subdividing a block and create an extra $100k for yourself, simply by buying this property now. Of course, you need to know that it really is subdividable in the first place. Further, what if someone in a regional area has a block of 4 units – they are rented at 8%, but they want to move back to the city to be with their grandkids. Out in the sticks, unit blocks don’t cost anywhere near what they cost in the city – maybe you can pick these up with $500k for all 4?
I have read it, or heard it said – profits are made in the mind first. Think about how you can make things “work” – learn to “run the numbers” so you can spot when something is a good deal. Practice by reading a few For Sale adverts, run the numbers to see if you could make a profit from what is being offered. (But DON’T rush out to buy something like that – yet – I am thinking of it as a kind of puzzle for you, so you develop an understanding of where profit is made).
From what I am seeing, you don’t want Pallara either. Take a look at this article by Jason that talks of H&L and/or OTP (Off The Plan) packages – and why, as an investor, you DON’T want them:-
https://www.propertyinvesting.com/buying-investment-property-off-plan-dumb/
Benny
Hi again, Steven,
I recall too that Steve wrote an article recently where he suggests we check the demographics of an area – that is one very important Article as it talks of how a largely Owner Occupied area has a far more stable price for properties than an area that is heavily owned by investors.
There is a wealth of other information in there too – enjoy !!
https://www.propertyinvesting.com/watch-out-for-this-simple-stat/Benny
Hi Benny.
No, it wasn’t a House and Land package. It was an established unit near a pretty good public school and fairly well established shopping area, but problem is the area itself is an expensive area, which means the value of the property itself was high when my family bought it, and it was back at a time our investment knowledge was very lacking, and part of the reason why we bought it is also due to we want our kid to attend that school when the time comes and we live quite a distance away from that zone.
Now days, I have been reading and studying much about property investing and I know much more than before, but I still consider myself to be a very time-poor person and my knowledge is far from sufficient.
Also, I don’t have a very good idea as where to source such “problematic properties” that fits within my budget either… certainly not in Victoria or anywhere close to my proximity.
Hi Steven,
part of the reason why we bought it is also due to we want our kid to attend that school when the time comes and we live quite a distance away from that zone.
Fair enough – suffice to say there were other (non-financial) reasons to purchase the unit, and maybe those same reasons will have you keep that one. Your call in the end.
The next one then probably needs to be for Income (not growth so much) and you may not be wanting one that is a reno opportunity. But you can still do well – I think the main thing is to take the time to decide what kind of property will work best for you, and continue to read to see how others do it. See, though one of us might “give you a fish”, it is actually way better that we “teach you to fish” so you might feed yourself for a lifetime rather than just for a day.
Reread my later comment a day or so back about “profits are made in the mind first” – have a go at something like that. You might not agree right now, but the very exercise of attempting to work those numbers (evaluate an ad in a newspaper to see if it can make you a profit) will have you starting to think differently.
That idea was originally presented to me when I attended one of the very first property seminars I had ever been to – it was in Melbourne, and I flew down from Sydney to be there. A young chap by the name of Steve had bought up a newspaper stand full of that morning’s papers that he distributed among the attendees, and directed us to look at the “offers” that were being made in the paper under “property for sale”.
Just by doing that, and with Steve McKnight offering suggestions, he showed us all just HOW to read the ads then run the numbers so we could see if there might be any good deals in there. That very practical display stuck with me all these years – and, back then, I started to read the “For Sale” ads a lot more keenly after that. At least one property I purchased I recall had come from that process. It was one of our first, and it turend out to be a very good buy that we retained as a renter for well over ten years. In that time it quadrupled in value (the last $100k lift was thanks to a $50k reno that also added a big lift to the rent too).
Who knows what you might turn up just by looking in the Property For Sale section. Have a go Steven, and keep us up to date with where you are at.
Regards,
BennyThanks Benny for the lengthy reply. I totally agree with you, that it is much better for me to learn to fish rather than be given a fish, which is why I am learning those. The only problem is that there is such a wealth information out there, and sometimes I get lost in all those information, and other times I see conflict advise from both point of view and both advise appears to “sound logical” and “make sense” and that causes me indecision.
Perhaps you can show me a very specific example of the ad that you looked at and illustrate how the number struck you and made sense? That might be much easier for me to understand rather than talking about theories?
You mentioned my next property may be better for income rather than for growth, in your opinion, what type of properties would fit the best into that category?
————————————————————–
With regards to House and Land package, I really appreciate the suggestions and questions that you provided me in one of your previous replies, and I think they are very helpful. However, allow me to explain why I feel indecision to H&L packages.
While what you said made complete sense, but in Victoria, there are a few places where H&L properties enjoyed very good capital growth, and they are mainly areas where Chinese migrants are living. (no, in this instance I am not talking about Box Hill, but rather an example would be Point Cook).
1. Point Cook is roughly some 20-25 KM from Melbourne CBD, roughly the same distance as how far Pallara is from Brisbane CBD. It takes roughly 30 minute to drive from Point Cook to Melbourne CBD and public transport would take over 1 hour even in non-peak hours.
2. A few years ago, Point Cook was not very well known to the Chinese community. However, a group of Chinese investors for some reasons decided Point Cook would become the next Chinese suburb or at least a suburb with significant Chinese migrants, so they started purchasing land at a massive scale and sub-divided them into H&L packages.
3. They then bombarded local Chinese newspaper with “home opportunities + investment opportunities in Point Cook”.
4. They bombarded the same via Chinese mobile app called “WeChat”, which is similar to WhatApp but with added functionalities such as “sharing a news article” much the same way as how facebook allows you to share news articles.
5. So within a very short amount of time, those H&L packages were sold at an incredible rate. A few years ago, it would something like “200 such packages were developed, and 150 of them would be sold before tomorrow while the remaining 50 ends up on the market such as domain.com or realestate.com.au”
6. And no, they were not sold to overseas Chinese investors, but they were sold to local Chinese migrants who are allowed to buy properties in Australia legally.
7. With enough Chinese migrants willing to relocate to Point Cook, this suburb quickly gained reputation within the Chinese migrants community, to the point where existing migrants are willing to relocate to Point Cook, as well as newly arrived Chinese migrants are willing to settle in Point Cook, and the reason is very simple: a) Easy access to Chinese gorecries and supermarkets, b) their neighbours are likely to be Chinese migrants too, c) shcool’s choice of Language Other than English becomes Chinese, and d) lastly, local Chinese migrants and Chinese Australians prefer to band together. So all of those are attractive factors to Chinese migrants or Chinese Australians.
8. So despite the factor that H&L packages are usually somewhat a poor choice, but in the case of Point Cook, they shined. In fact if I go to Point Cook today now, it is actually impossible to find 600-700sqm land properties any more, as such 600-700sqm land properties are almost extinct in Point Cook.
9. Those first wave of buyers who purchased in Point Cook, even though what they purchased was H&L package, but they are laughing today because both huge capital growth they enjoyed as well as positive cash flow for the past a few years.
10. Those who are buying today are still said to enjoy good capital growth for a few more years, but they can no longer enjoy positive cash flow any more because the price of Point Cook is already becoming very hot.
11. And we are still seeing additional Chinese Australians flooding into Point Cook, creating a supply/demand imbalance.
———————–
So I guess question that I have in my mind would be:
1. Now that both Melbourne and Sydney property market are becoming too hot but QLD market is enter a “start of recovery phase”, many Chinese buyers are turning their attention to QLD properties too. My friend seems to confirm that we recently there is surge in QLD property prices, especially in Brisbane capital.
2. So can the Chinese buyer replicate their success of Point Cook in QLD? Can there be a QLD version of Point Cook on the horizon very soon? If so, what suburb is likely to take up that reputation?
————————-
Again, I am not trying to say H&L packages are a good idea. In fact I very much agree with you that under most circumstances, they are a poor choice to invest in.
But at the other hand, there also seem to be quite a few examples and theories that suggest under the right circumstances, H&L can shine just as much as 600-700sqm land can, and it is the wealth of information and what appears to be the validity of both examples for and against the same type of properties that is causing me indecision and I am not too sure where to go from there….
Fair enough – suffice to say there were other (non-financial) reasons to purchase the unit, and maybe those same reasons will have you keep that one. Your call in the end.
The next one then probably needs to be for Income (not growth so much) and you may not be wanting one that is a reno opportunity. But you can still do well – I think the main thing is to take the time to decide what kind of property will work best for you, and continue to read to see how others do it. See, though one of us might “give you a fish”, it is actually way better that we “teach you to fish” so you might feed yourself for a lifetime rather than just for a day.
With regards to the first one, I am actually keen to get rid of that investment property as my family will be relocating our to that zone that is close enough to that public school as we obtained a new home there. I will just need to get my wife to agree on that.
As for “you may not be wanting one that is a reno opportunity” and “the main thing is to take the time to decide what kind of property will work best for you”. —- do you have any guidelines on what type of properties would be one that is “not a reno opportunity” but at the same time “allow more income rather than growth”?
I am a bit of at a toss right now, as I can’t really get a very good picture as what type of property would fit into that kind of category. Old properties would require a lot of reno work, but new properties generally speaking are sold at premium price, so I kind of feel like I am stuck in a go-no situation.
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