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  • Profile photo of King of the CastleKing of the Castle
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    @king-of-the-castle
    Join Date: 2006
    Post Count: 8
    September 27, 2006 - 1:04 pm

    Hi,

    I’m thinking about entering the Brisbane property market as an investor in mid 2007, (currently overseas), and I’m worried that the property will lose value over the next 5 years, ie, negative capital growth.
    I’m only worried because I plan on using 100% finance on an interest only loan due to a lack of capital.

    I know that growth rates in Brisbane are third only to Perth and Darwin, however as we all know nothing is certain in this day and age. And after reading some of the replies to this post, it seems that the property market has a pretty bleak outlook for the short-to-mid term.

    I’m also aware that you can make money regardless of the current cycle if you choose carefully and buy the right property for the right price, but as you know, these opportunities are few and far between.

    I guess I’m asking for opinions on a 5-year outlook for the inner Brisbane property market and whether or not you think an interest only loan is wise for the period 2007 – 2012.

    Cheers.
    [king]

    Profile photo of King of the CastleKing of the Castle
    Member
    @king-of-the-castle
    Join Date: 2006
    Post Count: 8
    August 31, 2006 - 12:41 pm

    Wow, with all the annual fees that are required to successfully maintain an IP it’s a wonder that anyone breaks even, let alone being positively geared.
    It’s almost enough to be turned off real estate as an investment option.

    I suspected that a property management company would be bound by those laws that apply to trusts and other financial services.

    Thanks for your feedback Dr.X.
    [king]

    Profile photo of King of the CastleKing of the Castle
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    @king-of-the-castle
    Join Date: 2006
    Post Count: 8
    August 31, 2006 - 10:49 am

    Thanks for the feedback Tammy.
    : )

    I was referring to the Gross income from both property types. It might be helpful to illustrate my point with an example.

    Eg. Both a city apartment and a townhouse in an inner suburb are selling for 330,000 (both 2bdr).

    Rental income for the high-rise apartment is $450 per week (7.1% Gross ROI).
    Rental income for the inner suburb townhouse is $315 per week (4.9% Gross ROI).

    Why then, are there so many of these city apartments available if they offer a similar capital gain, similar annual fees (body corporate), but receive much higher returns?
    Is there something that I am missing here?
    Why wouldn’t everyone be buying these units, (because they clearly aren’t)?
    Can anyone offer any explanation?
    Or to re-phrase, why shouldn’t I buy a unit in a city tower as opposed to the alternative?
    [king]

    Profile photo of King of the CastleKing of the Castle
    Member
    @king-of-the-castle
    Join Date: 2006
    Post Count: 8
    August 28, 2006 - 2:33 pm

    Thanks Josh, I will definately look into it.
    Cheers.
    [king]

    Profile photo of King of the CastleKing of the Castle
    Member
    @king-of-the-castle
    Join Date: 2006
    Post Count: 8
    August 28, 2006 - 2:29 pm

    Thanks Richard,
    I guess the best thing for me to do is to start small by saving enough to cover the costs of purchasing one or two ip’s rather than borrowing more than the value of the properties to cover these costs.
    It’s just frustrating having to wait on the sideline while I save a few thousand to cover stamp duty. Such is life.
    Cheers.
    [king]

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