Hi Benny,

I just purchased a copy of Steve’s book- 0 To 130 Properties In 3.5 Years, and looking forward reading through it. The way I see it, valuable advice shouldn’t be free!

I used the median house price from realstate.com.au. It doesn’t detail town houses or unit prices. When you look at the selling price for the town house I’m referring too (one side of a duplex), it looks like a bargain to me. To describe the property, its 2 story, 3 bedrooms upstairs, en suite, bathroom upstairs, with a balcony off the main bedroom. Kitchen, Living, dining with a 3rd toilet in the laundry. I don’t have the actual land size, however, based on the building drawings, I would estimate 130-140m2. These are basically built with a cookie cutter and mirror reverse approach all in one little community, but not a gated community. The area is right next to the freeway, with a bus top about 450 meters away, 30kms from Brisbane, 5km from the high school and 10-minute drive to the water. There’re some big blocks in the east side, so plenty of developments opportunities in the future.

As for the median house price for Burpengary east, there’s bugger all townhouses in the east, compared to the west. The East has some high-end houses and some big blocks. Looking at the lower end of the hoses solid, 4 bed, double garage, 2 baths on a 500-600m2 block for just over $400K, compared to higher end over a million. This indicates why the median house price is higher in the east. The key thing I’ve noticed is the big blocks of land in the east. With new developments planned for the future, this could drive the median house price down, if I’m on the right track?
The comment “Buy problem properties and sell solution properties” is bang on, however, considering I’m doing this in my SMSF, time poor, hassle free for 7-10 years and the tax reduction benefits, probably suites my situation for now, compared to relaying on super company’s and the stock exchange. I’m also looking at town houses in Northlands that’s is more matched to the median house price and doesn’t seem to have the same vacant land volume as Burpengary East. Plus, its not far from the hospital, so I figure better class of people.

To summarise the risk over reward. I probably won’t see much capital growth in the next 5 years, and there is the risk of the property being worth the same in 10 years from now, possibly less. Considering I can’t leverage off property in SMSF’s, I will need to inject a lot more into my super fund to buy the next one. I’m hearing lenders don’t like to people buying property in SMSF’s, and the rules are changing reduce people buying properties in SMSF.

I’m not in a position to buy another property out of super for the next 12 months at least. So, with your experience and knowledge, would you consider doing this in a SMSF, if the numbers stack up to be positive cash flow, or run the other way?

Mick.

Thanks Benny.
I’m in the process of setting up my SMSF, and looking to buy a new place being the preferred way, subjected to approval from ASIC, APRIA and ATO.
Obviously there’s the deprecation and fixtures straight up with a new property over an existing property, but there’s also a premiums with the developer and managing agent margins in the purchase price.

My main concern with buying a new place vs existing, is the value of the new one in 10 years’ time. Also looking at the area, the medium house price was $568k in 2010, dropped to $445k in 2015 and increased to $530k in 2017, still below 2010. With that said, this area is growing, with lots of major shopping centers nearby, such as Westfield and IKEA. They wouldn’t build in these areas, without having a very good understanding of the area.

The land and town house size is basically the same, and there’s about $20pw more rental for the new place. I keep hearing there will be a down turn in the economy in 2019, so a new place under the median rental will always be more attractive to rent. There’s also the ongoing maintenance to consider with new vs old.

Cheers