What are peoples thoughts with purchasing property in flood affected areas, with the intention of renovating and refinance or flip?. Good idea or not? So many things to consider I suppose.
Personally I feel buying flood prone property as akeen to holding a time bomb, you just don't known when its going to go off (under). How do you factor in another flood through the place while doing the reno? Who will finance the place, I dare say banks etc maybe a bit stand offish, at the moment anyway, who will buy a property that is flood prone, will they be able to get finance or even insurance. How long will you have to hold onto the property before it will sell.
I agree there is a lot of things to consider. I feel there are better opportunity out there.
Just my 2 cents worth
Brian
Think supply and demand……..
Only a matter of time before people forget about the impending doom.
I had this exact same fleeting thought the other day at work of buying-fixing-flipping. I dont have the means or know how, but thought surely it could be feasible for a handy person, that could afford the holding costs until people are keen to buy.
Rover
I lived through the 1974 flood at Goodna, our house went under. I have 16 properties and not one of them is in a flood zone. You never forget. I would look at buying land in flood zone, only if it could be filled and made higher than the flood level. Or the house could be lifted to be made higher than the flood level.
You have to ask yourself the question, how am i going to sell this property? Or another question: how am i going to rent this property?
My thoughts only,
Kerrie http://propertyprospects.com.auHey Kerrie…the likelihood of another flood like the devstating one which just occurred is possible… yes but if it takes another 37 years to surface then just get on with business. The only thing I would ensure is that your Insurance coverage has that detail of "any flooding" in policy. There could be an earthquake as well…sometimes we just have to move on and get on with life. We can takes logical steps to ensure the basic due diligence is completed – but hey people don't forget but people still need to rent and buy houses as well. Mortgages may possibly be more difficult to place on flood affected areas as well, depending on bank etc. The fact that you have 16 houses under your belt shows your not new to the subject and very lucky that none were in any flood zones. Keep doing what your doing – yes the ideas of raising houses in some fashion is an idea – but people always shall find a way to squeeze a little more out of something. If you raise the house – someone will buy it and build in underneath after settlement to make more room regardless of the flood plain lapping the gutters on previous occassions. Enjoy! Onward and upward.
Hi Bruce
I don' think there is much of a debate to be had here. Let's ask all the 1974 flood victims, then the 2011 flood victims would they buy another house in the flood zone? Then we can ask all the people who helped clean up the flooded homes if they would buy the house they cleaned up.
If the answer is no, which I would suspect it to be, the market for the sale of the property is reduced by this number of people. It unrealistic to think a flood house will be easy to sell any time soon.
As for insurance, read your policy even if it has flood. My partners house flooded about 3 years ago on the Gold Coast. She was covered by Suncorp Metway for flood. Apparently there are more than 1 type of flood, e.g. flash flood is one of them. Depending on what the assessor decides your flood to be will decide how much the company will pay out.
Hi Investors, I remember +- 1987 massive flooding in the Georges Hall area .Houses flooded along the Georges' River even those on pylons.You could buy houses at bargain prices after the floods.Around #95,000, today possibly $750,000 to $1,000,000 .It would seem one would buy in high demand areas only at really low bargain prices.Just a thought. Regards Jeremy.
The things to be aware of is which and how many of the lenders will provide finance to purchase something in those aras at the moment and also what kind of coverage the insurance companies will provide and how much that will cost. Some of them are charging really high costs at the moment to cover new purchases in those areas..
Cheers, Ana
Be aware some areas are now marked in the LMI providers black book…and will only be financed under a 80% LVR ( where LMI is not payable)
If you buy in a area where finance is hard obtain- yes it may be cheap…but it be hard to sell as well! low capital gain ( ie look at how student accommodation works)
Cheap does NOT equate to bargain!
Just my thought.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
One obvious change from the flooding is how it's hit buyer sentiment over the whole of the market, not just the 2% of flood affected properties.
If you have the view that Brisbane is in a flat phase before growth kicks in at some point in the future, and we are into our fourth flat year capital growth wise now, then it's a better time to be buying now than at any time in the last three years, generally yields are pushing up which is a positive. However buyer sentiment is the lowest I can remember since 2007, the maximum number of buyers always tend to appear just after you've had that 20% growth in a year like we did in 2007
I think the market has taken a considered view to pricing in flood issues with property, true forced sales and bargain prices appear most everywhere so my bias is to still avoid any flood issues with a property, can't see anything compelling with flood areas at the moment unless perhaps you are looking to snap up a luxury waterfront house, even then it would just be because you are able to buy rather than any impressive discount as the reason.
Hi jhk31,
I'd have no issue if your plan is to renovate and refinance (as opposed to flip in the short term). Many of the suburbs that were partially flooded are well established and remain desirable places to live. The increased rental yields are likely to carry you thru nicely. If you've got a sound equity position and don't need LMI – with the right place go for it.
I'll throw a red herring out there but I definately believe that the extent of the flood in Brisbane this year was due to mismanagement of the dam – not being used for what it was meant for – flood mitigation. We drove over the dam wall the week prior to all the rains and were close enough to having wet feet. Watching the dam levels on the weather channel in December and early January, prior to the floods made us think 'what the…. are they doing'. It doesn't take $15m to work out this was largely avoidable and hopefully enough butt is being kicked / responsibilities put in place to ensure that the dam operates as it was intended to into the future.
All the best
Meg
I heard that in 1974 that dam mismanagement was the issue too. That when they opened the flood gates they couldn't close them again because trees and logs prevented them from closing. This flood was about 6 foot or 1.8mtr short of 1974 as the property I lived in at Goodna did not go under this time. It appears council has based a lot of faith in the new dam holding excessive amounts of water.
The Goodna RSL was built after 1974 and went under, it's still not being used. I'm wondering if a class action will be implemented as zoning after 1974 was not changed in these areas. The Ipswich City Council allowed many properties to be build in flood effected areas?
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