Brisbane - to soar again?

[mystery]

I bought 2 x IP's in Ipswich area (Goodna, Redbank Plains) in April 07. Getting them re-valued this Friday (14th) as part of a portfolio refinance/restructure. I'll be keen to see what sort of growth they have had in 4-5 months.

I will post the result when I get the new values if anyone is interested.

Martin

Okay ... the valuations are back in ....

Goodna -
Paid $235,000 / April 07 ....new value $285,000 ...... $50,000 gain

Redbank Plains -
Paid $228,000 / April 07 ....new value $270,000 ..$42,000 gain

Combined growth ...... $92,000 ............. in 5 months

Oh yeah .... I'm happy ........

Martin

 

[Stella]

Okay ... the valuations are back in ....

Goodna -
Paid $235,000 / April 07 ....new value $285,000 ...... $50,000 gain

Redbank Plains -
Paid $228,000 / April 07 ....new value $270,000 ..$42,000 gain

Combined growth ...... $92,000 ............. in 5 months

Oh yeah .... I'm happy ........

Martin

Hi Martin,
Probably a dumb question but who/how is this valuation done & what are the costs involved? I have only ever had revaluations done by the bank when refinancing but it would ge good to be able to arrange this ourselves just to see how things are going without guestimating by ourselves.

Cheers
Stella

 

[eggnog]

thanks for that mystery. Looks like I should also get mine valued as well

 

[kissfan]

Okay ... the valuations are back in ....

Goodna -
Paid $235,000 / April 07 ....new value $285,000 ...... $50,000 gain

Redbank Plains -
Paid $228,000 / April 07 ....new value $270,000 ..$42,000 gain

Combined growth ...... $92,000 ............. in 5 months

Oh yeah .... I'm happy ........

Martin

Good stuff mystery.

I've also got a couple in the area, so hopefully they have gone up in value as well.

Regards
Marty

 

[Debt Junkie]

Ipswich Area ...

Mystery ... Kissfan ..? (Hi!)

I'm a bit surprised at the rent increases you've mentioned ... they seem a bit low ...

I work with someone who has a house out Ispwich way, and his PM recently advised that the property (standard brick and tile, less than 10 years old) was not renting for enough - and went on to recommend a rent increase from $200 per week to $280. Since the tenants are good, he's clearly not going to do that ... but he did get a happy surprise!

Regarding price increases and rent increases, I don't see why both can't happen at the same time - as long as you assume two different groups of people are causing the demand for each increase. Obviously it's not sustainable in the long term, though, but for now the impact on equity and cashflow is appreciated ...

DJ

 

[mystery]

Hi Martin,
Probably a dumb question but who/how is this valuation done & what are the costs involved? I have only ever had revaluations done by the bank when refinancing but it would ge good to be able to arrange this ourselves just to see how things are going without guestimating by ourselves.

Cheers
Stella

Stella, ..... on this occasion we had all our properties re-valued through a lender as we are refinancing and restructuring our portfolio with another lender. The mortgage broker has arranged and negotiated with the prospective lender so no upfront cost to us.

I have had some of my properties valued myself previously by going to my lender and getting the names of lender approved valuers from their panel of valuers list. From memory it cost me $220 for the report which was done in the lenders format in case I needed to submit a copy as proof of extra equity when lending against that property.


Martin

 

[mystery]

Mystery ... Kissfan ..? (Hi!)

I'm a bit surprised at the rent increases you've mentioned ... they seem a bit low ...

I work with someone who has a house out Ispwich way, and his PM recently advised that the property (standard brick and tile, less than 10 years old) was not renting for enough - and went on to recommend a rent increase from $200 per week to $280. Since the tenants are good, he's clearly not going to do that ... but he did get a happy surprise!

Regarding price increases and rent increases, I don't see why both can't happen at the same time - as long as you assume two different groups of people are causing the demand for each increase. Obviously it's not sustainable in the long term, though, but for now the impact on equity and cashflow is appreciated ...

DJ

Hi DJ ..... We realise that our SE Qld rents are probably slightly under value, but with the Goodna property a 14 year old 3 bed brick lowset property that already had tenants in place we were limited in the amount we could raise then rent as apparently a QLD law in place (PM told me) restricting the percentage of increase at any one time. We will gradually increase the rent periodically, but if the tenants move on then we can raise it to an acceptable market level in one hit. Probably $250 - $255 would be fair market value at present, so we are not to far away.

The second one in Redbank Plains is an older 2 bed (can be made 3 bed) brick lowset, but on 800m2 corner block. We could have hung out for $240pw, but happy to get tenants in quickly at $230,.... again we will review in 6 months. With these tenants they rented there previous house for around 16 years, so I'm happy to look after them and keep them in place.

We work on the philosophy of keeping rents at fair market value and trying to keep good tenants in place for the long term. It certainly saves money on re-letting costs which can be substantial. With your friends PM saying they could get $280pw .... terrific, but our properties are probably a lot different and certainly ours are older than your friends.

Martin

 

[Debt Junkie]

Martin - thanks for the reply ...

I am going to raise the issue of percentage increase in rent with the work friend ...

I am finding the opinion of landlords on this forum refreshing. Until recently, my discussions have been with 'accidental' landlords - you know, ended up with a single investment property more by chance than plan (which I guess is how many started out), but mostly looking to maximise rent or sell out ASAP.

In those discussions, the rental increases often sound more like extortion attempts ... anyway, I'm off on a tangent.

Was thinking of buying in Goodna area ... nice big blocks, train line etc

DJ

 

[yieldmatters]

you have a very good point! what's the median house price now in brisbane? I think it should be $500k and if not...it will be in the future.

dan, why not? considering renting is still much cheaper than buying for a tenant. One of my mil's IPs is rented at $350p/w and worth $450k. It's way cheaper than buying.

Did anybody understand this? If renting is way cheaper than buying then how will median house prices in Brisbane move up to $500K? I would have thought it to have the opposite effect. Low rent means no pressure on renters to become owner occupiers. Low rent means little incentive for investors to buy more realestate. I'm not sure what Sue meant - maybe the 2 comments were unrelated?

 

[wylie]

Check the Residential Tenancies Association (RTA) website. It will tell you about rent rises and rules - in fact - everything you need to know about renting in Queensland.

Wylie

 

[Debt Junkie]

Well, I've had a peek at Queensland's RTA website (thanks Wylie!) and there's nothing there about percentage of increase .... just how much notice has to be given.

There is reference to what a tenant can do if they believe there's been an 'excessive' rent increase, but no concrete definition for excessive...

"If a lessor gives a tenant notice of a proposed rent increase, and the tenant considers the increase is excessive the tenant may apply to the Tribunal for an order."

And further ...

s 53A (2) (b) - Tenant's application to tribunal about rent increase

What the tribunal must have regard to when making an order

In deciding the application, the Tribunal must have regard to the following: -

* The range of market rents usually charged for comparable premises
* The proposed increased rent compared to the current rent
* The state of repair of the premises
* The term of the tenancy
* The period since the last rent increase (if any)
* Anything else the Tribunal considers relevant

...

 

[wylie]

We recently increased rent from $330 to $365 without a murmur. It will go up another $30 next lease. If the tenants had left, we would have asked $395 but we prefer to keep the house full and increase it each six months. I have always believed if you can prove that the house was under market and that the increase is not unreasonable, you will ge okay but have never had a tenant take issue with increases, probably because usually we increase the rent when a tenant leaves.

It is only in this tight rental market and with tenants who have been in our IP for about three years, that we have had to ask sitting tenants for such a big increase. We are still under market, and they know they are on a good wicket right now, so I feel sure they will not kick up a fuss.

Wylie

 

[sue78]

Did anybody understand this? If renting is way cheaper than buying then how will median house prices in Brisbane move up to $500K? I would have thought it to have the opposite effect. Low rent means no pressure on renters to become owner occupiers. Low rent means little incentive for investors to buy more realestate. I'm not sure what Sue meant - maybe the 2 comments were unrelated?

For example, one property I looked at today cost $640k and rental is $420 p/w. Now how much would the mortgage repayments be on a $500k loan yet alone $640k...a lot more than $420 p/w. It's not low rent but it's lower than paying a mortgage....in fact rent is highest it has ever been. Rent is not the only factor for investors...capital growth is usally the bigger factor but anyway...rental market is excellent at the moment. There's a lot of pressure on renters to buy because rents keep increasing and they will keep getting price dout of the market with these mini booms.

Unfortunately, we have a situation where prices and rent are increasing and when they both increase simultaneously...renting is still cheaping than buying.

does anyone not understand this?

 

[alexlee]

Did anybody understand this? If renting is way cheaper than buying then how will median house prices in Brisbane move up to $500K? I would have thought it to have the opposite effect. Low rent means no pressure on renters to become owner occupiers. Low rent means little incentive for investors to buy more realestate. I'm not sure what Sue meant - maybe the 2 comments were unrelated?

From 2000 - 2003 Sydney rents were basically stagnant. Prices were jumping through the roof. I think most investors don't even look at yields: they look at capital gains.

You have to realise WHY rents are low. It indicates oversupply of IPs, i.e. there are lots of investors buying and renting their IPs out. Why would investors buy? Because prices are rising. Now, there is an IP shortage because investors aren't buying, so rents are rising. Why aren't investors buying? Because yields were pushed so low during the boom, and the only justification for buying at 3% yields, capital gains, is no longer there (for a while, anyway).
Alex

 

[letiha]

rent will not move as quickly as prices because you are only allowed to increase $10 to $15 max by law for existing tenants/lease renewals.QUOTE]

Actually not true, with my last renewal my rent went from $245 to $285 and i had only been there for 6 months, i said no i won't pay that much ended up getting $243 for a further 3 months, i got another renewal letter in the mail this week, rent is staying the smae, i thoink they had to many people move out when they put it up.

I've asked it to be week to week because i'm moving into my new house when its ready.

 

[sue78]

Letiha,

Did you check on your rights? either that or my PM doesn't know what she's doing. But I am pretty sure you cannot raise rents too high for existing tenants. There are more regulations in place to protect tenants than landlords.

 

[kaf]

Hi guys

We are just in the process to bringing rents up to market rents (after buying a place) and I've found no indication anywhere that limits how much you can raise the rent at lease renewal time. I think this is different for trying to raise the rent during the lease period (which is possible), as far as I know there are limits to how much you can raise it during a singe lease period.

Is this where the confucion could be?

Cheers

kaf