Capital Growth for Underwood, Logan, QLD?

I

Investor78

Hey all,

I have a 5 year old townhouse in Underwood, Logan (southern border of Brisbane) which has not grown in value since I purchased it for $364k in 2009.

It rents for $410 a week (5.8% yield) which has increased from $375/week when I bought it. It has had virtually no vacancy in that time which is great.

I am wondering what peoples opinion on Underwood are for capital growth in the near term and long term? I am hoping some of Brisbanes capital gains will start to filter out to this area soon.

My parents had a house nearby which more than doubled between 2002 and 2012, so the suburb has grown well in recent years.

Some more information about the property:

3 BR, 2.5 Bath, 1 Garage (air conditioned, modern design)
Across the road from Woolworths, servo, shops and Bunnings.
5 min drive to Kuraby train station
5 min drive to Springwood bus station (soon to be part of the south east busway)
7 min drive to Eight mile plains bus station (already part of busway with lots of carparking)
High rental demand
5 min drive to shops/services/aquatic centre on Logan rd
22 min drive to Brisbane CBD (no traffic)
About 35 townhouses in the development, with another similar sized devlopment across the road
Good depreciation, but still a small negative cashflow

Cheers,

Darren.
 
Hi Darren

I have recently done an analysis of suburbs across SEQ, and am impressed with Underwood. In my view, it's well located, popular, and one of the better locations in terms of rental growth. The data graphs attached suggest the suburb has also had some recent growth. From an investor perspective though, yields aren't the best. Personally, I don't advocate buying into a large complex. However, if I had an existing investment in Underwood, I would definitely hold onto it for now.

Cheers

Jen

(Disclaimer: the above is my opinion only and not to be taken as financial or investment advice)
Underwood realestate.com.jpg

Underwood-Residex.jpg
 
For that amount of money in a Logan city council, I wouldn't be buying a townhouse. Look for a house, perhaps something you can manufacture growth on from renovations.
 
D_One said:
For that amount of money in a Logan city council, I wouldn't be buying a townhouse. Look for a house, perhaps something you can manufacture growth on from renovations.
Click to expand...

Suburbs in Logan like Underwood, Springwood, Daisy Hill and Shailer Park are quite a lot more exxy than the likes of Logan Central, Woodridge, Kingston etc... totally different demographics and history.
 
JenJen said:
Hi Darren

I have recently done an analysis of suburbs across SEQ, and am impressed with Underwood. In my view, it's well located, popular, and one of the better locations in terms of rental growth. The data graphs attached suggest the suburb has also had some recent growth. From an investor perspective though, yields aren't the best. Personally, I don't advocate buying into a large complex. However, if I had an existing investment in Underwood, I would definitely hold onto it for now.

Cheers

Jen

(Disclaimer: the above is my opinion only and not to be taken as financial or investment advice)
View attachment 12332

View attachment 12333
Click to expand...

Hey Jen, thanks for the advice, glad to hear you think Underwood is ok. I didn't think this was a large complex, at the time I was considering a different townhouse in Loganlea (which had it at least 80 to 100 units) and I'm glad I steered away from that as last time I checked they were selling for 10-15% below what I would have paid.

The median unit value in Underwood is around $390k but I base my valuation on the 3 townhouses in my complex that are currently on the market with list prices of $359k to $399k. Maybe there has been a small amount of growth but it is not significant.

@D_one, Underwood does border with woodridge but it has alot of newer developments so I think it has become more like springwood in recent years. A strategy of buy a house and renovate might well be profitable but unfortunately I am already invested so I am really just looking at the future prospects of my particular property.
 
Can I please get people's impressions on Eight Mile Plains near Underwood. Something has come up close to Garden City. I loved the features until the words pool, manager and 50 townhouses were mentioned. lt is currently owner-occupied and the owners want to relocate to the bush.
 
Angel said:
Can I please get people's impressions on Eight Mile Plains near Underwood. Something has come up close to Garden City. I loved the features until the words pool, manager and 50 townhouses were mentioned. lt is currently owner-occupied and the owners want to relocate to the bush.
Click to expand...

First thing that comes to mind is that darn poor Gateway Motorway/Pacific Motorway interchange and merge.
 
norwoodman said:
First thing that comes to mind is that darn poor Gateway Motorway/Pacific Motorway interchange and merge.
Click to expand...

If you are a local you wouldn't be using that particular intersection to access the motorway. I was thinking the Garden City bus interchange. First thing that went through my mind this morning was: Manager. 50 townhouses. No way.:eek:
 
Hi Angel

I agree with the above comments.... 'manager' '50 townhouses' etc. would make me run a mile. Body Corps are generally painful at the best of times. Maybe have a look at what you can get after you have run a few miles, would be my suggestion.

Cheers

Jen
 
The townhouses that I've seen in Eight Mile Plains that are comparable to my one in Underwood (eg. 5 years old, 3 bed, 2.5 bath, 1 garage) are at least $30-$50k more expensive than what mine is worth (assuming I have estimated correct value of mine). They are neighbouring suburbs but EMP is part of Brisbane and is a few Kms closer to the CBD (plus it has the bus station part of the busway).

My townhouse is part of a group of ~35 with another similar sized complex across the road. The onsite managers have been quite good (there has been 3 in 5 years) and I've pretty much had full occupation over 5 years and always get my rent on time.

Body corp in my complex has actually become a bit cheaper over time and is currently $592 per qtr (complex has a pool) which I think is very reasonable for a new complex. Yield is around 5.7% on current estimate of value.
 
Oh and Garden City is very close by and currently undergoing a large extension which will bring some more jobs to the area, although I'm unsure how that might affect property values in nearby areas (can only be a positive though).
 
My 2c. When you bought 5 years ago not a good timing.
Market down/flat from 2009 to early 2012. I monitor the market since end 2012, its recover well so far.

If you can hold another 7-10 years, we will see the capital gain. Problem how about your cashflow?

Yes big complex have problems, but lets discuss options..
Since your complex have facility, can you try to jack up the rent by lease furnish?
Or how close to the uni, and try to rent by room with internet services?
 
Hi Zach, I agree it was not good timing when I bought in 2009. The capital gain is not there yet but my cashflow is fine, only slightly negatively geared.

I have faith that their might be some increasing demand over the next 12 months, I think Underwood just has not had it's run yet. The latest vacancy rates for Underwood are 1% with only 6 properties to rent so hopefully that keeps some pressure on rent rises.

The heat in the market earlier in the year seems to have died down a bit, so it will be interesting to see how things are looking mid to late spring.
 
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