House and Land package + marina berth?

[YPG]

Hey everyone,

So here is a bit of background information before I ask your advice:

I have just bought a 1 level 4bed 2bath 2car 22sq house and land package in Hope Island on the Gold Coast for a fixed price of $473,000 minus the 17 grand first home buyers + QLD Boost. (Pretty annoyed that GCCC and Councillor's decided against the +8k for new builds on the coast haha, wouldnt 25k off be a nice present).

The house doesn't begin construction until early next year and than the plan is to live in the house for 6 months and then rent it out as an investment property.

The house has great design and is within a masterplanned community with its own private marina (3 nautical miles to sea) + surrounded by 3 golf courses, + tennis courts, restaurants, shops, medical centre, etc.

I think one of the biggest selling points is that the property is selling a lifestyle.

And although Hope Island has predominantly been an area with more expensive homes (900k+) and had an older demographic - it is currently becoming more popular for young families and people wanting to be part of the "lifestyle" due to housing prices being as low as under 500k.

Another point to note is there is quite a bit of demand for low set homes in the area as the older demographics prefer these.

So here is the main question:
The opportunity to purchase your own private marina on a 99 year lease is expected to come about over the next 12-24 months. Starting prices are at 40k - not sure about size but I would guess at least 5-6m. There are to be 99 marinas released for the masterplanned community where there is planned to be over 600 houses and 300 apartments.

Do you guys think it would be worth to buy a marina for 40k and rent it with the house and raise the rent? Because if there are only 99 marinas and over 900 households it might have a fair bit of demand?

The trick is you can only own a marina if you own a property in the master planned community and it can only be leased to someone living within the master planned community.

So I guess even if the person who rented my house didn't want it I may be able to find someone else in the area that wants to lease it.

I might have just rambled on and not explained things very well - but do people think it would also be a good investment to buy one of these 99 year lease marinas for 40k?

To buy a waterfront house in hope island is at least 700-800k (at least!). So wouldn't owning a marina berth and house for roughly 496k be a cheaper way to offer the boaties lifestyle? Would this be a good investment to pursue?

 

[Aaron_C]

I think the purchase of the leasehold in the marina will not be adequate security for most lenders. It will definitely not be available as security for any lender that requires LMI so it will be $40k out of your own pocket. Also think of your target market - if they are renting your house for ~500 pw, are these the type of people who can afford a boat to put in a marina? You are confusing 'lifestyle' with 'investing' - never confuse the two in business

 

[YPG]

Thanks for your reply Aaron,

I think the purchase of the leasehold in the marina will not be adequate security for most lenders. It will definitely not be available as security for any lender that requires LMI so it will be $40k out of your own pocket.

True - always thought that it would be something that would need to be bought outright with cash, this could be easily done. Just a question if the
money would be better utilized elsewhere.

Also think of your target market - if they are renting your house for ~500 pw, are these the type of people who can afford a boat to put in a marina?

I'm not talking about 150k sports cruisers, I am talking about all range of boats? a 20hp tinny can cost 5-10k, a ski boat can cost 20-40k, I don't even think a 50-60k would be out of range for someone paying $500 a week. If you look at the average income of Hope Island it is a lot higher than surrounding suburbs.

I think there would be a lot of people of the Gold Coast that rent and still own boats and just leave them on their property. Boating is one of the Gold Coasts biggest hobbies - just go out to the broad water on any weekend. I know times are tough for GC atm but it will bounce back and boating will always be big on the GC.

Because the stage I bought it was selling land for 249k and sold 80% in the first 2 months. The next stage has just been released at 339k and there are another 3 or so stages to go (just on one side of the overall area) it is expected that the actual final waterfront blocks will be going for 450-650k+. Surely these people could afford to own a boat for a marina? Not to mention the luxury apartments overlooking the marina. By the time those stages are released a lot of the marinas could have already been sold (remember 99 for 900 properties)


You are confusing 'lifestyle' with 'investing' - never confuse the two in business[/QUOTE]

Again I disagree with this, I think one of the reasons this property is such a good investment is because it has that unique factor, it offers a lifestyle for a fraction of the price.

For 500k you can buy a home and land package in other master planned communities on the gold coast but these are at ormeau, coomera and upper coomera. Much less desirable areas. If you were to ask a local where they would want to live it would be Hope island - it is a higher socioeconomic area with much lower crime rates than that of coomera. And sure coomera might have the town centre planned but I doubt that will be here at least 10 years.

Other lifestyle factors that the property offer is a gym, function room, pool, BBQ areas, parks with BBQs and kilometres of paths along the water. Yes there is a body corporate - but it is still reasonable.

The lifestyle that the property offers will be one of the highest selling points.
I disagree with you that the lifestyle a property provides shouldn't be considered when investing.

I would assume that a number of investors would not choose to do this and take their 40k elsewhere but I still want to consider it. And I'd like to hear any other reasons why or why not, Thanks.

 

[Propertunity]

You are confusing 'lifestyle' with 'investing' - never confuse the two in business

Again I disagree with this, I think one of the reasons this property is such a good investment is because it has that unique factor, it offers a lifestyle for a fraction of the price.

OK, so you'll probably disagree with me too, but I second what Aaron said, you are confusing lifestyle with investing. I take it that this is your first property?

Look I know a reasonable amount about Hope Island and the Gold Coast (used to live there many years ago). I also had some dealings with a company of Craig Gore's (son of the late Mike Gore who developed Sanctuary Cove) who was selling 'adult community' living (no kids) OTP a few years ago.

Hope Island may be having more younger people move in. But it is still predominatly the 50 - 59 year age group that is most represented.

A few of the stats really bother me at the moment as far as investing there goes:
1. According to sqm research the vacancy rate is currently 7.2% . This is a real problem especially since many areas in the nation are still sub 1%.
2. Capital Growth according to RP Data has been:
2009 -3.4%
2010 +9.5%
2011 - 10.7%

Look, over time it should come good - how long are you prepared to wait?

In relation to your specific Q about marina berths as an investment, a few years ago API Magazine did an article on them - from memory it was in WA - possibly Mandurah?.......and we all know how well that has been going for the last few years

 

[YPG]

Thanks for your reply prop.

Your right in your assumption that this is my first property. And maybe I am just too young and don't know what I am doing. But I am just about to finish a double degree in town planning/real estate and property development so I'd hope I would at least be able to choose an acceptable property, but maybe I haven't. Eh I guess time will tell.

Like we both said - HI predominately has an older demographic. Also a bit due to over 50s developments you said from Gore, Fish, and the likes. And I don't think these over 50s have done very well. Was it Halcyon waters or platinum waters that Gore did?

But anyways do you think this older age group is a bad thing?
Besides aren't we suppose to have a significant rise in aging population over the next few decades? Does this limit the overall pool of potential renters? Etc.

And I don't know the exact statistics but I think the number of younger people entering the area has risen a fair bit over the last 5 years.
Again I could be wrong?

And yeah the CG for this year has been really bad hasn't it, but I think that's why I and others could get it at this price. The poor people in the houses built in earlier stages a few years ago are trying to sell there houses for 600k where nobody is willing to pay it because they would rather wait and get a brand new house for 500k. So I wonder if this could happen to me? Man I'd like to see the CG statistics for Sovereign Islands are

I think overall GC must have had a pretty terrible capital growth this year. No developments.

Anyways I'm pretty positive and I think it will work out. This was always a long term thing - at least 15-20 years. I am lucky enough to have 50% being paid for me upfront, so at least I wont be in any danger of losing it if things go really bad with the market.

Do you think that the vacancy rates could be due to the million dollar houses in hope island not receiving the rent they are asking?
I have been keeping a close eye on the estate and houses in it are being rented between 450-550 and their listings have generally been taken offline after 2-3 weeks.

I dunno - hope I haven't made a sucker out of myself hah.

Cheers

 

[YPG]

Capital Growth in Median Prices

Hope Island vs Gold Coast Area

period % Change % Change

2011 -10.7% -3.9%

2010 9.5% 4.1%

2009 -3.4% -0.4%

2008 6.5% 3.6%

2007 18.2% 11.8%



Note: CG on Units in 2011 has been +15.4%.

 

[Propertunity]

...And maybe I am just too young and don't know what I am doing. But I am just about to finish a double degree in town planning/real estate and property development so I'd hope I would at least be able to choose an acceptable property, but maybe I haven't.

well you've got a whole lot more degrees than me All I've got is a 1/2 RE licence and a bunch of life experience

But anyways do you think this older age group is a bad thing?

I am biased because I am in this demographic.

Besides aren't we suppose to have a significant rise in aging population over the next few decades?

Yep.

Does this limit the overall pool of potential renters? Etc.

Depends if the oldies are renting or buying.

And I don't know the exact statistics but I think the number of younger people entering the area has risen a fair bit over the last 5 years. Again I could be wrong?

ABS stats are out of date now. We'll have to wait for the results of the latest census just recently done.

I think overall GC must have had a pretty terrible capital growth this year.

Oh yeah.

This was always a long term thing - at least 15-20 years.

One thing about RE is that it is very forgiving (to mistakes, if you've made one) in the long term. And you are only running 50% LVR which is pretty safe.

Do you think that the vacancy rates could be due to the million dollar houses in hope island not receiving the rent they are asking?

Maybe......I just had a look on re.com rentals and there were ninety (90) in total.

Cheers,