Investing in Southport, QLD as a foreigner

E

Envision29

Hi,

I am a newby at investing and considering to purchase a property in Southport, QLD.
By law, since I live in Canada I must purchase an off the plan unit or the property that have not been occupied for more than 12 months.
I've been searching and searching the forum and the internet for 1 very important subject but can't find the answear. If you buy a new property what garantees you have that it will be rented out ??? How do those overseas investors make sure that their property always brings rent. I know there are management companies that look after your unit but they cannot provide a 100% garantee that they will find tennants (or can they ?), even if it's a low vacancy area.
So far I was considering a property like that :
http://www.domain.com.au/Property/For-Sale/Apartment/QLD/Southport/?adid=2008531264
but not limited to.
Could you suggest other development projects/areas I should consider ?
How is Southport, QLD regarded as an investment area ?
I did some research and found some review about this region :

''There is no better time to invest in Southport than now as local, interstate and overseas buyers are recognising the immense potential for capital growth. Southport has a massive amount of infrastructure currently underway. The $1.76 billion dollar Gold Coast University Hospital (Australia's largest hospital comprising 700 beds) is under construction and due for completion in 2012. The new hospital is going to bring 5000 new employees to the area. In addition, there has been a recent announcement that a 320 bed private hospital is to be co-located with the new GCU Hospital.

Stage one of the Rapid Transit project (Light Rail) has been approved and will have its first station located between the new hospital and Griffith University.

Griffith University (Gold Coast campus) remains one of Australia's fastest growing campuses and it's student numbers are set to increase further in the next 2 years as many students will be medical students studying and training from the new hospital.

Southport is located close to the Broadwater, beaches, with easy access to the M1motorway, surrounded by great shopping, restaurants and cafes

SOUTHPORT HAS IT ALL - A great place to live, study and work.''

Shouldn't this be a no-brainer for most investors or is there more to it ? At first I thought the whole part of Gold Coast is mainly a tourist area, so long term leases should be limited to people mainly in tourism sectors, but after doing some research it seems to be different. I would like to hear some comments from locals.
 
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Hi Envision,
Welcome to the forum :)
I'm interested why you're looking at investing in property in Australia while living in Montreal? Specifically Southport?

It's not usual to buy a property with a rental guarantee.. In fact, be suspicious if it is offered, because the guaratee would just be factored into the price, and they're usually for hard to let places.. once the guarentee expires, you're buggered.

Regarding this unit complex, you may need to do some more research to see how many similar buildings you'd be competing with in renting out.. I'm guessing there would be loads. I don't think hospital employees would be interested in renting there. Rich international students on the other hand would.. fully furnished you'd get a pretty good yield. You may want to ask what the strata fees would be? I'd guess $5k pa for a 2bedder..

The advertised price of $353k (for a brand new one bed + study + plus car park?) seems quite good to me.. I'd be interested in buying to live in.. there is great surfing the other side of the spit :D
 
I was in the same position as you when I lived in the UK and bought a couple of flats from Central Equity here in Melbourne. From a capital gain pov both proved to be duds - no lies told by CE, just statistics carefully presented in a way that leads you to make invalid deductions. On the letting side, both let very shortly after settlement and inter-tenancy voids have been measured in days, and the management has been first class. *If* the demand is there (I have no idea re this area), why wouldn't the manager want to keep it let - they're taking 7% or so of the rent.

As already noted, be careful with rent guarantees: what matters is the market rent which may well be lower. The one valid argument for a short rental guarantee is that when a very large building first becomes available, it is better to stage the occupancy, and the letting agents really don't need 3-500 people phoning up every day demanding that their unit is promoted as they have a mortgage to pay (as does everyone else doh). Also be careful with strata fees: the building I now live in was built by a Qld developer and they cut a deal (no doubt for $$$$$) which arguably gives the current managers a 25 year licence to print money.
 
Have you been to Southport? I don't have much of an opinion about it from the IP point of view, but there are many other suburbs on the Gold Coast that I'd rather live in.

Saying that, it may be an up and coming area. If you're looking at units, there are still sh*tloads of buildings going up around the area though, and your not likely to have a sea or even hinterland view.
 
Thank you for your replies. To answear some of the questions as to why I chose investing in Australia while living in Montreal, well I was vacationning in Gold Coast last year and really felt in love with the city and the atmosphere. So I thought that it would be really nice to invest in a property and with time when the place is completely paid off spend the entire 3 to 6 months (depending on tourist visa) vacationning in Gold Coast during cold winters in Canada. So my goal would be - not to make a quick buck by reselling, but rather the long term investment in order to keep the place for my own use in 20-25 years from now.
When we were vacationning in Australia, we stayed at Main Beach which is a very expensive part of G.C. but I did explore other areas around it, Surfers was too noisy, and Southport seemed like the only part of town I could afford financially.
My preference was to purchase a high rise unit, preferably with ocean views (mostly for the views and the fact that it can be managed by a company, since I will be overseas).
Now according to you I should be careful with rental garantees, but in my case it's the only option I see as I am not one of those rich investors who can buy a unit and allow it to be vacant for some time.
 
Envision29 said:
Thank you for your replies. To answear some of the questions as to why I chose investing in Australia while living in Montreal, well I was vacationning in Gold Coast last year and really felt in love with the city and the atmosphere. So I thought that it would be really nice to invest in a property and with time when the place is completely paid off spend the entire 3 to 6 months (depending on tourist visa) vacationning in Gold Coast during cold winters in Canada. So my goal would be - not to make a quick buck by reselling, but rather the long term investment in order to keep the place for my own use in 20-25 years from now.
When we were vacationning in Australia, we stayed at Main Beach which is a very expensive part of G.C. but I did explore other areas around it, Surfers was too noisy, and Southport seemed like the only part of town I could afford financially.
My preference was to purchase a high rise unit, preferably with ocean views (mostly for the views and the fact that it can be managed by a company, since I will be overseas).
Now according to you I should be careful with rental garantees, but in my case it's the only option I see as I am not one of those rich investors who can buy a unit and allow it to be vacant for some time.
Click to expand...

as an investment i wouldn't touch the gold coast (in general but especially atm) - just my preference

but from this post it seems it's a bit of a mix of investment, but mostly a consumer item. if you want to holiday there go for it.
 
southport is on its way up however like many as an investment the whole of gold coast has decreased and you would need to sit on it for 10yrs plus ....however if its not only for investment and holidays etc then go for it....i would rather prefer broadbeach but thats my opinion.
 
these units have been struggling to sell, developer went bust during the gfc. development since rescued, rentals very good value here for the person renting. no doubt very expensive strata fees. short term might look like lower value investment.

Also always worries me the quality of fit & finish in these types of buildings. Quite often very poor, slapped together.

long term good proposition i think. very good area for future growth, southport slowly coming to life. gentryfying you could say.
 
Gold Coast is over-supplied. The amenity of Southport is good however there is no shortage of stock there. There is nothing hedging new stock to differentiate it from other new stock. Meriton's Harry Triguboff has deferred developing due to excess stock for the time being.

Invest elsewhere.

Holiday there (Gold Coast) by all means and rent for the time you wish/desire and stay at different places. I wouldn't holiday in Southport itself. I prefer Broadbeach or Burleigh Heads. Might stay at Coolangatta next time.........good to stay at different places.
 
gold coast is over supplied,I live here and the choise is overpowering there are 3 beders going for 290k in bundall but the body corp and management fees are outrages!!!!then you have to pay a rip off rates fees avery year on top!!!!yep a ten year return is average....just live here and dont get too excited about rent returns,goldcoast has been done like a dogs breakfast,great place too retire in .
 
Gold coast is oversupplied atm which could be good for someone looking to buy 2nd hand because prices will be coming down but its not so good for new developments.

Unless you have someone on the ground who will look after your interests (like a buyers agent) I feel that you'll be taken for a ride and you'll be stuck with a dud invesment.

IMO Just buy off the plan in one of the capital cities where there is no shortage of tenants and capital gains is more likely to occur because of demand.
 
I have been invested in southport for many years now. As a player in that market i can tell you it has gotten better rental returns than some of my inner brisbane city units. (5kms from cbd)

True there is current oversupply and capital growth has been slow since 2007. But the rental returns have been rising steadily while my brisbane units rental returns have actually been going backwards due to many young Australians using the FHOG. For example a unit i own at windsor was renting for $380 week pre GFC, is now being rented for $350 a week

With future infrastructure, new jobs and a rising population, as a hold position i am a buy today. Prices are low and in some cases still falling, invest counter cyclically.

Today units i bought in southport 3 years ago are now cashflow neutral. With the added benifet of substansial future capital gains in the future.
 
Envision29 said:
Thank you for your replies. To answear some of the questions as to why I chose investing in Australia while living in Montreal, well I was vacationning in Gold Coast last year and really felt in love with the city and the atmosphere. So I thought that it would be really nice to invest in a property and with time when the place is completely paid off spend the entire 3 to 6 months (depending on tourist visa) vacationning in Gold Coast during cold winters in Canada. So my goal would be - not to make a quick buck by reselling, but rather the long term investment in order to keep the place for my own use in 20-25 years from now.
When we were vacationning in Australia, we stayed at Main Beach which is a very expensive part of G.C. but I did explore other areas around it, Surfers was too noisy, and Southport seemed like the only part of town I could afford financially.
My preference was to purchase a high rise unit, preferably with ocean views (mostly for the views and the fact that it can be managed by a company, since I will be overseas).
Now according to you I should be careful with rental garantees, but in my case it's the only option I see as I am not one of those rich investors who can buy a unit and allow it to be vacant for some time.
Click to expand...

If you want something like the gold coast, why don't you try Miami.

To me when I went through Miami (Florida - not Gold Coast), it reminded me of exactly Surfers Paradise. (albeit the dated architecture)

With the GFC, you can pick up a few for the price of the GC one??!!

F
 
Player said:
Gold Coast is over-supplied. The amenity of Southport is good however there is no shortage of stock there. There is nothing hedging new stock to differentiate it from other new stock. Meriton's Harry Triguboff has deferred developing due to excess stock for the time being.

Invest elsewhere.

Holiday there (Gold Coast) by all means and rent for the time you wish/desire and stay at different places. I wouldn't holiday in Southport itself. I prefer Broadbeach or Burleigh Heads. Might stay at Coolangatta next time.........good to stay at different places.
Click to expand...

OK Player .... I agree in staying at different places for different visits, but once you have a holiday on the other side of Brisbane (Sunshine Coast), you wouldn't want to holiday anywhere else. :)

F
 
BV said:
Gold coast is oversupplied atm which could be good for someone looking to buy 2nd hand because prices will be coming down but its not so good for new developments.

Unless you have someone on the ground who will look after your interests (like a buyers agent) I feel that you'll be taken for a ride and you'll be stuck with a dud invesment.

IMO Just buy off the plan in one of the capital cities where there is no shortage of tenants and capital gains is more likely to occur because of demand.
Click to expand...

Second it. Here, Here,

F
 
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