Is Brisbane Still An Option?

[M_and_M]

Hello

I've spent the last 12 months reading reports, ignoring hype in the media and trying to decipher the best option for my situation; basically investing everything but hard earned cash to purchase my first investment property!

Would love to hear the thoughts of other forum members about good areas to consider in the Brisbane and greater Brisbane areas for a first investment? It doesn't need to be cash flow positive - in fact I'm definately looking to make my tax dollars do some exercise for a change - but would like to minimise (not eliminate) holding costs to allow another purchase in the near future.

I have been looking at houses on >600m2 land within an 8km range of the city under 550K but, possibly unsurprisingly for many of you, these often need extensive renovation before they can generate decent rent. Am I just approaching this all wrong? Any advice would be welcome.

 

[HandyAndy888]

Hello M&M,

Brisbane has many corridors in that price range and I suppose, the question is, what are you prepared to do? Is renovating something you're keen on? Do you want a "set and forget" investment? Are you after CF or CG?

Much, much to learn young grasshopper..the journey is long....

 

[stumunro]

Definitely a good option for a medium to long term hold, but I don't think you will see much happen in the next 12-18 months.

Be careful if you are going to renovate, make sure you find the benchmarks for renovated products and work out a feasability study using those numbers.
Often in a flat market the only difference between renovated and non-renovated product is that they sell. You don't have alot of sentiment in that market to drive the prices up so you get a good profit from what you spend.

Big risk of over capitalising. I would consider buying a house that CAN be renovated, holding it for a few years then doing it when the market is better.

 

[Mal P]

stumunro - Interested to know why you think Brisbane will be flat for a year or so? I only ask because I've been watching for a while as well, and I feel somewhat the same... there was a surge in purchases last three months (mostly lower priced stock) that as a result has inflated the asking price for what is currently on offer... however the higher values seem to have reduced the volume of sales a tad. With the coming interest rate rises, I'm making an educated guess that the current prices will hold, or only creep up marginally.

 

[M_and_M]

Thanks for your input

I'll keep studying...

 

[WinstonWolfe]

If you want to stay within 8km of the cbd, drop your land size to 405m2.
Many people are comfortable living on lots that size now.

Go the BCC website and study where infrastructure and transport is going to be updated.

 

[HappyCamper]

I went to Brissy on the weekend and looked around the Logan area. The market does seem really slow. Plenty of stock available and hardly anyone at opens. Of the several houses I saw, only 2 had someone else looking and a couple of these houses were going for auction that day too.

 

[tv2]

Hi,
It depends where you are looking at. I have been looking in the past two months in Rocklea, Acacia Ridge, (15km within CBD). I can tell you that any homes below $300K are sold quite quick. Logan is further away that's why the market is more quite.

I don't live in Brisbane, and I wonder if anyone here know about the flood zones in Brisbane, or where to find out such information? Why much of the old homes are built higher than ground level? I notice much of the newer homes are brick built and wonder what happen to them if flooded? Thanks.

 

[Amadio]

There are some new maps out to help figure out the flood zones:
http://www.brisbane.qld.gov.au/BCC:BASE::pc=PC_5909
http://www.brisbane.qld.gov.au/BCC:BASE::pc=PC_5909

There are some areas south of the river by the Gateway which have large lots, oldish houses - they seem to be residential pockets in mainly industrial areas, but because they are so close to the CBD and so close to the airport I think they can't help but continue to go up - Murrarie, Tingalpa, Balmoral etc

E.g

http://www.realestate.com.au/cgi-bi...r=&cc=&c=63504262&s=qld&snf=rbs&tm=1267423799
This one just needs a kitchen in the granny flat and you've already added value and increased rents.

Market seems a bit sluggish at the moment.

 

[GIDDO]

Went to 3 different opens on the Redcliffe Peninsula Brisbane on Saturday and only saw two other people inspecting properties.
Despite this, all of the agents were very confident that the market was very strong!
How can a mug punter like me find out what the market is really doing at a given time.

I really don't care much what the market was doing in December 09, because the climate was quite a lot different then, with FHB purchasers active.

 

[tv2]

Amadio, thanks for your suggestion. I hope amateur like me will use this as a tool to further their research in Brisbane market.

The house you suggested is suitable for owner occupier but is not too bad as an investment either. However, the risk is higher as an invesment. Although it has nice & spacious rooms, pictures show too much clutter. It needs a face lift to sale at $450K. Would you buy it at $450K?

 

[INVSTOR]

I would purchase in Bris now while there's not much competition.

 

[Amadio]

Amadio, thanks for your suggestion. I hope amateur like me will use this as a tool to further their research in Brisbane market.

The house you suggested is suitable for owner occupier but is not too bad as an investment either. However, the risk is higher as an invesment. Although it has nice & spacious rooms, pictures show too much clutter. It needs a face lift to sale at $450K. Would you buy it at $450K?

Hey, I'm an amateur too. Look past the clutter to the bones. You will never see anything if you look at the contents of the rooms. All the things that renters in Bris put on their must haves is there and more: covered garage, patio, fans, air conditioning, yard.

Write yourself a check list and tick off the items when you visit a property. That way you can remain cool instead of being influenced by the tenant mess.

I only put this house up as an example of house and land available in that part of Bris. so I'm not suggesting you take it further. However, take any house and start running the numbers. With this one it is probably rented for about $350 week rent -it is obviously tenanted now and the current figure will be available. Ask the agent but remember that if an agent opens his/her mouth they are lying. You have to see the actual lease agreement.

If you add the kitchen to the granny flat and rent it separately there is another $200. Total $550 week. Take into consideration any value added to the granny flat to make it rentable which gives you some depreciation and already the numbers are starting to look ok. Find rental yield spreadsheets on the net or on this site and put in the numbers.

Re price. Ye gads, I have never offered asking price in my life. You need to look at surrounding sales, do all your own homework. Agents are only going to tell you sales that suit their asking price - you need to find all the sales that they don't tell you about.

With a property like that - nothing special - just a boring house which needs work in a nondescript neighbourhood, I'd start in $300'sK. The last property I bought was in Victoria with an ask of $420K and I offered a take it or leave it price of $380K plus the usual clauses for building and termite reports etc. and 6 hours for them to decide. Don't muck around playing games. Once you run the numbers for you should know exactly what good value is.

This is all just me blathering on about stuff in general - practise identifying potential properties and doing the sums and you'll find you are ready in no time at all. Hope this helped. Good luck.