Is now the time to buy Cheapies in Queensland ?

[Garry K]

Will they stop stamp duty in Victoria as well?

I doubt it, the state would go broke or the speed cameras will have to make up the difference.

I can just see it, 2 kph over the speed limit = fine $500 and more than 5 kph under the speed limit = fine $200 for holding up traffic

GarryK

 

[XBenX]

As I mentioned in the chat room a little earlier today, any fall in the level of stamp duty (be it in Queensland or anywhere else) will have a more than proportionate positive effect on the prices of property (owing to the increase in demand - the demand curve will actually shift upwards).

Why does demand increase?

Consider a buyer who has 5% plus costs and who intends to borrow at 95% LVR and assume those "costs" include $1000 in stamp duty.

If that stamp duty is reduced to zero, then his 5% deposit has just grown by $1000.

Assuming servicibility is not an issue the buyer now has the capacity to spend an extra $20,000 on their property ($1k of their money, $19k borrowed).

This increase in their capacity to spend is, in economics terms, an increase in demand (as demand is defined by desire to buy at a certain price backed by the actual capacity to pay that price).

While this may sound good for buyers, I'd argue otherwise.

After all, anyone else who gets the benefit of the cut in stamp duty also has more to spend - how much more depends on their LVR and servicibility.

Buyers have additional spending power > other things being equal (supply held constant) buyers are forced to use their additional spending power > market as a whole gets forced up (perhaps to the tune of around $20k in this simple model).

Now could be the time to buy but either way bring on that cut in stamp duty - I could use some CG.

Re: interest rates

Just on SC's point. I am not nearly as bullish on interest rates as I was even a month ago. We could be playing the waiting game with the RBA for a few months.


MB

I started to write a reply and then read the rest of the thread including your reply.... us damn economists must all think the same. The demand / supply interaction was the first thing that came to my mind as well.

 

[Cat09Tails]

Oops! Sorry folks and Jude- my abacus was playing up

Yeah, I meant 5% = 5%! So a 200k property would yield $200 a week rent. That's better!

I guess my point was that I think it has been, currently is, and will be, in my opinion, easy to find 7.5% yields- at least- in Qld.

Forgiven? ))

Cat

 

[Lplate]

Hi Guys

[snip] There are still many suburbs in SEQ which in my opinion are still well undervalued (compared to other similar areas in other metropolitan areas) and in the current climate is a great opportunity to get in.

Thanks for reading

Hi Jude 78
What suburbs? New or established houses/units? What yield?
Thanks
Lplate

 

[andrew12121980]

Looking for advise on suburbs

Hi all

I’m living in Brisbane, I am currently selling my main residence apartment in Hawthorne.

I now am looking to buy a “Fix me Upper” (quick facelift) house.

I have up to $350,000 to spend but would rather spend around the $250,000 price range, but will spend my max. if it is property is right.

My aim is to get in and out with a three to six month time frame.

Could anyone recommend a suburb that is up and coming and that has good growth, to maximise our profit.

I also read that first time buyers from May 1st will not have to pay stamp duty. What is the opinion, on buying before or after May 1st. Should the value of property increase due to the demand of first time buyers after May 1st?

 

[CastleDreamer]

Hi all,

Do people here think that 5% is a good yield to be getting in Brissie at the moment?
Cheers
CD

 

[smiley]

Hi all,

Do people here think that 5% is a good yield to be getting in Brissie at the moment?
Cheers
CD

Dear CD,
Being no expert, but one who does his research pretty well, I would be happy with 5% at present in the median housing market. Units can offer better returns, but there is too heavy a reliance on offshore exchange students propping up the prices for my liking....
Cheers,
Smiley.

 

[Lplate]

Desirable Yield for Buy and Hold

Hi all,

Do people here think that 5% is a good yield to be getting in Brissie at the moment?
Cheers
CD

CastleDreamer
5% yield might be possible to get. However from searching the forum one could question whether 5% is a GOOD yield (ie desirable yield).

Not so long ago forumites were questionning whether 7% was too low. I notice in property investment books a higher yield is comtemplated and that is what the examples are based on.

Do you lower the yield 'bar' to suit a market where properties do not offer more? Why?

I wonder what 'buy & hold' stategists would advise in the present climate as the lowest yield they aim for. Interest rates aren't that low any more and one should I believe that one should factor in some 'fat' in case of interest rate change.

I want to make my living from yield not from turning properties over and 5% does not give sufficient margin IMHO.

Perhaps some may help with worked examples. C'mon fellas.
Lplate

Lplate

 

[Sunfish]

CastleDreamer
5% yield might be possible to get. However from searching the forum one could question whether 5% is a GOOD yield (ie desirable yield).

Not so long ago forumites were questionning whether 7% was too low. I notice in property investment books a higher yield is comtemplated and that is what the examples are based on.

5%gross becomes 3%nett after exs and land tax. Fast forward 2yrs with interest rates up another 1% min and your holding costs would be more than a koala could bear. There are other investments with better returns and min. holding costs but they may be more difficult than RE. Don't let that stop you though. Start reading!

The only bright light I see for RE is if we get another surge in inflation as we had in the '70s. (quite possible, it may be about to happen in the US) This was great for home owners who saw their wages rise and their mortgages shrink before their eyes. Not sure though about "professional investors" benefitting in the same way.

Thommo

 

[see_change]

Hi all,

Do people here think that 5% is a good yield to be getting in Brissie at the moment?
Cheers
CD

Would agree with the others above. If 5 % is the best you can get , maybe it's time to stand to one side.

Some "guru's" including Robert Kiyosaki have said at times it's best to wait. RK actually waited about five years before finding an IP that suited his criteria.

One reason to buy at that sort of yield ( assuming it was the best you could find ) , would be if you were paying off capital and using it as a sort of enforced saving plan. Some people don't have the discipline to save well ( me for one ) and if I was getting into the market for the first time at this stage , I'd be tempted to buy one el Cheapo and pay it off as fast as I can.

I certainly wouldn't buy at that yield if it was going to put me under any sort of potential financial strain.

See Change

 

[Sunstone]

Dear CastleDreamer,

I agree with See_Change, Thommo and Lplate.

With a 5% gross yield I would not be investing.......... Unless it had substantial development potential. I turned down a 8.5% one the other day because it had no development potential and my concerns over it's ongoing vacancy rate.

However it comes down to your own investing criteria. Can you see things that others can't? Or can you better utilise the funds by re-investing in your existing IP's?

Enjoy the journey.

Cheers,

Sunstone.

 

[willair]

Andrew12121980,
imho,have a look at these areas,Tarragindi 4121,inner southside,highgate hill,Annerley,
rocklea4107 i have rental properties in these areas and i have seen several that are in
the low 300ks in need of some reno work,just walk around the streets and obtain a feel for those areas.
good luck
willair..

 

[Lplate]

Andrew12121980,
imho,have a look at these areas,Tarragindi 4121,inner southside,highgate hill,Annerley,
rocklea4107 i have rental properties in these areas and i have seen several that are in
the low 300ks in need of some reno work,just walk around the streets and obtain a feel for those areas.
good luck
willair..

Hi Willair
I've been interested in some of those areas, however some 3 br renovated houses in Annerley are available at rents from $260 to $300 per week. I guess the question is how long it will take for rents to show a better return.

What yields can an owner expect in Annerley?
Lplate

 

[willair]

Lplate,
There are very few left in Annerley to renovate,imho the rental returns for this area
are nothing special,i have not increased the rents in the last 3 years and if i did the tenants have told me they will find somewhere else to rent in these areas, the for rent
signs all over the area tell me it may be hard to obtain $300.plus rents,i only look at the long term land value in annerley,not the rental return.....
good luck
willair..

 

[Lplate]

Lplate,
There are very few left in Annerley to renovate,imho the rental returns for this area
are nothing special,i have not increased the rents in the last 3 years and if i did the tenants have told me they will find somewhere else to rent in these areas, the for rent
signs all over the area tell me it may be hard to obtain $300.plus rents,i only look at the long term land value in annerley,not the rental return.....
good luck
willair..

willair
Thank you for your frank reply.
LPlate

 

[Shirley]

I understand that the reduction in Stamp Duty in Qld after 1st May is only for owner/occupiers and not investors. Can anyone confirm?
Shirley

 

[see_change]

I understand that the reduction in Stamp Duty in Qld after 1st May is only for owner/occupiers and not investors. Can anyone confirm?
Shirley

Havn't seen anything in writing but my understanding is that it is for First Home Owners only

See Change

 

[Aceyducey]

Shirley,

To my understanding:

If you're an investor buying your First Home - it applies.

If you're an investor buying an investment property - it doesn't.

Cheers,

Aceyducey

 

[chrispy]

Brisbane

What constitutes a cheapie in Brisbane?

I have read this thread but haven't seen anything I would consider to be a cheapie.

I spoke to a friend in Brisbane today, she is selling her first house in Hill End, which is an inner city suburb of Brisbane

http://www.ljhooker.com.au/property_listing.php?id=585002&type=residential&category=buy&a=1083487240

Her price is $550k-$560k. She tells me this is the going price for the area, being so close to town etc.

This house has been her prime ip for the past 30 odd years. She currently has it rented at $250 pw which she admits is a very low rent for the area but has left it at that as the tenants are good.

My friend is only selling because she has bought overseas.

We both bought our first houses at the same time, mine in Melbourne hers in Brisbane. We both still own them. Her ip has appreciated far more in value than mine. Maybe this is because she bought close to the capital city and I bought in the suburbs.

Chris

 

[see_change]

What constitutes a cheapie in Brisbane?

I have read this thread but haven't seen anything I would consider to be a cheapie.

I spoke to a friend in Brisbane today, she is selling her first house in Hill End, which is an inner city suburb of Brisbane

http://www.ljhooker.com.au/property_listing.php?id=585002&type=residential&category=buy&a=1083487240

Her price is $550k-$560k. She tells me this is the going price for the area, being so close to town etc.

This house has been her prime ip for the past 30 odd years. She currently has it rented at $250 pw which she admits is a very low rent for the area but has left it at that as the tenants are good.

My friend is only selling because she has bought overseas.

We both bought our first houses at the same time, mine in Melbourne hers in Brisbane. We both still own them. Her ip has appreciated far more in value than mine. Maybe this is because she bought close to the capital city and I bought in the suburbs.

Chris

These are the sort of houes I'd consider to be cheapies. All under
200K. Now I'm not saying I'd be buying them myself, but some people still are and the returns on these are probably as good as you'll ( easily ) find in a Capital city.

http://www.realestate.com.au/cgi-bi...0-200000&tb=&u=WOODRIDGE&cat=House&p=10&o=def

See Change