Just a basic plan.

[WebBoard]

From: Robert Longmore


I have just finalised the purchase of an IP in St Helens Pk,near Campbelltown in South western Syd. 195K rented to good tenants for $220 PW. I have just returned from a trip to Cairns, to visit my mother who has lived there for the past 5 years.

As a result of the recent Ansett and overseas dramas, the tourist market in Cairns has suffered severely, and as a result, i believe that property prices might now come under pressure. My basic plan, (thought up while enjoying a hot breakfast on Ellis beach and watching the world go by) was to borrow 50K against my Sydney IP ( it doesnt need much work to really make it stand out, it already has tropical gardens, pool etc. just needs TLC) and buy a unit outright in Cairns for approx 50K. Average unit rent in Cairns at the moment is about $110 to $140 PW ( i have friends up there who live there and rent) and use the cashflow to aid in +ve gearing the Syd property.

I know cairns real estatee isnt the best for CG, but for cashflow, looks pretty good.

what do you think.?

 

[landholdings]

Reply: 1
From: Land Holdings


Sounds almost too good to be true. At 11% rental return can there be no catches? Except no equity growth? I think if you understand the market in the area then it would be great however I wouldn't touch Queensland otherwise.

LH

 

[WebBoard]

Reply: 1.1
From: The Wife


Queensland is my stomping ground, I know it intimately, but I would tread with great caution in Cairns.

Having said that, I've seen some awesome cheap property being moved there this week, maybe I am due for another trip? Freestyler in Cairns?

TW
~Life is a daring adventure, or nothing at all~

 

[lawsjs]

Reply: 1.1.1
From: Jeremy Laws


The hovels in Cairns have been interesting me for ages - just been trying to get there. I can tell you though from the things my parents bought there, is that the rental returns are _fantastic_ when they are rented. Like parts of London, it is possible to buy things that just won't rent. Buy, but I would allow from my experience (5 years 4 properties at least 3 months vacancy. Especially over summer.

 

[sali]

Reply: 2
From: Lisa Southgate


Hiya,
I'm a Queenslander and wouldn't agree with the below response about not touching it, cos there are many good investment spots around (ask some of the people who have invested in Mooloolaba and Noosa over the past 5 years!). But I am a former tourism writer so re Cairns I'd make the following points. Any place that depends mostly or entirely on tourism income is vulnerable to peaks and troughs. Also, its remoteness makes it vulnerable. All it takes is for Virgin to sell out (almost happened once) and you're back to an air duopoly of very, very high airfares (and something tells me Solly Llew and his mate aren't buying Ansett for the battlers). That would kick the domestic tourism market in the guts. Cairns and Port Douglas have been very, very vulnerable to what Jackie Kelly would call "blips." Eg, the pilots strike in the 80s. And an Asian meltdown - which brings me to another point, Cairns is dependent on international traffic, such as the Japanese market. Its emergence in the 80s was largely due to Japanese attention. When that never really recovered properly, tourism was pinning a lot of hopes on the Americans and Germans. And we know what happened to the Americans. A footnote to the Japanese thing -many come over here thinking Cairns has a surf beach. I glean there was a bit of dodgy marketing going on overseas, or maybe just a misunderstanding, but my guess is that in the future they'll go looking for a beach sans crocs and stingers. That's not to say Cairns doesn't have many good things about it, including attractions for the backpacker market (but we've got to stop killing the poor people) but just keep these things in mind.
Regards, Lisa. (PS, I really do like Cairns!)

 

[michaelg]

Reply: 2.1
From: Michael G


Lisa,

With tour media like what you just wrote, its no wonder Australian tourism is in decline! hehe

But seriously, great write-up, I enjoyed the wealth of info you put into that post. Keep it up.

Michael G.

 

[lawsjs]

Reply: 2.1.1
From: Jeremy Laws


Funny comment one of my workmates made a few years ago after a Narita Cairns flight. "Amazing place Japan, bit like a Tardis (Dr Who) 8 hours flight and you still haven't left it"

 

[WebBoard]

Reply: 2.1.1.1
From: Robert Longmore


I just returned from Cairns on Sunday, and there is noticably less Tourists there than before Sep 11. Even Pt Douglas was unusually quiet for a beatutiful saturday lunch, not even many locals around, let alone tourists, i would say on the whole weekend, i saw about 5 Japanese tourists.