Latest purchase - Cairns

[Coconutwheels]

Exchanged on my next purchase today, thought I'd share.

Picked up a 2brm unit in Cairns for $85k rent $190/week, plus depreciation. Will still be negative cash flow by about $1500p.a before tax, still I'm happy ill get some equity gain at that buy in price.

Anyone recommend a property manager? It's in Manunda.

 

[2jzzzz]

Is it near Raintrees shopping centre? What are your body corp rates like?

I recommend Chris Gay Real Estate to manage, good rates and don't charge for each inspection which is s great thing in Manunda.

 

[DaveM]

Exchanged on my next purchase today, thought I'd share.

Picked up a 2brm unit in Cairns for $85k rent $190/week, plus depreciation. Will still be negative cash flow by about $1500p.a before tax, still I'm happy ill get some equity gain at that buy in price.

COngrats on buying.. but to still be cashflow negative by $1500 on that kind of gross yield (11.6%) your body corporate fees must be mind numbingly huge. Is it a serviced apartment?

 

[Coconutwheels]

Yeah it's near those shops 2jzzz. It's a standard 65m2 strata unit, not a serviced apartment.

Strata is high at $3400p.a and council rates are huge too at $2200. There's a few things that could be done to improve the yield down the track.

 

[monalisa]

I'm happy ill get some equity gain at that buy in price.

Hi Cocontwheels - I am curious to know if you have extracted equity since acquisition of this IP?

 

[Coconutwheels]

Hi Cocontwheels - I am curious to know if you have extracted equity since acquisition of this IP?

Only settled two weeks ago, had to delay settlement a couple of times. So haven't tried yet.

I'm looking at another up there so was about to ask my broker about having a go at revaluing now.

I'll let you know how I go in few weeks.

 

[MsAli]

Coconutwheels, do you see long term prospects there?

As in, what makes it a better investment than say Brisbane or Sydney?

 

[Coconutwheels]

Coconutwheels, do you see long term prospects there?

As in, what makes it a better investment than say Brisbane or Sydney?

For me it's a combination of low buy in price (I have very limited deposit funds this year and ill pick up two good quality units using only $25k of equity), rental return is good and I think it has past it's rock bottom.

Vacancy rates are tightening, population is increasing (now on par with Townsville), there has been virtually no construction at all since the gfc. IMHO only, I think northern Australia in general will see massive population growth over the next decade, can't back that up though just gut

If I had enough equity atm I'd be looking closely around Brisbane, Logan area too, hopefully I'll be in there early next year and things won't have moved too much.

 

[monalisa]

Only settled two weeks ago, had to delay settlement a couple of times. So haven't tried yet.

I'm looking at another up there so was about to ask my broker about having a go at revaluing now.

I'll let you know how I go in few weeks.

Thanks! Look forward to reading about it.

 

[DavidMc]

Thanks for sharing Coconutwheels! I was looking at Cairns recently, it's a very interesting area esp with that huge resort.

The council rates and insurance was a killer though.

Did you buy the property yourself or through a BA?

 

[Coconutwheels]

Thanks for sharing Coconutwheels! I was looking at Cairns recently, it's a very interesting area esp with that huge resort.

The council rates and insurance was a killer though.

Did you buy the property yourself or through a BA?

It was on Deal Finder earlier this year

 

[travelbug]

Strata is high at $3400p.a and council rates are huge too at $2200.

OMG. Why is the strata so high?

And the Council rates. Or is Qld generally more expensive than NSW.

Certainly puts a dampener on the yield.

 

[Kinnon Bell]

With Cairns council and water rates are included on the one rates notice.

 

[hobo]

With Cairns council and water rates are included on the one rates notice.

Do you mean water usage? If so, that might be an option but I certainly receive mine separately...

 

[DavidMc]

OMG. Why is the strata so high?

And the Council rates. Or is Qld generally more expensive than NSW.

Certainly puts a dampener on the yield.

Yes - it's a real killer. It is what has made the values so low. I believe the cost is due to insurance. I'd love to explore other options in relation to insurance,

i.e., what is the bare minimum level of insurance you can go for? Why pay $2.5k a year insurance on a property that you paid $30k for?

 

[JenJen]

Yes, strata is definitely an issue in North Queensland, and largely due to high insurances, but there are other factors that do contribute.

My recommendations are as follows:

If buying into a unit complex, go for a small complex with 5 or less. These can be administered under the 'small schemes module' which is far less formal than the 'standard module'. Big body corps tend not to be conservative in terms of insurance, and also get a nice big broker's fee on top of already high insurance. They then add a whole lot of fees just for administering everything. Also, you have little chance of influencing the budgeting, expenditure etc, so end up spending exhorbitant dollars on things like gardening.

Try Suncorp, and get an online quote which you can adjust yourself by increasing excesses etc. Terry Sheer is competitive for Landlord's insurance.

Also, keep in mind that the Federal Government is putting quite a bit of pressure on insurance companies to reduce premiums so they can get on with their Northern Australia development plan, plus the Newman Government has committed to flood mitigation measures and challenged insurance companies to respond.

Incidentally, housing development in NQ is subject to very strict 'cyclone standards', which means the area is actually very resillient. More so than southern areas subject to similar weather conditions, but which are not recognised as such.

Cheers

Jen

 

[Longrass]

What street is this on?