Loganites please pay attention

[Tibor]

Hi there,

This is mainly for people who have already invested (or in the process of doing so) in Logan Shire, QLD. Today I got my forthnightly Matusik snapshot (in the arm) which under "In focus" has a 2 page analysis of Logan with the title "At long last....Logan!"

I have asked them about a year ago or so to make an article about Logan. At that time I was politely told, that they were not interested. I guess the past 12 months result changed their minds.

The article is generally very positive (albeit stating the mid nineties over building, over pricing) about the immediate future to the next 12 to 24 months. Population is growing, people from "matured" areas moving into the considerably cheaper Logan shire(Brissie median is $227.5K, Logan median 126K!!) , not a huge amount of new building commencement (up with supply but not over supplied) good infrastructure and lastly but maybe more importantly, that Logan shire is one of the shires where there is a bit of land shorthage. For future residential development, they require redevelopment, infill development or the use of greenfield sites. The existing land is close to exhaustion. Latter is not my opinion, I got it from the "Population trends ansd prospects for Queensland" 2001 edition which is made by the QLD Government.

So, for those Loganites who have bought last year, congratulations, you are already started to enjoy the fruits of your investments, with more to come. For those who missed out on the growth so far, might just worth to have a look at Logan. For the cynics, no, I am not selling any of my holdings, I am very happy with the amazing returns (average is around 45% total gain - capital and gross rent) over the past 12 months, on cash-flow positive properties, and even better ROI. I am also not trumping my horns or wisdom or anything (I am still very grateful to Keving Young who pointed out the area about 2 years ago), but rather trying to share some experience and information.

Cheers,


Tibor

 

[pjb89]

Tibor


Go for it Tibor!!!....I am rapt that your due diligence is paying off....

Pedro

 

[Philby]

Tibor, as they say in the classics - you oughta be congratulated. After reading and watching what forumites have had to say about Logan it sort off put me off the joint,..... BUT not yet as I am heading down there next week for the first steps into the world of IPs
So well done mate, you must be feeling pretty large at the moment.

 

[see_change]

Philby

For me this only reinforces the importance of doing your own research. About 18 months ago we started looking at brisbane and two areas initially caught my interest. One was redcliffe and the other was logan . Redcliffe because it was relatively cheap for a waterfront area , and Logan because it was, well

Very cheap

I discussed these areas with people ( including TW ) who know brisbane very well and was told redcliffe was " deadcliffe" and not very nice. Logan was , somewhere you avoided at all cost.

By the time we got up to brisbane for are first visit last Easter , Redcliff had already gone through the roof. At the beginning of last year I remember seeig a REALLY nice queenslander , Opposite water with never to be builtout views in the mid 200's , and a double absolute wateront in the canal area in the 400's... If only we'd gone up six months earlier.

Redcliffe reminded me of the sydney northern beaches 20 years ago , ( ok the beaches arn't as nice, but some are ok )

Logan is, well , logan . It's like any lower socio economic area in many cities around Australia. As I've said before, I work in Mt Druitt ( similar area in Sydney ) and to me Logan was nicer. The kids had smiles on their faces in the pool hall , and the real estate agent was happy to park his car right out the pool hall. It wasn't that bad. It is on two freeways to the city , has three train stations and is alot closer to the centre of Brisbane than similar areas in brisbane , namly Ipswich and Caboulture>

The bottom line is , you need to check things out yourself as people have been pointing out to Shimi .

Interstingly , logan is now starting to get some coverage. If you look at individual properties when the market was at it's bottom three years ago , Bottom end places were going for 50-60 .These are now selling for 100-120. 6-12 months ago they were 65-75.

Ten years ago they were selling for 80 , so the peope who complain about logan , bought at the peak of the last cycle and sold 3-4 years ago.

Does this mean I wouldn't buy now if I hadn't already done so? Well people are telling me I should now sell and take my profit.

I'm holding until prices double from the peak of the last cycle , namely 160K. What I do then will depend on other things.

Given that Matusik are now expecting growth over the next 1-2 years I think I'll see that as they have a good record.

Nice to see things going well for you Tibor. Thanks for the help and exchanges of info last year. When I was buying there it was nice to here someone else prepared to stick their neck out

see change

 

[Philby]

Thanks for the tips sea change, we have focused on Logan area and have also looked at Caboolture, so its a toss up which area to "attack"

The point that Logan has been avoided because its Logan hasnt worried us, I think its a plus for newbies like ourselves. My partner grew up in Bondi and she heard the same remarks about Bondi area (Waverley et al)30years ago,(ie - surfies and dole bludgers). The future looks good for the area.
And as Logan presents an opportunity for our low level entry into the IP world all the better.
While instinct albeit not a properly researched one tells me Caboolture is another area for our low level entry - phone calls on Monday illustrates it is hotting up and may be out of reach for our first IP(if we decide to go there) in the "blink of an eye"

Anyway its fun and the help one gets on this forum is well received and sometimes beyond the call of duty so again I salute you all for your helpful hints

 

[see_change]

Philby

Logan will never be bondi , smply because it's in the midle of suburbia with no distiguishing features.

It will only ever track the average growth , but as it is one of the last places to take off ( as Mt Druitt was in sydney ) , at the right time in the cycle ( towards the end ) it will always be worth a look.

see change

 

[stirling]

Hi Tibor,

I also took Kevin Young's advice about Logan. I purchased four 3 bedroom houses that were only 10 years old for an average of $80 000. These were purchased about one year ago. Rent was $160 per week. I avoided units as these were occupied by the more risky tenants.

I noticed that the Investors Club do not do much business in this area because they normally deal in new properties. And at that time you could buy an almost new house/unit 20% cheaper than building a new one. Not much point in building or buying off a developer.

The housing stock was basically sound and about 10 years old. The quality of the area was going to pick up as the percentage of owner occupiers increased.

Values are now $110 000. My rents are still $160. (Yields have come down from 10% as expected).

Stirling

 

[Philby]

Originally posted by see_change
Philby
Logan will never be bondi , smply because it's in the midle of suburbia with no distiguishing features.

Only used Bondi to illustrate the aversion people/investors have to certain socio economic groups and the stigma attached to them as undesirable tenants.

 

[Tibor]

Hi there,

Thanks for the words of encouragement. The only thing I can say
that I have done my homework on Logan. It included my local friend who said, "You want to invest, in where? The place is full of unemployed and coloured people, etc, etc". I do not care. I had a look at the population composition (Logan council's web site), QLD Goverment's info that I have mentioned before, several other sources like RESIDEX, then numbers and number and numbers and used common sense. It made sense even without growth, but growth had to come. It was mispriced within Brisbane. It is similar to Parramatta, 15 to 20 years ago. I wish I have bought then some in Parramatta.

Sterling, I am very surprised that your rent is the same. For me a big part of the value increase is the dramatic increase in rent on some properties. Have a look at www.rta.qld.gov.au site for average rents in the suburb for 3 bedder houses. You should be able to increase the rent as $160 (sorry not sure about the numbers) now is pretty low. The average / median /whatever way they calculate it rent is $175 for Logan shire and basically all suburbs all above $160. As an alternative, what about some improvements on the property then a reasonable rent increase.
I am not sure that your manager is the right one as far as rent review concerned. You can also have a look at what is available in the area for rent and for how much, to set the corrent rent value. I think if you work on it a bit, you might just have a very pleasant surprise in the near future. Just some examples what I have done. 2 bedder townhouse currently rented for $85 (I was screwed by real estate who provided to info when I bought about the lenght of lease) in this month goes up to $110 (if tenant stays), otherwise to $120. Another was purchased with $95 rent, I reviewed it to $105 (mate's rate to the real estate agent who helped me), now he is moving out and after recarpet and retiling (about $2800), rent goes up to $125. Another 2 bedder I bought with $95 rent, now is fetching $110 (not a cent was spent!)

I hope it helps.

Go Loganites, go, go.

Tibor

 

[dwyerfam]

Tibor and others,

Found this on REIQ's website.

Bargain Shoppers Flock to Logan

A bit of backing up what you have already said Tibor.

http://www.reiq.com.au/mediaReleases/default.htm

 

[brains]

Good on you Tibor, and good on everyone thats kicked a goal similar to Tibor's.

I have a similar story in Morayfield. Last May, after a couple months research, i went up there and bought 3 houses for the following prices: $97k, $107k, $115k, then saw some growth and went back in October and bought 2 more for $118k & $120k.
(All at about 8.5% av. gross return)

Since then the area has gone off. About a month ago i recieved a PM from a poster on the forum who had read a previous post of mine re Morayfield. I gave him some info and said to look in the $130k - $140k price range as i suggested this was the bottom of the market as he requested.

Well he PM'd me the other day, he'd been up there and bought a house (go son) but he said theres nothing under $150k.
The entry price is now $150k - $170k according to him, bringing the gross rental to about 7% in that price range.

I underestimated the growth there by a long shot. So i think its a similar growth story to Logan, about 40%-50% growth in just under a year.

I think anywhere surrounding Brisbane thats undervalued is and has going through the ripple effect of Brisbane price rises.

And lots more growth to come id say.

For some reason Residex has much higher future growth figures for Morayfield than Caboolture which is just around the corner.

Theres a lot of infrastructure stuff going on around Morayfield Rd. maybe this has something to do with it or maybe its a symptom of the growth, i dont care, i just know theres lots of it.

 

[beech]

Thats RESEARCH for ya,congratulations Brains well done.
You too Tibor good stuff.

Darren

 

[Tibor]

Hi Brains,

Excellent buy. I am also looking at Morayfield as Residex top 100 predicts over 16% per annum growth for next 3 years and 14% to 16% over 5 years. Add the 7% yield to it, it beats the bank deposit by a big margin!!

Yes I am still expecting growth as relative to Brisbane some of these areas are underpriced and when people can not afford the 400K to 500K related mortgages, will look a bit further. The population of SEQ has grown faster than NSW (or Sydney) over the past 12 months. It also helps.

Value adding can put the absolute ice on the cake.

1) Increase rent and my cash flow situation (meaning profit)
and serviceability for further properties improves greatly!

2) Rent increase will increase value of property (the real value as per Uncle Steve names it) and equity for further properties improves greatly!

3) I will also depreciate the cost (or write off, depending on the nature) hence getting back something from the goverment for my hard work, which also increases my service ability for further purchases improves greatly.

Obviously one has to watch out for over capitalisation as well as think of the time when the current mark trend will change. Fortunately with Logan, there is land shortage which can only be cured with infill and high rise redevelopment, but only up to a point and the council has also have to fight with greenies, locals, etc. Fortunately developers also got burned, so they might not be so keen to flood the market again.

I'd like to state that while I know Logan well, there are other areas I am looking at, that are similar to Logan in QLD and am also pretty sure that they also exist in other states as well. Bit research in the right way followed by being decisive (don't wait for the deal of the decade but buy TODAY what makes financial sense) can go a long way in wealth creation. A local (Loganite) mate of mine while agreed in principal that the value was OK last year, did NOT buy then. Today he is wondering what has happened. Yes, he missed out on a great opportunity, but such as life. Others who bought, now laughing. He is still trying to decide whether purchase or not. I just need the cash, I will find the property and will buy!

Tibor

 

[brains]

Tibor

Im not looking any further in QLD. With the sort of cap. growth we are talking about, it wont be long before land tax becomes an issue. I know we can get around that with trusts. But i would prefer to buy in another state.

Im looking for something similar in NSW, its like a quest for the holy grail. I know I can find similar growth, its the rental return thats getting hard to find with it.

 

[brains]

To add to my previous post re cap. growth in Morayfield.
I have been considering valuing my houses up there but before i did i wanted to get an agents opinion, so emailed an agent in Caboolture for an appraisal of the $107k house.

He replied with a sell price of $160k - $170k. My first impression was he's buying the listing, surely it couldnt have increased that much since May 2002.

So i jumped on realestate.com.au & property.com.au and had a look around, it looks like hes being honest. Thats just amazing growth.

So, for anyone considering buying there, im sure theres heaps of growth left.