My Aqua Blue Ugly Duckling - #4

Hi guys,

I hope you are all well. I haven't been able to contribute as actively as I would like, as I've been doing a lot of overseas travel for work and have taken on a new role with keeps me time poor unfortunately. I've just gone unconditional on this property "the Aqua Blue Ugly Duckling".

In terms of a brief background on myself, I've just turned 25 and this purchase is Property #4 in my individual portfolio and #6 in my joint portfolio with my long term partner (soon to be fiance, if she says yes!). My journey has been well documented on the forum, and links to my initial three property discussion threads can be found below:

* Property 1. 2 bedroom unit, St Marys NSW:http://somersoft.com/forums/showthread.php?p=1048574#post1048574
* Property 2. 2 bedroom townhouse, Waterford West, QLD:http://somersoft.com/forums/showthread.php?p=1135957#post1135957
* Property 3. 3 bedroom house, Waterford West, QLD "the Green Ugly Duckling": http://somersoft.com/forums/showthread.php?p=1205448#post1205448

I know seeing young investors achieving success certainly motivated me in the very early stages of my journey, so hopefully one day others can track my story and gain some inspiration to take action themselves.

So...

The Property:
* 3 bedroom single storey brick veneer house in Gailes, QLD (Ipswich City Council)
* Built in 1977; with 1 bathroom and 1 carport on a 607sqm corner block. Two street frontage with access on both sides. Plenty of street parking as well.
* Hardwood timber floors with combined L shape lounge/dining
* Walking distance to shops and easy access onto M2 motorway
* Walking distance to Carole Park State School (Primary), Brisbane Youth Education and Training Centre (Combined), St Francis Xaviers School (Primary-Catholic) and Camira State School (Primary).

The Numbers:
* Purchase Price: $214,500
* Tenant lined up at $310pw (day one yield of 7.52%) - moves in day after settlement
* 90% LVR + LMI capitalised - total loan: $196107.56 from AMP at 4.70% = Monthly repayments of $768.09
* Other expenses: Council & water rates (233.33pm or $52.85pw), Building & Landlord Insurance ($114.75pm or $15.90pw), and Property Management fees ($91.00pm or $21.00pw at 7% inc GST).

Total Cash Flow Pre-Tax:
Income: $1333pm based on $310pw rent
Expenses: $1161.33pm based on $268.00pw expenses (loan repayments/council + water rates/building + landlord insurance/property management fees)
= +$182.00pm or +$42.00pw

No renovation required - just need to replace some taps in the bathroom. Can always come back and paint the internals/externals and polished the floorboards over time if need be.

Rationale behind the Purchase:

Firstly, the rationale was not so much location based, but more value based. I've been doing a lot of research in the SE QLD area and have found that the Logan City Council area has been a little hot for my liking with too many NSW investors and potentially the start of Mum & Dad investors starting to penetrate the market. This has driven the market upwards and in my eyes, the value is starting to be better elsewhere. As Logan continues to climb and yields drop, many people (in particular PPOR buyers) will be priced out of that respective LGA, and will head West to the Ipswich LGA where they can still be 25km outside of the Brisbane CBD and buy 3 bedroom houses for sub $230-240k which require no work. The yields for investors are also attractive, with the potential for 7%+ day one with strong negotiation and knowing the market.

My estimation of the market value of this property, to be approx $225-235k.

Given where my portfolio is at currently, #4 had to be a combination buy of short to medium term CG with strong cash flow. The property is CF+ from day one, and bought under market value. The strategy moving forward for this property is to set and forget and revalue in 12-18 months time. I?ll be ready to commence the search for #5 in my individual portfolio in June, which will be a pure equity play to be pigeon paired to this property.

I?ll put some updated pictures up in the next post. Thanks again to Right Property Group for their assistance with this deal.

Happy investing,
Nixba.
 
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Congrats nixba!
Great buy just like all your other purchases. Thanks for sharing.

Which lender do you use for your purchases?
 
That color would put a lot of people off - well done for having the vision to see past the facade and the guts for going ahead.
 
Wow you wern't lying when you said aqua blue, ***** believe someone would paint their house that colour :confused:

Congratulations love you detailed posts :D
 
Great story Nixba!

The internal looks to be in really great condition. With a dollop of paint on the exterior it won't need any more work other than incidental maintenance.

Quite the keeper.
 
Thanks for the kind words all - I'm really humbled and grateful for all your support.

We had an extra bit of good news in regards to this property on Monday. My initial post may have been a little premature (Sunday) - we actually went unconditional on Monday. Late on Monday afternoon, we put in a request for an additional $9,000 reduction post review of Building & Pest reports. There was max $1,000 in maintenance to be completed, so we thought this was a bit cheeky but nothing to lose by asking the question. We expected a flat out no, which is acceptable given the situation.

To my shock horror, the vendor actually ACCEPTED the total $9,000 deduction :D! We went unconditional on Monday 5:00pm at the following numbers:

Purchase Price: $205,500
Rent: $310pw
Yield day one: 7.84%
The further positive cash flow on a weekly and monthly basis will cover a contingency budget for incidental maintenance

Moral to the story - you never ask, you'll never get.

Next steps from here is an engagement then Property #5 (individual portfolio) or #7 (joint portfolio) by end of October.

Thanks again,
N.
 
Great purchase, congratulations!
The Barrett Adolescent Centre School was a mental health facility that has now been closed. Google it.
Marg
I don't get the relevance?

Wow you wern't lying when you said aqua blue, ***** believe someone would paint their house that colour :confused:

Congratulations love you detailed posts :D

I don't mind the colour, and it's easy to change. I've seen worse, much, much worse. Like my one time neighbour who painted his house a darker shade of that with grey trim. He also had a penchant for bright colours inside the house, and while I'm not a fan of the bright green that Depreciator likes, at least the stuff he does has some class to it, whereas my neighbours stuff was just awful.
 
Congrats nixba!
Great buy just like all your other purchases. Thanks for sharing.

Which lender do you use for your purchases?

Hi Cadence,
For this particular property, I used AMP. I think its really important to diversify lenders - for example my other 3 properties are with Westpac, Bankwest and Macquarie. I have no loyalty to any of the banks, only to which product is suitable to my current situation and my long term goals.

great work nixba

can you tell us who you used for building and pest inspection if you did use someone reliable
thanks

Hi Lobboroz
For all of my QLD properties, I've used:
a) Premier Building Reports - Scott Hayes - 0412 855 160
b) Aim High Pest Control - Steve Power - 0427 062 106

Hope this helps.

N.
 
Great purchase and a strong yield, you have definitely got a good eye for a bargain, if you gave up your day job you could have a career as a buyer's agent. Keep up the purchases and the posts, they are good reading.
 
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