Questions about Brisbane / Adelaide market

I live in Sydney but I am interested to research Brisbane / Adelaide for potential buying options towards the end of 2015. It may be a bit early but because I know nothing about either of them, I think it may be best to start early and get to know them.

I came across this property which looked quite interesting:

http://www.realestate.com.au/property-house-qld-spring+hill-118678211

They want around 500k for it but the rental return looks really attractive at $835 per week. I dont know of many deals in Sydney that will have that much return.

Firstly which market is going to present better options for me to spend more time on researching?

Where should I start to get to know the suburbs and also learn what is or is not a good deal?

What are the implications in terms of tax, and laws around the purchase of property?

Does any one here have any experience in buying interstate, do you need to be physically present to inspect prior to purchase?

Would be great if someone with experience could comment.

Any information on where to start would be great.
 
Whilst in Perth I looked at a few Brisbane purchases remotely but didn't end up going ahead with any. I did go ahead with a few Adelaide purchases remotely. A couple of those purchases I still have yet to see the inside of :)

So yes, definitely possible to do what you're thinking. You could perhaps even buy 1 in each with the budget level you're suggesting.

Aside from the normal property related taxes, the only thing with interstate is land tax. If you look up the states OSR website you'll find their tax free thresholds - SA's is ~$316k for example.

Which one you'll do better out of is anyone's guess. No one has a crystal ball. Which one fits your strategy better, and which one suits what timeframe you're investing for.
 
Tenex,

That QLD looks good on number because you didnt calculate ongoing. Strata will reduce your cashflow for sure. Make it no longer attractive..

In QLD you can structure your property using trust, with this strategy you can legally pay lower / no land tax.

Both market will perform for 1-3 years. I like Brisbane compare to adelaide, bought north side of brissy last year. Been perform well.. But I also like south area of adelaide..
Market will migrate from syd, melb to bris, adel..

If your budget $500k, you have plenty options in adelaide. But need to be selective in brissy,. Logan area can still afford to buy 2, I like the Infrastructure there. Remind me of blacktown to penrith in Syd

But let's star with your goal? What do you want to achieve in x years?
 
Well I don't think I know my budget just yet.

I have recently purchased a property in Sydney. Although I got it at slightly under the market value it is still quite expensive and is going to cost me about 20k per year on current interest rates to keep it. It was purchased firstly to optimise the taxable income and most importantly for capital growth.

The next property that I purchase will need to be either at or very close to neutral gearing in order to maintain my cashflow. I think with a bit of luck I can create the equity to purchase the next property but I need to make sure that the rent pays the costs.

With that in mind, I can't keep looking in all States, with the limited time I will have for research it is probably best to focus on one State, get to know it better and it will be a toss between that State and Sydney depending on how things pan out.

Using this topic I am also wanting to learn the basics of finding a positive or neutral cashflow property.
 
Well I don't think I know my budget just yet.

I have recently purchased a property in Sydney. Although I got it at slightly under the market value it is still quite expensive and is going to cost me about 20k per year on current interest rates to keep it. It was purchased firstly to optimise the taxable income and most importantly for capital growth.
There are few point concern me, if current rates cost you $20k to hold, can you surf out if next year or 2017 when rates start climb up?

Also buying for taxable income means that you spend $1 to get 30c back. Hopefully capital gain with you along this years. When I jump into sydney market the time was 2010. Market still flat, neutral cashflow but positive after tax return. We increase the rent via cosmetic reno. If you learn the property clock, sydney was 5-6'oclock ath that time. Then on 2012, we refinance for another sydney purchase. Both property perform well since then.
Timing in the market as important as time in the market

If you ask me how brissy, my personal answer is 6-7. Some area already climb, but not boom yet. Same as Adelaide, nice suburb already show capital gain in valuation


The next property that I purchase will need to be either at or very close to neutral gearing in order to maintain my cashflow. I think with a bit of luck I can create the equity to purchase the next property but I need to make sure that the rent pays the costs.

With that in mind, I can't keep looking in all States, with the limited time I will have for research it is probably best to focus on one State, get to know it better and it will be a toss between that State and Sydney depending on how things pan out.

Using this topic I am also wanting to learn the basics of finding a positive or neutral cashflow property.

I guest dont buy property because everyone else doing it, find what do you want to achieve. And be specific with it.. Without end goal/destination, you won't have a clue how to get there. Property investment is vehicle to get there..

We tend to focus of the property, and forget if this is pure business. Doesnt meant person A have 5 properties, they are better than person B who have 2.

Finding your goal, will determine your stragegy, and you will find your niche. This is become your expertise, as experience will lead your sense, maturity,etc. What's the indicator if you progress it well? Capital level is one of them. Hope I don't scare/rude to you. Happy investing..


See my response in diff colour
 
Hi Tenex, for your next purchase are you using cash or using equity from the Syd purchase? How much equity is there do you know? (the budget might somewhat determine where you buy)
 
There are a few good points above.

The end goal for me is to increase my net wealth hence I predominantly focus on buying land rather than apartments. The focus is on capital gain and equity building through purchasing and renovation as well as sub division and building down the track when I have more experience.

However I have to make sure that I get a balanced cashflow. 20k cost per year for now is manageable and there is of course the option of fixing the interest rate and if that was the case, as rents go up this cost will decrease. But I have to obviously balance it with my next property as I can't continue to create negative gearing.

In terms of equity building etc, I should be able to create good amount of equity by next year. As is, I have another half a mill buying power which I did not use and I am not planning to use it untill at least towards the end of next year.

I like buying very close to this time as most bargains can be found at around this time (I bought my current property late December 2011).

I anticipate a budget of around 600 to 700k by around next year but I must make sure that it is neutral or positive cashflow.

The time between now and then should be a good amount of time to read,research and learn.
 
Whilst in Perth I looked at a few Brisbane purchases remotely but didn't end up going ahead with any. I did go ahead with a few Adelaide purchases remotely. A couple of those purchases I still have yet to see the inside of :)

So yes, definitely possible to do what you're thinking. You could perhaps even buy 1 in each with the budget level you're suggesting.

Aside from the normal property related taxes, the only thing with interstate is land tax. If you look up the states OSR website you'll find their tax free thresholds - SA's is ~$316k for example.

Which one you'll do better out of is anyone's guess. No one has a crystal ball. Which one fits your strategy better, and which one suits what timeframe you're investing for.

How will you make sure that the property you are about to purchase doesnt have any major problems that will cost you down the track?

How appealing it may be to future tenants or buyers or what it looks like now so you can make sure the tenant doesn't damage it.

What if you need to do renovations?

What about things such as getting to learn the neighborhood and the street? in other words how do you make sure that this is a good buy?

I am keen to understand how will you take care of aspects that you can normally take care of if you lived near the property?
 
Tenex,

The same principle happens regardless where is the property.
Proper due dilligence, organise building & pest inspection, strata search, organise local solicitor/conveyancer to help.

I remember ask very specific question to building inspector, there is an issue with pergola. I was able to re-negotiate the price further down. Price down another $10k, cost to fix pergola $3k. Depend on your view of problems/solutions. For me, "every problem has their solutions and opportunity". Some of them fix-able depends on your conditions.

Request more photo from the agents is one of my usual question. Build a relationship with agent will favour you in the future. I was able to secure property before hit the market. Thanks for Christmas card and $20 woolies gift card. Btw there are good thread "how to buy interstate property", thanks to Rixter.

Also there are few thread how to select good property management.. This to help you on first filter, my experience is good PM help select good tenant.
Last thing make sure adequate insurance in place. Read their PD to find out specific clause.
Landlord and building insurance (if applicable)

Always expect "problem" with property business. This help our mindset to face it..
2 months ago, air conditioner in one of my property break down. Cost $600, its tax claim-able but we able to increase $20/week.

For reno, I always prefer before the tenant secure the lease. Means there is 2 windows opp, after settlement, or when the tenant leave. Once again dependa on your capital reserve, on my early days I dont have much money. So usually I wanted secure the tenant ASAP after settlement. But these days, I prefer reno straight after settlement. This help me to organise 3-6 months straight reval to draw equity out.
 
How will you make sure that the property you are about to purchase doesnt have any major problems that will cost you down the track?

How appealing it may be to future tenants or buyers or what it looks like now so you can make sure the tenant doesn't damage it.

What if you need to do renovations?

What about things such as getting to learn the neighborhood and the street? in other words how do you make sure that this is a good buy?

I am keen to understand how will you take care of aspects that you can normally take care of if you lived near the property?

Get a building and pest inspection during the building process to ensure it doesn't have major problems.

The ones I bought remotely already had tenants in them which proves they're liveable.

I haven't bought anything that needs renovations. Although one is pretty dated - I'll either have the PM coordinate it or go do it myself.

What would you normally take care of if you lived near the property? Doesn't a property manager do all this stuff? I did drive past the last couple of times I was over.
 
rent sounds high

The price looks cheap.

You need to add 15k refurbishment, Also check the Body Corp minutes and see if there are problem in the building like big expenses coming up for the common areas. The building looks likes it is coming of that age. There are a lot of new apartment going up that will give rental competition in about 2-3 years.

I would get an independent check on the rental.

There are new 3BR apartments available in Bris.
 
Get a building and pest inspection during the building process to ensure it doesn't have major problems.

The ones I bought remotely already had tenants in them which proves they're liveable.

I haven't bought anything that needs renovations. Although one is pretty dated - I'll either have the PM coordinate it or go do it myself.

What would you normally take care of if you lived near the property? Doesn't a property manager do all this stuff? I did drive past the last couple of times I was over.

I would be able to do some renovations if I lived in the area.

I suppose the most important aspect is the ability to view the property so you can estimate for yourself if you have to spend any money on it and if so how much.

I suppose it can be a bit different with an apartment rather than a house but then again it really does depend on what you are buying and how much it will cost you to maintain.
 
Tenex

The property you linked is part of a serviced apartment/hotel lease. Lenders hate it, and the managment fees will eat you up.

http://www.ridgeonleichhardt.com.au/

Indeed, serviced apartments/lease backs are generally a big no-no in finance. It certainly is possible to finance them, but the LVR's are restricted and lender selection reduced, which only equates to a smaller market to sell to, which results in decreased demand (read capital growth).
 
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