Rocky , The next Big Thing ??

[liverpoolharryk]

markpatric

Saturdays Courier Mail (business section) had a spread on rental yeilds across QLD.

Rocky was the only place to have a +% rental yield +0.57 in Sept 2003 Qtr compared to Sept 2002 Qtr yet it was the only place to have a negative median house price -0.95% compared to the Sept 2003 Qtr.

Best performer was ipswich with 64.71% increase in median house price but had the biggest decrease in rental yield -2.64%

Jarrod
Jarrod Lane Real Estate

 

[markpatric]

So Rocky went down and Ipswich went up, it would of course lead to the rental yeilds going in opposite directions.
These figures for Median price can be misleading, it could be that investors hit the area at that time seeking out the cheapies or maybe that some floodprone properties on the market all were sold at that time due to no others being available.
Of course Rocky can go down, as could Ipswich.
But I do believe Rocky will show steady gains this year with an annual gain of around 40%, mainly based on the fact that traditionally areas not affected by a boom do so after the boom for obvious reasons.

 

[astroboy]

Originally posted by markpatric
But I do believe Rocky will show steady gains this year with an annual gain of around 40%, mainly based on the fact that traditionally areas not affected by a boom do so after the boom for obvious reasons.

woo hooo, thats a big call markpatric. I reckon your just trying to gee up more debate on the area, if not, I reckon a wee wager could be the order of the day.

astroboy.

BTW holidays rock, 4 weeks of reeelaxing just slipped past, first time in I can't remember when. Augers well for a much more laid back 2004. Cheers all.

 

[astroboy]

C'mon marcpatric, how long have you lived in Brisbane. Youre the only Queenslander in this thread talking up Rocky for IP investment....hmmmmm.... just starting out ?
ab

 

[markpatric]

30 yrs in Brisbane.
I have been investing in property for ten yrs.
40% growth is the minimum I would expect otherwise I simply would not bother investing there.
Time will tell.

 

[Aceyducey]

Originally posted by astroboy
C'mon marcpatric, how long have you lived in Brisbane. Youre the only Queenslander in this thread talking up Rocky for IP investment....hmmmmm.... just starting out ?
ab

Astroboy

I just did a review of this thread & from my count Marc is the 6th Queensland-based investor who has said positive things about Rockhampton as a place to buy IPs.

People like pantotango and gridcap have talked about property they bought there & were happy about owning.

From my count, Astroboy is the ONLY Queenslander in the thread who's been negative about Rockhampton. A few people have raised questions about figures discussed in this thread, but you're the only one who's been talking Rockhampton down.

I also question the theory you've raised that you MUST live in Queensland to be able to assess QLD property prices. Many investors are highly successful in investing in areas outside their immediate neighbourhood.

Perhaps, Astroboy, you actually live too close & can't see all the opportunities under your nose


Astroboy, I don't recall hearing you ever talk about where you prefer investing (only in general terms like http://www.somersoft.com/forums/showthread.php?s=&postid=51586#post51586).

Tell us more about where you like to buy so the rest of us have a greater understanding of the types of investment properties you prefer. Or have you decided to buy that yacht after all?

Cheers,

Aceyducey

 

[Janvid]

9% + returns

The debate continues

I exchanged contracts yesterday on a new Rocky property. There are still great buys in Rocky but they are getting harder to get. I missed out on a block of 3 units last week, which was a blessing in disguise given my new purchase.

The new place is a brick duplex in Frenchville (North Rockhampton). The old owner lives out of town and was keen to sell. It never made it to the paper and was only put on the market on Wednesday this week. The contract price is $190K but it was listed at $196K. Its a great area and well regarded in Rocky. The duplexes are both 3 bedrooms, and leased until May and July respectively. Unit 1 is rented at $155 per week. Unit 2 is rented at $170 per week. This means the present rent is $16,900 per year, or a 8.9% gross return. I can't see any reason why Unit 1 can not be increased to $170 in line with Unit 2. This would increase the annual rent to $17,680, or slightly more than 9.3% gross return.

After rates, insurance, agents fees, maintenance etc, the property still makes a profit. This is without taking into account savings from a depretiation schedule.

Even if Rocky does not "take off" how can a serious investor say no to this type of property. If you lock into fixed interest rates you are being paid to buy the investment and its guaranteed for the term of the fixed interest.

Surely with present returns possible at 9% based on present values in Rocky, and with Sydney returns at around 3 to 4%, and other areas lucky to make 6%, the market must push prices up in Rocky to level out the returns.

Looking back to the property above, at an annual income of $17,680 this would make it worth $294,666 using a 6% gross return to assess market value.

Once again, I am happy to debate any of the above.

 

[astroboy]

Originally posted by Aceyducey
Astroboy

Perhaps, Astroboy, you actually live too close & can't see all the opportunities under your nose


Astroboy, I don't recall hearing you ever talk about where you prefer investing (only in general terms like http://www.somersoft.com/forums/showthread.php?s=&postid=51586#post51586).

Tell us more about where you like to buy so the rest of us have a greater understanding of the types of investment properties you prefer. Or have you decided to buy that yacht after all?

Cheers,

Aceyducey

Well I was *most* certainly wrong about Coomera, no doubt about that.
Am I mistaken about Rocky,,, hmmm we'll see, I still stand by convictions on that one.
And that yacht, well cat actually, is still very much on the cards.

ab

 

[Aceyducey]

Re: 9% + returns

Originally posted by Janvid
Surely with present returns possible at 9% based on present values in Rocky, and with Sydney returns at around 3 to 4%, and other areas lucky to make 6%, the market must push prices up in Rocky to level out the returns.

It's been suggested in other parts of the forum that property prices around Australia are likely to fall until properties are geared to 9% or better returns...

Here's an interesting thought - with returns so low in major cities, perhaps we'll see the reverse happening - returns everywhere (including in places like Rockhampton) falling to the 5% mark & below.

Whenever there's a retrace in an area (drop/hold in property prices) people will buy there & push yields down to 5% again.

I blame the internet! With it it's easy for any investor to quickly compare returns from IPs around the country & jump on an area with 'abnormally high' (above 5%) yield.

So how much do property prices have to rise in Rockhampton for yields to fall to 5%? That could be the limit of the short-term CG growth there, and then it would slow down to match CG growth rates in larger centres, keeping yields hovering around that 5% figure.

Cheers,

Aceyducey

 

[markpatric]

People I am seeing homes in Rocky like the one I purchased for $65,000 being sold for up to $120,000, one in particular is on a block of dirt half the size?.
Are some owners asking too much?, this one is a 2 bedroom single carport, 1 bathroom home and rents for less than mine at $125 week.
Are the prices moving already?.
Looking at properties on the net I`d swear I could get over $100,000 with a quick paint right now and I only purchased mine 8 weeks ago.

 

[see_change]

Prices have been moving for a while and they didn't stop with the rise in interest rates.

Some agents in Rocky also have a habit of pushing the envelope a bit, while some don't seem to have much idea that prices are rising.

I've seen asking prices varying over 20k for similar houses.

See Change

 

[willair]

I look at the qld public trustee of queensland site every week,
the houses that where for sale in rocky have all sold,i use this site to work out market values ,i just wonder what will happen to Rocky if the united states military build a training facility at
Shoalwater Bay for 5000 us troops..in the Livingstone Shire the main cental town is Yeppoon,Shoalwater Bay covers a third of the
Livingstone Shire.
good luck
willair..

 

[markpatric]

That`s interesting news, any idea when this is likely to happen, it can only be good for Rocky, but besides that fact Rocky is by far the cheapest city in Aussie and for that reason alone it is looking good investment wise as it has a lot to offer.

 

[willair]

Markpatric,
im not sure on the timeframe on the military training base,
it may come down to increased federal funding for roads in the area and when senior usa advisers strike a deal with Australia
advisers and what they consider important..but i know they want
this to happen as with this site the army,navy,and air force can train together in one place.just something to think
about.
good luck
willair..

 

[astroboy]

Originally posted by willair
Markpatric,
im not sure on the timeframe on the military training base,
it may come down to increased federal funding for roads in the area and when senior usa advisers strike a deal with Australia
advisers and what they consider important..but i know they want
this to happen as with this site the army,navy,and air force can train together in one place.just something to think
about.
good luck
willair..

Another Courier Mail beatup (suprise suprise) Defence Department came out with a statement that there were no plans (immediate or future) for this type of facilty at Shoalwater Bay.
Regards,
ab

 

[Sunfish]

And the Singapore Air Force is setting up a training base at Charters Towers. I know because the local RE Agent told me!

 

[tomd]

I've read most of this thread while I was a lurker, but I mightn't have read all of it so I hope these comments haven't already been made.

I'm not experienced enough to know how well Rocky is doing/will do in future but I've been there a number of times.

It's not the best city to live in. It's very hot during summer months (September to April) because mountains separate it from the sea. I think any rental property should have ceiling fans throughout and an airconditioner in the main bedroom at least.

I think some areas flood and some of the housing is pretty ordinary (same everywhere I suppose).

I know the biggest meatworks in the town closed down a few years ago. The smaller one is still going. The closed meatworks has been kept in full working order so far, pending possible re-opening. It's closure could be a factor in population decline in recent years.

I think the meatworks used to employ around 1500 people, so the negative effects of it's closure would have been already felt and a re-opening would be a big boost to the city.

There's some very nice streets around the botanic gardens but housing here might be too expensive/high maintenance for IPs.

By the way, the botanic gardens are fantastic, even though not advertised much. Don't miss them if visiting (but take the aeroguard for mossies!) Actually the botanic gardens in Cairns are great too, but there's lots of other things to see around Cairns.

 

[Janvid]

I say as I have done in the past for all the people who bag out Rocky.

Show me where else you can get returns of 9% plus in a City this size.

Of course Rocky has its faults. If Rocky was growing rapidly, was on the beach, or beside Sydney, or a suburb of booming Brisbane, then we wouldn't be talking about it on this forum because its boom would have come and gone and the returns would now be less than 4%

You have to put it in perspective.

AND, at the risk of sounding again like a stuck record, who cares about short term capital growth or otherwise with returns like this.

The number of persons on this forum discussing what should be an insignificant QLD town, and the number of people that I know personaly who have recently, or who are looking to purchase an IP in Rocky, is also very re-assuring.

Having said all of this, and as a means of risk management, I am not saying that anyone should invest everything they have in Rocky. I have just signed a contract on my second block in Rocky, which in dollar values only represents about 10% of my portfolio. This is the last purchase for me in Rocky, I am now looking to either buy again in Cairns, or to buy in Townsville.

Like all investments, share the risk.

 

[astroboy]

Sorry Janvid but those numbers just keep going down. See

http://www.rta.qld.gov.au/december_quarter_2003.cfm

I can understand why this is your final purchase in the area and you have decided to venture to other areas with real growth prospects.

Yield is ok, but long term,,, well,,,,

astroboy

 

[pennyk]

when will it peak?

I have just been looking thru realestate.com.au and others to see whats happening with the prices in Rocky. We have a duplex there. I think the rental returns are great, and obviously the capital growth is risky. But with any investment, you need to decide when to get out of the market, if you are looking for capital growth. There has obviously been a huge amount of capital growth over the past year. For example...

http://www.realestate.com.au/cgi-bi...&f=30&p=10&t=res&ty=&snf=rbs&cu=&fmt=&header=

This property was listed 1 year ago for sale for $195 000 or thereabouts. So, a $100 000 capital growth in one year is not too bad. and probably a good time to get out, while the market is still hot. I was surprised that there is only one listing for a duplex under $200 000. and that place has been on sale for several months, cause it was on the market when we bought in October.

For me, the question is not so much " do I get into this market?" but " when do I get out?"

Penny