Should I go for it?

fyang1024

fyang1024

I spent 7 days in Brisbane to find out some IP in Ipswich LGA. Because the time was so limited, I've just got one in my list, which is a Delfin's land/house package in Springfield lakes. The block is 763 sqm2 and the house is 4/2/2.

The land shape is not regular, but close to Orion Town Center(8 mins walk) and the Uni. The builder is prospero. The house building area is 25m * 12m. The land is sloping down from the road. The price is 466150, not negotiable.

The rent for such a house now is about 370/w.

I think the springfield lakes has good potential, but the price is a bit high and the rental yield is not good. Still hesitating...
What do you guys think of it?
 
You went to Brisbane for a whole week and only ended up with one possibility? How many properties did you look at?

What are your criteria for the purchase?
Alex
 
What do you actually get in your house and land package, fyang? Is it a turn-key package, or will you have to spend further $$ on landscaping, driveway, clothesline, etc, etc??

Cheers
LynnH
 
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so basically it is an asset which is too expensive and has a return which you are not happy with? you have really answered your own question i think.
 
I looked at Springfield Lakes about 4 months. As you said prices are high and yields are low at the moment. But I think long term like all Delfin projects it will take off. The agent at Delfin total us that most tenants are people building in the estate so it is only 6 months at a time.

We end up thinking Oxley ad Darra were better value at the moment.

My concern was the bottleneck in the freeway which creates a nightmare for people commuting to Brisie or even just getting to the nearest train station. I believe there is a new station planned for the near future nearby though.

Cheers,

Bazza
 
Hi Fyang1024,
I have been looking for a couple of months now in various areas. I was in Ipswich and Springfield Lakes on the weekend. I came to the same conclusion as Bazza about Springfield Lakes at the moment. I thought Redbank Plains, Goodna, Bundamba area were more value at the moment. I hope so because I bought one. :D
 
Just to clarify a few things. There were no open inspections during the week, that's why I could only put house/land package on my list. My criteria is 1. house, 2. close to everything. 3. Yield return is above 4.5%. The package is a turn-key package. Obviously the package doesn't satisfy No.3. So probably I should give it up.
 
Hi Everyone

The things that concerns me most (well for my strategy) is the area and surrounding suburbs seem to be investors not owner occupiers.

I always try to buy my buy and holds in areas where 80% of the houses are owner occupied.

It all depends on your strategy.
 
I think it's too expensive but then considering Augustine heights is further away and the same house on the same land would cost over $500k...it's hard to say.

Have you considered building? it would probably cost you around $420k to build it yourself.

I have a property in Heathwood (Forest lake) which I built for $360k now worth $530k and rents for $475p/w.

The yield is too low. Maybe you should consider buying a big, nice but not brand new house in Forest Lake area...you can get 1 or 2 yrs old for similar price but better rental.

Also, for that price you could get leaseback display homes at 8% yield. There was one display house built by Orbit in Woodlands which sold for $460k and leased back 1 yr at 8% but could achieve around $430p/w on the market.

You need toc ome up on a weekend an dyouw ould only need 2 days. Some friend sfrom Sydney came up on friday night left sunday and boughts two IPS
 
How much is a 1 or 2 year old similar existing house selling for in the same area?

The depreciation on yours and the existing one will be much the same, the rent return probably the same, but the purchase price could be less.

After another 12 months, your new house will be second hand, and will be much the same value as the existing one. Either it will have come up to yours, or yours will have dropped back to the existing. I think I'd rather have the existing one.

House and land packages are often, not always, loaded to profit the developer; not you.

Incidentally; the rent return is pathetic and I wouldn't buy it, even with all the depreciation deductions.

What is the rent demand in the area? What is the vacancy percentage for the local agent's rent rolls? Is there much rent demand there?

These are important factors; you could be buying an overpirced, bad yield property in an area that no-one wants to rent.

There may be good cap growth, but that's no good if you can't service the loan to hold it until the growth occurs.

More D.D needed.
 
I think someone mentioned "you can build it yourself" and save some dollars......well if that was the fact perhaps you can perform open heart surgery yourself as well !!!!!
My experience tells me that if you want to do something the right way, get a professional person to carry out the task. Most guys who atempt to (owner build) usually end up in disasters and the house looks very SH_ty, not to mention your prolong holding costs.

In regards to buying display homes, it might be a good option in some cases but usually the reason why the builder gives you a higher yield of 8% as mentioned is because he has most likely loaded up his prices by 20k and tangling a carrot to the an educated investor. again buyer beware

LK
 
ml320 said:
I think someone mentioned "you can build it yourself" and save some dollars......well if that was the fact perhaps you can perform open heart surgery yourself as well !!!!!
My experience tells me that if you want to do something the right way, get a professional person to carry out the task. Most guys who atempt to (owner build) usually end up in disasters and the house looks very SH_ty, not to mention your prolong holding costs.
Click to expand...

I think they mean buy the block, choose a builder and supervise the build. :confused: Not actually get out there and lay the slab yourself etc.
 
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