Time to shop for IP #5 and 6

J

jmillar

Hi guys,

IPs 1-4 have all performed well lately and I'm preparing to reval shortly. My MB suggests I can comfortably purchase 2 x $300k IPs using just equity which I plan to do around May-June. After that I'll take a break for a year or so :)

IPs 1 and 2 are units in Western Sydney, while 3 and 4 are townhouses in Beenleigh and Eagleby.

For 5 and 6 I will be buying in QLD again. My options are:
- Houses in Logan (circa $300k)
- Units/townhouses closer to CBD (circa $300k)
- One of each of the above (circa $300k ea)
- 1 dual income house (circa $350k) + 1 unit/townhouse (circa $200k)

These will be buy & hold, main goal is short and long term CG and I require them to be close to neutrally geared.

I also thought about a duplex but the asking prices of the few I've seen don't make sense. ie: This one in Waterford West
2 x houses on 786sqm yielding $700/week for $630k. Wouldn't I be better off buying 2 separate houses at $280k each with similar rentals, higher land sizes and I'm guessing they would value up better/easier than a duplex. Surely you would need a 20-30% discount on 2 freestanding houses to purchase something like this.

Something like this one in Woodridge is interesting but still 7.1% return. I would think a freestanding house @ 6.7-6.8% would be better for CG and ease of valuation.

The below properties are interesting - I'm guessing if rented separately they would yield something like $520-550/week so could potentially yield around 8% and valuations would still be pretty strong. Are these types of dual income properties legal though?
http://www.realestate.com.au/property-house-qld-slacks+creek-119275863
http://www.realestate.com.au/property-house-qld-beenleigh-119266183
http://www.realestate.com.au/property-house-qld-eagleby-119230531
http://www.realestate.com.au/property-house-qld-eagleby-118813919

Questions:
  1. Thoughts on duplex purchases? Am I right in that you would want a 20-30% discount on what you'd pay for 2 freehold houses? How do the valuations generally stack up?
  2. Are the above types of dual income properties legal?
  3. If a 3bdr house yielding $350/wk is $290k and a dual income 5bdr house yielding $440/wk is $330-350k then that seems like a reasonable difference in capital value, the return will always be much stronger in comparison (which can only help the valuation) and there seems to be a good pool of comparable properties around Logan, so I'm guessing valuations would stack up okay on these types of dual income properties (as opposed to houses + granny flats in Sydney which can be hard to value from what I hear). Correct?
  4. Where would you look for a unit/townhouse around $250-300k closer to the Brisbane CBD with a close to neutral return?

As usual, any help would be appreciated!

Cheers!
John
 
On sat I browsed 15 opens and 1 auction through Logan and surrounds , I actually had a look at this one here as mentioned http://m.realestate.com.au/property-house-qld-slacks+creek-119275863,

plenty of people viewing that, however with the others I viewed, :eek:traffic was mostly quite slow, so I wouldn't go in too high with my offers if it was me IMHO

With this one http://m.realestate.com.au/property-house-qld-beenleigh-119266183 and the other you have mentioned they are being marketed by a local agent that is good to sell with but bear in mind they price high when they sell! So watch what you buy off them if you do that's it's not over priced

I'll let others go on about what's legal and what's not but if it was me I would be looking harder for something for 280 highset, add cosmetic and receive 400 a week rent in a good area

Good luck
 
Thanks for the comments guys. I should also mention I have no experience with renos but something with reno potential would be good too.

I don't plan on drawing equity out for another 12 months at this stage, so I would probably just sit on it and do the reno at a later stage.

Cheers
 
jmillar said:
The below properties are interesting - I'm guessing if rented separately they would yield something like $520-550/week so could potentially yield around 8% and valuations would still be pretty strong. Are these types of dual income properties legal though?
http://www.realestate.com.au/property-house-qld-slacks+creek-119275863
http://www.realestate.com.au/property-house-qld-beenleigh-119266183
http://www.realestate.com.au/property-house-qld-eagleby-119230531
http://www.realestate.com.au/property-house-qld-eagleby-118813919
Click to expand...

If you are going for a cashflow play, you are looking at the right properties.

Speak to the agents on each to find out more information. They will generally tell you whether it's legally approved or not.

On the ones you have listed:

24 Jindavee is legal 5 bedrooms
63 Adelaide Circuit isn't legal. It should really be advertised as a three bedroom house. Underneath two bedrooms aren't legal height
3 Embley Court Eagleby is legal

Don't know about River Hills Rd.
 
Hi

Hi,
Before looking at buying any new properties, I would look at your current portfolio and looking at the following:

1) Have you revised your loan structure, interest rates and features?
- As your portfolio grows so should your strategy :)

2) Accumulating more debt at the moment in my opinion is a bit of a risk unless you are going to see a return pretty quickly.

3) Have you got any other debt eg: Personal loans, credit cards or a home loan for your own PPOR? If so maybe start tacking that debt first.

By the way I just bought a property on Saturday: 6 Laming Road Deer Park Vic 3023 - Realestate.com.au
www.realestate.com.au/property-house-vic-deer+park-119234875


Looking at building a unit at the back :)
 
Congrats where you have gotten so far!

Nearly half way to your goal don't know why everyones telling you to start paying down debt if your trying to reach 10 by 2018!

Hopefully you have a decent strategy and are not just trying to get to 10 for bragging rights!
 
Hi,

Sorry for what's probably an obvious question to many, but why is now a good time for the OP to stop buying and pay down debt?
 
Hello John,

Congratulations on where you are today. Amazing effort for your age. My advice to you is nothing as sounds like you should be the one giving advice :).
 
Michael's a great host for Logan! Good fun meeting SS members.

Michael_X said:
Haha, I was there with three other Somersoft members - could have said hi :)

Good location in Slacks Creek, nice brick. Some problems are no garage, the floor is uneven and the renovation was quite rough.

Suspect there will be lots of competition on this one.
Click to expand...
 
Michael_X said:
Haha, I was there with three other Somersoft members - could have said hi :)

Good location in Slacks Creek, nice brick. Some problems are no garage, the floor is uneven and the renovation was quite rough.

Suspect there will be lots of competition on this one.
Click to expand...

Oh yes that's interesting! Hopefully catch up soon when it starts to BOOM! Lol

Some opens quiet, but house quality I think reflected these, I had a lot to get through, so some I just drove by, buts lots of sold signs out which is positive , interesting to see what that one mentioned goes for!
 
Thanks everyone for the comments and encouragement.

Michael_X said:
If you are going for a cashflow play, you are looking at the right properties.

Speak to the agents on each to find out more information. They will generally tell you whether it's legally approved or not.

On the ones you have listed:

24 Jindavee is legal 5 bedrooms
63 Adelaide Circuit isn't legal. It should really be advertised as a three bedroom house. Underneath two bedrooms aren't legal height
3 Embley Court Eagleby is legal

Don't know about River Hills Rd.
Click to expand...
Thanks for the opinion, Michael. Do you have dual occ properties in your portfolio? If so, how have the valuations been (if you've had any)?

I have your 'My Story' thread open but haven't had a chance to read through yet - worked 13 hours today :eek:


jpcashflow said:
Hi,
Before looking at buying any new properties, I would look at your current portfolio and looking at the following:

1) Have you revised your loan structure, interest rates and features?
- As your portfolio grows so should your strategy :)

2) Accumulating more debt at the moment in my opinion is a bit of a risk unless you are going to see a return pretty quickly.

3) Have you got any other debt eg: Personal loans, credit cards or a home loan for your own PPOR? If so maybe start tacking that debt first.

By the way I just bought a property on Saturday: 6 Laming Road Deer Park Vic 3023 - Realestate.com.au
www.realestate.com.au/property-house-vic-deer+park-119234875


Looking at building a unit at the back :)
Click to expand...
Hi jpcashflow,

1. Current structure is all sorted - I am using Rolf as my MB so I generally leave this to him. I concentrate my time doing the things that make me money and let him do what he is best at (structuring).

2. I don't think this is the case if you know what you are buying. People told me not to buy IPs 1, 2, 3 and 4 at the time and I've turned $60k into $220k+ equity in less than 18 months. I will still have $50k cash in an offset account after I buy these 2, so plenty of buffer and my portfolio is positively geared.

3. No other debt, I own my vehicles outright.

Congrats on your purchase - the link doesn't work though.

Cheers
 
jmillar said:
Thanks for the opinion, Michael. Do you have dual occ properties in your portfolio? If so, how have the valuations been (if you've had any)?
Click to expand...

Yes, most of mine are. Mostly for cashflow plays.

I haven't had any valuations, as most of them were picked up within the past 12 months. Looking around, in terms of value I find I am paying around $30k more for the same type of product I was buying last year.
 
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