QLD 4114 - LOGAN

im going to go against the trend and share my thoughts (going to be a bit long and disorganised as ive had 3 espressos)

valid points have been made
$20 per week cashflow doesnt sound like much but thats $1k per year, multiply that per property and it goes a long way to pay off your loans,

but you also need to understand that a hot water system is $2000, thats 2 years "profits" gone if it happens,

I think the low socio economic strategy does work but there is a higher risk factor than buying "bluer" chips,
yes a good property manager reduces this risk but the risk exists for more insurance claims,

I would do things a bit more differently next life time as I ve seen other people do better than me by buying $500x4 as opposed to $200kx10 IPs,

there was one stage a few years ago, I was almost doing insurance claims and maintenance full time, and it drove me crazy, the breaking point was when an insurance company initially declined to insure me, (off the top of my head, in the past 5 years , 26 IPs, i think ive done 13-14 insurance claims)

If my CG was the same as others with bluer chip properties, id be happy with my strategy, as buying cheaper allowed me to get more with increased leverage and I got far higher yields, and hence my cash flow was/is good!

also, ive sold some properties at small losses after 5-7 years of holding, as far as im aware very few blue chips have done this

as for logan, I think long term it will be fine, those that got into it before the "boom" a few years ago will be happy, if you got into it recently, I think you're going to be disappointed if you are expecting a doubling in the next 5 years, but for a good balance between CF and CG, I think its very safe


my advice for those getting $40-$150 pw cashflow out of it, dont rely on it for mortgage payments or lifestyle requirements, put it towards buffer, maintenance and deposits, you can never have not enough

 

At one stage, we had over 20 of them and the cashflow increases most years, so it can be very powerful.

Yes, but how often do you need a new hot water system. We spent on average, maybe two large items per year across the whole portfolio. Some years nothing at all, others 2 or three.

The property manager is a tool to reduce the risk, but I've found that the good ones stay for long term. They don't want to move. I've also had bad tenants in 'good' areas as well, so there's no guarantee you'll get better tenants by buying a more expensive property.

I've had a few insurance claims, but you do need to look at the property. If the tenants are properly screened, and the property is well maintained, you should be fine.....but in saying that, you sometimes need to look at the suburb within the demographic. For instance, in Western Sydney, Willmot is the worst, so limit your exposure. I believe you had a lot in Elizabeth. There's a few suburbs around that area that I wouldn't touch. Note: I've got 3 around the Elizabeth area. Also Ashmont (Trashmont), I would never touch, after driving through the suburb. You can tell a lot by driving the streets.

My Nunber 1 rule:

All investment income goes into a separate account (an offset to one of my loans) to wages etc. All mortgage payments come out of the same account. As the offset account gets full up, funds come out & go into another offset account. This is free money & not for consumption.

As we got further along our investing, I began to draw a 'wage', from the investment account. Most loans have full offsets attached now & we live off of the rental income.

 

yes, couldnt agree with you more!

I reckon ive replaced 4 aircons, Hws-7, thats a lotta $$$

yes, tenants can go bad no matter what, but in my experience, low socio tenants are less likely to care less about their history or future rentability, ie they are more likely to abandon or leave with arrears, so a PM goes a long way but doesnt eliminate or make the risk the same as a blue chip

not a lot in elizabeth but more than one, I m out of those areas, and for the record, timing wise bought well, and sold with virtually no profit, one of those was my highest insurance claim numbers!

I have a similar mindset in that any profits/cashflow is to be put into offset and increases my buffer, and I dont rely on it for non investment purposes, very dangerous to start thinking its your salary

 

We had one year like that....but many with nothing at all. It all evens out in the end, but it is a bit of a shock when they all go at the same time. Add ovens into the mix as well. One reason that I never put dishwashers in, it's just something else that I've got to maintain. Of course, if it was in a better area, then a dishwasher is expected.

 

Yeah okay fair enough, we’ll done !! I understand the multiple $$ increases across multiple properties makes sense but with that does come with higher costs and tenant issues, it’s not my thing however again good on you over what period did you Aquire these assets ?

 

Very valid points @skater i guess the difference is now days even your average or even high income investor has little Chance of accumulating 20 to have that $20 adding up.

You now have to be very selective as @TMNT has rightly pointed out, 4x$500k or 8x$250k and so on.

Given it takes approx a 12% yield for a property to not be a burden on serviceability, how many IPs would you have accumulated today?

 

You might be right. This building is under construction at the moment on Jacaranda.

 

What kind of experience do you have to make these claims? Some of my best long term tenants have been in ex-housing commission properties. Yep, a few extra costs due to extra properties. With only one property you might need to buy one water heater over a period of time. With 20, there's a possibility you might need to replace them all, but they don't all fail at once, you know.

If I started again, from today with a decent income and some extra years up my sleeve, I'm sure I could do better than before. It's not like you go out & buy 20 in one hit, you know. It takes time & several cycles to build a large portfolio.

We did most of the hard work on one very low income & two kids. We were young & just bought what we could afford to buy. Some with little due dilligence. Like I said in a previous post, there are some really bad pockets of lower socio areas, & it's best to avoid (or limit) the exposure to these. We found that by the experience of buying into some of them. We just ditched the lemons as fast as we could & moved on.

To get the capital for purchases we bought & sold as well as reno's. The reno's we did ourselves, so no labour costs & I bought supplies on the cheap. For instance, recently I got a pallet of wall tiles and some floating floors for FREE off of marketplace. These are things you can STILL do. Earlier this year we sold two properties that we'd done reno's on & made around $200k. You could almost pay cash for one of your Logan properties for that. Sit on it for a few years, and when you've got some CG, if the serviceability is there to redraw, do that. If not, sell & buy elsewhere.

 

Remind me not to hire the person who designed that building!!!

 

I second that, however I did mine in one cycle because I went super aggressive.
also I was able to buy more as lower prices = lower deposits, and my $ to equity return was higher as a result

originally, my intentions were to weather out any major bumps and issues as I susbscribe to no pain no gain, but a few years later I ditched my what I determined to be the lemons and the ones that I deemed as not worth the time

 

Same! I don't like selling, but we learnt fast that sometimes that's the best & most logical thing to do. First one was a hard call. Bought in some low priced area, full of scumbags. Tenants no problem, but the neighbours were, & the neighbours weren't going anywhere soon. Sold up for a modest profit. Would have made more if we kept if for longer, but the headaches wouldn't have been worth it. Actually we had two that we sold due to scumbag Housing Department neighbours. Unlike private rentals, those in Housing Commission won't move along.

 

Anybody have feet on the ground in Logan and can update on the market?
Surely with the recent rate cuts tenants will soon realise that it’s cheaper to pay a mortgage then continue renting?

 

I ve learnt over the years to not look back in hindsight all the time, only regret if you royally screw up, eg the property absolutely rockets up and you had a choice to not sell

learn from your mistakes/decisions good and bad

 

In oo areas market is up by 1.8% in the last quarter. There has also been a flurry of activity from fhb making the most of the govt scheme in this qtr...

 

Haha, I don't regret a thing. You don't go broke making a profit.

 

Hi have feet and property on the ground. Those that would be able to will have gone already and got a mortgage. There is a good sort of tenant that we have stumbled across in Logan and in GC (so not just Loganesque if you get my drift). There are ppl who are finishing their divorces, found another partner and are setting up house. These people are GOLD, they are respectful, good renters, work history good. By rights they should have their own houses but lawyers cost a lot, so they rent til they are settled. It is like they are young kids but with the income and responsible attitudes of older ppl. They are like double income, some involvement with kids / grandkids ….. but just not able to buy. We have two of these , one in each place. Pay good rent, and we can relax a bit.

 

We are putting rent up a fair bit in our marsden manor. PM reckons rents on the rise in the 4114. Anyone else seeing this?

 

New "York" High Rise in Beenleigh - icubed consulting

Category: | The Courier Mail

Approved and underway.

 

Time to buy in Beenleigh!

 

Are those marijuana gardens on the balcony?