Question to all those Brisbane investors out there. Asking on behalf of parents (not myself, sadly). They are QLDers but they live in London (for now) and currently own 5 properties in: West End x 2, Annerley, East Brisbane, Stafford Heights, all mortgage free. Have recently sold another one in Gordon Park and have $1.2 million to re-invest. They are not after long-term capital gains as they will be too old to realise them, they want cash flow for retirement. They are also not investors by trade, this is passive income and hence they do not want to look far and wide and deal with tenants and property managers in various states. They have been looking for a couple of months, with varying success. Some estate agents (amongst others) have suggested they buy a house for around $1.5 mill somewhere <5km from CBD where it is still somewhat affordable (ie East Brisbane) and buy a higher end property that would rent on a corporate least for around $1300-1800 per week (these figures seem inflated to me though I have no idea as to the demand or lack of demand). Others have pushed for 2 properties a bit further out (~5-10km from CBD). They're not that interested in getting 3 or 4 properties with small mortgages either. It's either 1 'big' property or 2 properties. Something requiring a reno would be okay though again that won't happen for a while. I live and work in Auckland so have zero knowledge of the Brisbane market (though it seems somewhat more sedate than Auckland). Nice problem to have, obviously. Any ideas? Cheers.
The house we sold for just under $1m 18 months ago was worth $1.2m (according to an appraisal) before the GFC. It is probably worth that again now. We had trouble renting it three years ago (before the rental market softened) for $750 (started asking $850 and dropped until we got a tenant). That end of the rental market is not easy, and the pool of renters is small. It did rent after we sold it or $950 and last rental was $900. That rental market is fickle. I'd suggest that something for $1.2m isn't going to get anywhere near $1,300 to $1,800 per week. With their properties, the land tax must be high, unless they have trusts? I'd be looking at shares. No tenants, no repairs, no land tax, no hassles. They just have to pick wisely... maybe a good spread of shares? I have no shares other than in super, so I'm no expert, but I know the return would be better in shares than we are getting for houses right now.
Thanks for your reply. I will put that to them. I did think that the figures the estate agents were quoting seemed crazy, figures you'd usually expect in a rent by the room style uni student property. It was more the $1.5 mill+ properties they were suggesting would provide the $1500+ rents, ie get a small mortgage with the $1.2 deposit. Seems an unnecessary risk however. A quick online search usually reveals a few $1k+/week properties in most inner city suburbs, though I have no idea whether these actually rent with ease. Property managers haven't really been able to shed much light either.
Consider a commercial property or shares. I'm no expert in either but thats probably what I'd looking at.
Maybe first when you look at the income from those properties each week month use the income to lever into the equities markets,but the first cab off the rank would be have the 2 in West End and Annerley valued and find out what the properties in West End some have gone up over 70% in the past 2 years,depending on the street and zoning..imho..
Another vote for shares, look into LICs and ETFs. They have a good basket of properties already, and as others mentioned, land tax component must be considered.
