Advice re: next steps, Perth or Logan?

As the title says...advice please! I'm looking for another residential IP, and can't decide on a property type/location.

This is a fairly long initial post, to provide as much info as possible about my situation and strategy. If you stick with it til the end, I'd love to hear your thoughts and advice.

Current situation

PPOR - Brisbane, Qld (off limits, will not touch equity in this place)

IP#1 - Ipswich, Qld (2/1/1 house), purchased 2012, $210k equity, value $320k. Old house in a great location, lots of renovation potential.

IP#2 - Warnbro, WA (4/2/2 house), purchased 2021, $80k equity, value $440k. A "set and forget" investment, very low maintenance. Not much scope to add value.

Now looking to add IP#3...and possibly IP#4 before the end of 2021.

I have pre-approval to borrow up to $890k, but don't want to spend more than about $750k total, and I'm not interested in properties that are strongly cashflow negative. (yes, I know this probably isn't the "optimal" approach, but it is what it is).

I won't have time to actively add value through development/renovations until 2024. I'm in a secure and well-paid job for the next 3 years, and want to maximise earnings in this period.

Strategy:

• Aim is to build equity with the aim of selling down (not out!) and achieving passive income in about 10yrs time.
• Hold 3 or 4 IPs until at least 2024
• In 2024-25, add value through renovations/subdivisions if possible
• From 2026, either sell 1, 2 or 3 IPs and roll the profit into a quality commercial property (for a very long term hold), or continue to hold and purchase further IPs though a further property cycle.

Options

I've been considering the following options:

A) Purchase 1 x IP in Perth (eg: Spearwood, Hamilton Hill, Morley, Lynwood) with subdivision potential. Cost would be $750k-ish.
PROs - good CG potential in next 5 years, opportunity to subdivide or renovate
CONs - cashflow negative, top of my budget, I don't live in Perth and don't know the area very well

B) Purchase 1 x IP in a top-end Logan suburb (Daisy Hill, RDS, Shailer Park, Crestmead). Cost would be $600k+
PROs - I know the area, decent CG potential, cashflow should be close to neutral
CONs - Less opportunity to add-value through reno/subdivision

C) Purchase 1 x IP in a lower-end Logan suburb (Woodridge, Logan Central, Beenleigh), with renovation potential. Cost would be around $400k.
PROs - low capital cost, opportunity to add value though renos, decent CG potential, cashflow would be close to neutral
CONs - lower exposure to CG on a cheap property, could have higher vacancy rates.

The Question

What would you do?!

Given my strategy and the info above, where should I spend up to $750k? I'm leaning towards option B) because I'm time-poor, live in SEQ and fairly risk-averse... it is probably the "easiest" option.

All advice appreciated.

(EDIT: Why only Perth and Logan? Because I don't have unlimited time to research every possibility, and I'm already somewhat familiar with both markets)

 

Rochedale South is a good option. Go with what u know. Plenty of attractions to the suburb .... u already know that.

 

haha yes... it's definitely being considered as a "fall-back option" for several (relatively wealthy) couples in my circle, who are priced out of inner-ring Brissie. They'd rather have a 4/2/2 on 800m2 in Rochedale South instead of 3/1/1 townhouse in Coorparoo.

 

So I went to a couple of open homes in Shailer Park/Daisy Hill this weekend... the market is absurdly busy. At least 50 people inspecting each home - probably closer to 100 at one property in Shailer Park. Conversations with REAs confirm what I've been reading on here - it's hot!

I think I'm going to concentrate my search on Options A) and C)... I can't help thinking we're getting close to the top of the market in Shailer Park/Daisy Hill, there's just so much competition and prices have moved so much in the past 12 months already. Surely buyers who keep missing out will start to look west of the M1??

 

Probably correct.

If that hasn't started already

 

Just wanted to chime in that your budget probably doesn't need to be as high if you are targeting those suburbs.
If you are targeting $750kish with some subdivision potential then I'd probably add in
Warwick, Duncraig and surrounds, Padbury, Hillarys

 

Thanks for the pointers.

 

B) Purchase 1 x IP in a top-end Logan suburb (Daisy Hill, RDS, Shailer Park, Crestmead). Cost would be $600k+
PROs - I know the area, decent CG potential, cashflow should be close to neutral
CONs - Less opportunity to add-value through reno/subdivision

There are heaps of opportunities in these suburbs to add value through renovations! I live right on the border of Loganholme and Shailer Park. I've bought a few myself in the area and lots for clients and have made some very good gains with minor renovations.

C) Purchase 1 x IP in a lower-end Logan suburb (Woodridge, Logan Central, Beenleigh), with renovation potential. Cost would be around $400k.
PROs - low capital cost, opportunity to add value though renos, decent CG potential, cashflow would be close to neutral
CONs - lower exposure to CG on a cheap property, could have higher vacancy rates.

From 2003 to 2008 cheap properties in Logan went from around 70k median to 300k median (Quadrupled in around 5 years). Sure the last 10-13 years haven't been great but the last 12 months have! Don't bet that Logan can't have great CG over time in the cheaper suburbs.

 

I'm confident Logan will continue to see good CG. I mean there's less exposure to CG on a cheaper property - in absolute $$ terms, not %.

 

I would go into a solid middle class suburb in Perth...it is about 12 months behind Brisbane in growth and more upside in my opinion.

 

Any indication of the names/surrounding.

I am in luv with Busselton but that's not Perth

 

I'd target inner ring suburbs (10ks from the CBD) with a few exceptions. If looking at the CBD as a clock probably 1-6 o clock if its under 750k. 11-1 is also good as long as long as its below Morley Road though 750 would be pushing it. Rest is probably out of budget

 

Where is 12 o’clock? Due North?

 

Yea north being 12. Another Ring could be Reid, Tonkin, Roe Highways.

I think as posted by others there might be a few exception suburbs to avoid inside and few just outside that might be still worth looking at. All just general

 

In Perth...I would look at anything within 5 klms of the coast within 12-13 klms of Perth CDB. ...you can still find stuff under 650k.

 

Yeah I'm still looking at Hamilton Hill, Spearwood, Willagee

 

Thanks, in your opinion what are your top 5 suburbs there for under 750k mark for good CG and decent CF.

 

Logan is going crazy... houses in Woodridge are selling within days, if not hours after listing!

Perth is looking better and better for me...

 

@AsburyJuke are you using any BA?

 

No