Flood Affected Area Brisbane - Would you?

Hi Guys

I have been looking for my next property in Brisbane for some time, haven't found anything quite right as of yet in budget, I am now considering a property in flood affected Rocklea, given that I could save 200k compared to what I was planning on spending in nearby suburbs it is quite tempting. The property was affected by floods (only to floor level, it is raised) however I believe you can now raise properties in the area further in order to avoid the risk going forward... The extra cash would allow me to create equity in my other properties which are in desperate need of a reno, the yield would be good and from what I understand the area is not likely to flood for another 40 odd years... The growth in the area has been 6%+ year on year as the stigma and memory of the 2011 floods is dissipating.

Is this a complete no go or potentially a smart investment...?

Thanks

 

I would buy in a mining town before I would buy in Rocklea...

 

First cab off the rank would be insurance,just give several companies a ring but we pay above 3k per house,and from what i saw after the 2011 floods suncorp was the only one that did what the insurance contract said,then it would depend on where the property is located,anywhere near the creeks and parks if it goes too the 2011 levels again then it becomes a stress full nightmare,stay away from darnley st,tramore st,anywhere near the rocklea markets,try and target near the railway station back into the salisbury,and by the way
it's flooded several times in the last 23 years,you get 3-6 days of constant rain and everything goes on the BBQ plate..imho..

 

Is a one in 25+ year event which lasts a few weeks going to put such a severe dent in your cashflow to sway your investment decision? What can be done to mitigate the risk? Does that need to be done immediately? <5 yrs, <15 yrs, <25 yrs?? Can you budget for it? Do you have to budget for it?

 

Nah. I wouldn't. After watching many floods on TV, I just wouldn't buy flood prone.

Even if the house is raised, I'm sure the water will affect the foundations. Plus the house becomes isolated and you need a boat to get around.

Then there's all that smelly water. Nah.

 

Yes thats kind of where my head is at, if i just spent 30k lifting the property and go in with the at some point this will happen factor, my prediction is the yuppies will get priced out of salisbury and moorooka at some point and migrate to rocklea... 200k median price differential between the suburbs it's hard to ignore despite the obvious stigma.

 

Talking too the Asian real estate agent doing a letterbox drop yesterday outside one of the properties while picking up the rents yesterday afternoon,he tells me he has sold over 20 properties in the last year in Rocklea,the base entry line is 400k,the lady real estate agents who were walking the streets one week after the floods in gum boots in 2011 only offered me 150k,gotta love real estate sales people looking for someone too fill up the BMW and make the next lease and credit card payment..

 

That's my view too. Today's obvious stigma will recede in a half a generations time.... ask anyone under 25 (not from PC) from interstate if a non-flood zone is high on the DD list... or even anyone under 10 in Brisbane. In another 5-10 yrs, a critical mass of people will have the mindset of 'it'll never happen to me'. And by then the 2011 floods will have morphed into a human error story that will never be allowed to happen again.

So it's possible that flood affected properties will experience better relative growth in a 10yr+ timeframe ?

 

When we went into the flood area at it's peak in my small punt ,one house we control right on the park waterfront was not even there
could not even see the roof,Wife starting crying thinking the house was washed away,all i said was we still have the land,2 days later we could see the roof and the back stumps gave way
and the back section sunk into the mud,then all the good people came and helped me clean
best experience of my life..

 

Wonder what it will be like to sell again down the track. Do you think others will be thinking the same thing? Better yet, try selling, or watch your house drop in price soon as another flood occurs. And the flood will occur again, it's just a matter of timing.
Very risky.

 

That's the only part you would have to be very very care full about the with the insurance,some companies that cover qld still don't have flood cover in the contract,and it will flood again ..As far as selling goes and the people who buy,most interstate buyers unless the agent tells them or they see the 3mts flood level sign outside the house would not have a clue..and they sell quickly..

 

the house I once lived in ( in Rocklea) isn't even there any more. Council demolished it after 2011.

The time to make money is right after a flood, when people are spooked. 2012 would have been the time to buy in Rocklea.

 

People forget about natural disasters really quickly.

There are flood areas and there are flood areas. I have lived on a major river in a flood area for 23 years. I have lived in a flood area before in Sydney which was very marginal. Glad to get out.
My present home has never even looked like being flooded . I don't even include flood cover in insurance so i can reduce premiums.
Rocklea is really marginal. I wouldn't buy there. If house values are 400 then look at another suburb. Like the previous poster said "the time to buy was right after the flood'" not now.

 

Wow. Heartening to see people chipped In to help.

 

Poll results already show 13 - 1 people would not buy something previously effected by flood. Imagine how small your market is when you go to sell.

 

There was an article about 2 brothers back in 2011-12 that bought up in Ipswich after the floods and renovated fairly extensively.

From memory I think each property was around 60 - 80 k, They also still achieved good rents post reno for obvious reasons.

Now each property would be worth no less that than 260. Reasonable gains but sensitive subject nonetheless

 

I think the flood affected properties are very interesting it is obviously a risk and a price drop, say 20% less then comparables nearby so when time comes to sell you would expect that 20% off again at the other end.
for people on the ground that experienced the floods would have a much better understanding and ideas the damage and risks also has there been new infrastructure put in place to prevent the extent of flooding that occur previously?is the say 10 metre level now going to be 7m under the same circumstances that would mean water which was previously over the tele is now just going to be lapping at the driveway

 

My only question is what makes you think it's not likely to flood for another 40 odd years?
It might not or it could flood next month if a tropical low moves south over SEQ.
The stigma and paranoia around many suburbs in Brisbane has started to go away with time but your playing with fire in Rocklea IMO.

 

As people in cyclone affected regions have painfully discovered insurance companies can change their risk assessments at any time potentially leaving you with obscenely high premiums.

 

@HUGH72 - consider full or partial self-insurance. If you can't find cover for all of your exposures, negotiate with your broker to get the best affordable coverage and with what you've saved on complete cover put it aside for the eventualities which aren't covered - this may mean doing upgrades to buildings to meet newer Building codes, construct bund walls to keep out flood waters etc.