QLD Flood Risk

Discussion in 'Property Analysis' started by Trailblazer, 8th Sep, 2020.

Join Australia's most dynamic and respected property investment community
  1. Trailblazer

    Trailblazer Well-Known Member

    Joined:
    13th Sep, 2017
    Posts:
    105
    Location:
    OZ
    https://www.realestate.com.au/property-unitblock-qld-ashgrove-131702394
    I'm trying to evaluate the worst case scenario for a flood prone, but blue chip area.
    I'm mainly looking for high yielding buy/hold deals to increase my income and that is also something with add-value value potential. In this case it's a renovation. However considering it is in a blue-chip suburb, i'd be happy on riding on market-driven growth since it would be a long-term buy and hold.

    However the catch is it's in a "Highly Likely 5% Chance" of Annual Flood Category.

    I'm not really aware what the potential costs associated with flooding and i'm trying to evaluate if the risk of holding onto a flood-prone property with good cashflow outweighs the costs of inevitable flooding.
    What are likely risks/costs and worst case scenario's that could occur? How much would expenses would tally up?

    Some scenarios:
    - What happens to tenants in these scenarios?
    - Mould damage / repair
    - Carpet replacement
    - Re painting

    What other factors to consider?
     
  2. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    I wouldn't do it (that being said, I'm a chicken).

    Insurance will be through the roof, and the bank may probably treat this as a commercial property, so LVR will be < 80%. People have short memories but if it does flood again....

    Plus I'd panic everytime a storm rolls in in summer. What's SANF worth?
     
    Propertunity likes this.
  3. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    I totally agree with @Lacrim .

    I was a teen and remember well when the 1974 Brisbane floods were on. I was middle-aged when the 2011 Brisbane floods were on again. I hope to still be here enjoying retirement in my old age when the next floods in Brisbane occur (which they will)....
     
    craigc likes this.
  4. Trailblazer

    Trailblazer Well-Known Member

    Joined:
    13th Sep, 2017
    Posts:
    105
    Location:
    OZ
    I'm assuming most of the properties from those previous floods are still standing, so it's a matter of tallying up the damage to repair while banking in the cashflow to pay it down.

    As for insurance according to the description it's $2200 yearly. It probably doesn't include flood but perhaps you could opt-in for flood insurance prior to flood season and opt-out after the season is over.
     
  5. Heinz57

    Heinz57 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,959
    Location:
    Paradise
    Zero rent on a multiple tenant property while you strip the carpets out for the umpteenth time:eek:
     
  6. Stoffo

    Stoffo Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    5,301
    Location:
    In the Tweed
    Floodinformation.brisbane.qld.gov.au
    Looking at this I'd also be having second thoughts
    20200909_095715.jpg
    I'm an optimist though, and as the annual chance on comes halfway up the block it's possible the house wont get flooded due to being raised....

    I would consider walking the street, find a well kept yard with a garden gnome and go knock on the door (chances are they've lived there a while) and ask how high the waters have ever gotten :)
    It could be your best or worst purchase based on this conversation ;)
     
    zoobzilla and Angel like this.
  7. Heinz57

    Heinz57 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,959
    Location:
    Paradise
    Apparently we are currently moving into a La Niña weather pattern after a few years of drought so expect wet weather events.
     
    gman65 likes this.
  8. chindonly

    chindonly Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    686
    Location:
    Brisbane
    Pretty sure that whole area was smashed in the 2011 floods.

    Looks like it could be all asbestos as well, so any renos would be costly.
     
    wylie likes this.
  9. boganfromlogan

    boganfromlogan Well-Known Member

    Joined:
    10th Jan, 2017
    Posts:
    3,332
    Location:
    Brisbane
    True - it will be wet. I would add it is also going to blow harder, burn hotter and rain more intensely in the future, and history will not be a good way to project the future. With flooding it would pay to think about the increase intensity of storms (local flooding risk will escalate) and flood levels being generally optimistic. So if you are a pessimist, you are probably reading the future realistically.
     
    gman65 likes this.
  10. Mark F

    Mark F Well-Known Member

    Joined:
    29th Jan, 2020
    Posts:
    1,029
    Location:
    Canberra
    I remember reading somewhere that what used to be a 20 year flood frequency (5%) is now really a 10 year frequency and likely to drop further. As Clint says "You have to ask yourself one question: Do I feel lucky?".
     
    gman65 likes this.
  11. kimbrisvegas

    kimbrisvegas Well-Known Member

    Joined:
    30th Jan, 2019
    Posts:
    74
    Location:
    Brisbane
    This risk would be a deal breaker for me.

    I lived in Ashgrove in 2011. Many of the streets that are flood risk marked in the area weren't actually impacted as much as areas with creeks closer to the river in 2011. The water that caused the big problems resulting in the major flooding in 2011 were a convergence mainly of high tide at the same time as water having to be let off from the dam and making it's way down the river, and the massive downpours that resulted in a torrent becoming a huge waterfall off the Toowoomba range - that water that caused devastation as it made it way towards the coast, also bypassed the Wivenhoe dam and also added to converged at the same time. So the creek systems that were the worst impacted are ones where flooding from river pushed back up into the creeks, and added to already swollen creeks from heavy rain flowing into the river catchments overland as well.

    Although this spot is closer to Newmarket side - I know that issues with heavy rain combined with king tides are a regular issue in creek areas in Windsor, which is not far away.

    But it just takes a significant downpour falling in a particular spot and feeding into that creek further upstream, and you get a torrent that the creek can't cope with, and you have a big problem in a spot like this.

    Before 2011, Ithaca Creek has some significant fast moving flooding as a result of extreme rainfall further upstream - it resulted in a house in 94 Lugg St Bardon being completely swept away. I don't think they ever rebuilt.

    I may consider something that has 1 in 100 chance of impacting on part of a block if it didn't pose a risk to the house - that is, house and level at which it sits are higher than the levels on the block that have that risk.

    But 5% risk and covering the whole block would be a big no for me. Looking at that particular map would be an even bigger nope from me. Not worth the risk.
     
    Last edited: 28th Nov, 2020
    Firefly99 likes this.
  12. LJW

    LJW Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    68
    Location:
    Brisbane
    I know this property has sold already but for what it's worth the flooding wouldn't really concern me too much. According to the floodwise property report for the site, the 1% AEP level (i.e. 1 in 100 year flood level) is 11.4m AHD. Based on the contours of the site, it looks like the floor level of the exisitng building are at least 0.5m higher than this so i'd say that it is pretty unlikely that the units themselves will ever flood. Yes, the backyard closest to the creek will flood frequently and the whole site may flood in a very rare flood event but I personally wouldn't be too concerned about this.
     
    zoobzilla likes this.
  13. Mark F

    Mark F Well-Known Member

    Joined:
    29th Jan, 2020
    Posts:
    1,029
    Location:
    Canberra
    I don't think the insurance companies will take such a benign view of the flooding risk. :rolleyes: