In need of a growth assest

Hi PCers

This is going to be very broad question as I'm hoping to get some direction on where to buy next.

Currently have a highly positively geared portfolio (which is part of my strategy) which generates about $25k per year return over 4 properties.

I'm now in a reasonably higher income job and am looking to purchase again but more so to keep it neutral and aim for growth.

Current properties are 1 4 bed home in Heathridge, Perth,
An NRAS townhouse in Sunshine Coast
And a house in Logan area with granny flat.

Even through I have 2 properties in QLD I wouldn't mind purchasing closer to the Brisbane CBD.

I am open to other areas also but have a purchase price of about $500-$600k in mind.

Appreciate any advise

Scott

 

A broad answer. Brisbane, within 7km of CBD, Home. over 600sqm if possible. Add value potential would be even better. A place that will appeal to the OO market. If you can buy an older place, do a reno and then hold it. I would think there is a decent chance that it should have good CG over the next few years and your reno would also be adding value to it due to the location.

 

Where is that possible for $500-$600k? (You mention reno, I assume you a mean complete dump)

 

Was supposed to say 7-10km. If you look you can find gems but it wont fall into the lap.

 

Thought you had some very high expectation with getting something for 500-600k within 7km of Brisbane on 600m2. Makes more sense now and agree with your previous one.

This would likely give you maximum chance for potential growth, if you don't have the skill set or time you could also buy something built 10-15 years ago so there is still some depreciation (not as much as before... thanks budget). Which will still likely provide good growth but not as much as the renovation however much less effort and stress.

I was able to snag a very old house (approx. 1960) but was fully renovated within the last 2 years for 30k above land value (comparing to the knockdown price 2 doors up the street). Depreciation schedule was over 100k of which 46k was P&E (had meile appliances, solar panels etc) which is basically written off in the first couple of years (approx. first 4 years is about 25k).

The suburb is located 11km from CBD according to Wikipedia but neighbours (my back fence) onto a very expensive Asian suburb being Sunnybank.

 

Have you checked the Tassy thread, from reports this is booming, but don't take it as a given this is a forum where posts/opinions should be taken with a grain of salt. You always need to work the rest out and put in the hard yards. BTW, I have had some great leads from the forum, not poo pooing it at all.

Phone many re agents, find out how quickly properties are selling, establish whether it is in fact hot, how long has market been rising, who is buying, are there multiple offers, what product is selling.. Rinse and repeat with all leads, use this forum as a guide but don't believe everything you read.

For example anyone who purchased in Adelaide 3 years ago and not in Melb or Syd should be kicking themselves. A couple of phone calls with re agents and asking the right questions would have easily established whether it was a buy/boom or a no go. Could have purchased in Mt Druitt, Syd for as little as $230K, today we are talking probably $600K

The point is imagine how much money investors made over the lasts 3 years by simply buying in Syd and Melb, plenty of threads on what was happening, including auction clearances? Cash flow in comparison to doubling your capital in 3 years is a massive difference

I know lots of people love Brissy, so do I, but don't let emotion get in the way if you are chasing growth, you need to find out if the market is in fact rising today otherwise it is just another prediction. Lots of talk about inner ring moving? I don't know if this is fact? Identify areas/suburbs that have been mentioned and ask the right questions, as Brissy is a fragmented market.

My point is you will get many opinions on where and what you should buy on this thread, but the reality is they are just opinions, you need to dig deeper to establish what is fact. Markets that are already booming close to peak need to also be considered in terms of how long they have been booming, if its been 3-4 years then you are possibly taking too much of a risk buying in these markets? Don't know.

MTR

 

Awesome buy mate.

 

Good advice.

 

Thanks Leo the real will not be realised for another 10-20 years when it gets developed for 3-4 houses or better if zoning changes (other side is medium density) but we probably wont develop it due to financial risks & our lack of skill set - although there are always options (JV and/or employ someone).

 

@MTR why would a selling agent tell you that the place is dead? Wouldn't all agents tell you that the place is booming due to vested interests? Wouldn't it be better to look at re.com sold tab to check what's been selling, where and for how much? Isn't asking these questions to an agent again just relying on someone's opinion? Genuine questions as I want to learn.

 

For me, the key operation is corroboration.

Whether its something the forum alerts me to, or an agents opinion, or report, or a friend said something or something I read etc etc, I always look for multiple sources of integration, corroboration and confirmation to improve the probability of it being reliable and useful information.

 

True, often re.com figures can be skewed by new builds coming up etc or factors that cannot be quantified.

 

Get something in a city returning 5% yield.

Without wage growth there will be little rental growth. without rental growth, yields will fall as capital gains rise. So what ever you buy for a growth strategy should have a lot of slack in the current rental yield.

I dont know the brissy market too well but personally I'm put off by the current development pipeline. I'll revisit that idea in a year though. IMO now Perth has some ripper deals. Your investment in Heathridge is close to the money. There are lots of sites around Currambine Train Station (joondalup side) that are zoned R60 for around 450-500k, and will return a decent yield. they will also have dev value when the time comes. For something smaller, i recently saw a 2 bed 2 level townhouse in highgate with private courtyard go for 370k. That's a solid 20% down on peak prices. A city townhouse for less than a 2 bed unit in the suburbs.. I can't find a reason not to make CG on that and even at its rock bottom rent prices, still returns 4.8% gross.

Don't get too carried away on development potential though unless its something you plan to do. I would say its a 'nice to have', but not necessary. some people pay way OTT so they can say they have a dev site in their portfolio and end up stuck holding a super-low yield asset waiting for it to boom. Though as someone active in the Perth market, I'm sure this scenario isnt hard for you to picture.

 

networking with the right people in this industry and many, it takes time to establish a relationship and you need to keep them honest, which means you need to understand what is happening. How do you do this, phone many agents, compare notes, its not that hard to work out fact from fiction, and the evidence to support this is also important that's your job

Would you believe many investors use BA and totally trust their advice

 

Thanks for that. Some good points there.

Yes my Heathridge got re zoned to an R20/40 so can do 3 there but it's not worth doing as yet.

I agree there are some ripper deals here. An inner city/2-3km out townhouse at the right price could be just as good as going East