QLD Investing in Murarrie, Brisbane?

I'm looking at buying an investment property in Murarrie around the mid 500's to early 600's to rent out and hold. Seems like a decent suburb for eastern middle-ring housing with potential. Doing my DD investigating whether this suburb would appeal to renters (significant industrial zoning / quality of neighborhood?) and whether it is likely to see decent CG (seems to be on the up-and-up as of mid 2014: Suburb Profile report for Murarrie)

Any thoughts on this area?

 

It is a mixed area of older places and then a 15 year old estate development. New cinemas, restaurants etc going in the East Village development next door.

It used to be the location for Brisbane abattoirs and older Brisbanites may still associate it with that.

 

The East Village project does look promising.

I am looking at the east side of Creek Road for better growth potential. However there was a push to re-zone Park Hill estate to Cannon Hill which might hurt east side Murarrie. I am not sure if that plan fell over though as I believe there was a lot of resistance from east side residents.

The other point of interest is the gateway motorway and winding arterial roads running through the center of Murarrie's industrial zone. Not sure if this will impede gentrification.

 

There were rumours of contaminated soil in Cannon Hill / Murarrie.

Lot of employment in that area particularly warehousing logistics and manufacturing.

 

I think Murrarie has potential but you maybe a little late. Lots of hype around the east village project which I believe price maybe factored in already.

 

i was researching brissy last year so can't really remember but the name rings a bell as being flood prone?

 

There are currently 29 houses listed for sale in Murarrie and that is about 2% of the total number of houses in the suburb. That is double the state average of 1% so there are more sellers than buyers. The average price at the low end of the market is $550,000. The average number of sales in any one year is 60 so there is 6 months stock currently on the market. If you buy here, don't expect to sell in short timeframe.
The average (not median) price in 2011 was $510,000 and today it is $660,000 which is a growth rate of approximately 4%.
There are the same number of rental properties available at the moment (29) out of 450 in the suburb so a vacancy of 6.5% with average rents at $450 per week.
If you buy at $550,000 and rent for $450pw your net return (EBITDA) will be approximately 3.2% (allowing for all expenses, vacancy and maintenance) and with a 5% interest rate the investment will be $10,000pa negative cash flow.

 

John, may I ask, did you collate that information from a number of sources or is there a place where I can find that kind of information for other suburbs? Your post is very interesting, thank you.

 

Robert, I use a program to extract most of it from www.realestate.com.au and the ABS. (Google Grid Variance Program).
I calculate the EBITDA with a simple formula I call the rule of 39.
Multiply the weekly rent by 39, then divide by the purchase price and multiply by 100.
The result is the returns on the property as a percentage before interest and tax. Then subtract the interest rate you pay and the balance is the net return before tax. Multiply the purchase price by this percentage and you have the cash flow gain or loss.
The number 39 takes into consideration the average outgoings on normal suburban house rentals.
in the example above 450 x 39 = 17550, then divide by 550,000 and we get 0.0319 multiplied by 100 equals 3.19. Now subtract an interest rate of 5.0% and we are negative 1.81%. So 1.81% of $550,000 is approx. $10,000 negative per annum. Hope that helps.

 

What program do you use to extract info from realestate.com.au and the ABS?

 

I googled "Grid Variance Program" and found Real Estate Investing Software

 

I think Murarrie has great potential. There's a bit of industrial zoning between Murarrie and Hemmant and I suspect eventually the industrial area will move further out as the roads get busier etc so its likely to get developed in the next 10-20 years I suspect.

Murarrie is reasonably close to the city (20 min drive), has decent public transport.

My concern however would be east village in Cannon Hill, i'm unsure how such high density housing might affects free standing houses / townhouses but I suspect it would impact on capital growth in the longer term.

I think rents may get pushed down in the area due to over supply of apartments...

 

Brenden, you should have found a YouTube video as well that explains how the program works. I wrote it myself using Microsoft Excel and Visual Basic.

 

Check the aircraft noise too, directly under the Bris Airport flightpath...