Just bought IP #1.

Hi @pwnitat0r and congrats on the purchase- I trust it works out to be a sound investment for you over the long term and you've landed quality tenants. Yield looks decent enough and repairs minor. Small block and affordable rental for this area, which are pluses.

I don't normally offer my opinion on specific purchases but seeing as you did ask I hope you don't mind me offering my 2c worth here .... take it as you will given that I am a buyers agent (though only in Sydney not sunny QLD!) though also keeping in mind that I lived in Brisbane for many years, hold property there and am somewhat familiar with some of it's suburbs (including parts of Logan).

Whilst I applaud you for purchasing and sticking to your plan, did you buy completely sight unseen (as alluded to in your second post)? This can be a potentially risky move, if you haven't considered the impact of the immediate environs/neighbourhood. I'm sure you did your research (you certainly come across as organised ) into anything surrounding that was detrimental but it's always a sound idea to have at least someone (friend, colleague, fellow investor, family member, trusted independent property manager (preferably from a different agency to the one you purchased from)) check out the physical side and report back. Online tools are great (eg: council, flood maps, google earth etc) but they don't always show everything and nothing quite replaces a physical presence. It might sound like overkill but we've had clients who've bought in the past sight unseen and have missed physical factors that weren't as obvious but could have easily affected the value of a property or particular area eg: road/aircraft path noise,high tension power lines nearby, above ground water pipelines/easements, odours/smells from adjoining industrial areas etc. I would urge you to consider flying up for the next purchase or engaging someone to at least provide a physical inspection of the property and surrounding areas for anything disadvantageous.

Strata/building/pest reports where appropriate are naturally recommended and at the very least ensure you get these done but it does pay not to be too complacent with these and also ensure that you go through the reports thoroughly and ask the inspector specifically prior to test/check specific items that you may want verification on. As buyers agents we always test everything electrical, ask for specific clauses to protect our clients from potential losses here etc and conduct thorough pre-exchange and pre-settlement inspections to mitigate here. You'd be surprised what some vendors try to remove or cover up come PSI time. It pays to conduct these yourself if you can't get a trusted colleague to carry out, so do try to attend if possible for IP #2 as well.

I won't comment specifically on the Slacks Creek area as I don't have full access to the required ownership data for QLD but also ensure that you always check the ownership details (via a selling agent or someone who can access this for you- I'm sure there are several on this forum who could assist if they have APM or RPData subscriptions) of the block and/or street you're looking in for IP #2 if you wish to avoid buying in housing dept saturated areas or blocks- this may not concern you particularly but it's good to know who your neighbours are as it may also impact the type of tenant you may end up with/likely to attract.

I have noticed that growth has been slow since this place last sold- in fact it appears the previous owner paid more than you did back in 2009 so hopefully that's a good sign Let's hope the market moves up in your favour and it performs well for you. Best of luck !

 

Overall good to see u looking at the numbers carefully. Also generally Qld has a lot of up side so in general, timing is good.

In terms of calculating yield. I personally look also at net yield on your capital. Ie - what is the rate of return, net, you are getting on the amount you "put down", on a annual basis. That will give you a good sense of how good an investment you are making.

 

I have a 4 bed house with a 90s reno built in the 70s that gave me 5k in deductions in the first year. They pay for themselves.

 

I have a similar THouse to yours, >4k in depreciation in year one alone.

 

It's always a misconception about the council rate charges in QLD... it isn't much more than what NSW is charging.

Brisbane lumped their Council notice and Water/Sewerage servicing and usage in one Invoice.

Here is an example of Brisbane council rate + water/sewerage servicing and usage charges...
Council charge should be $470 per quarter for a land value of $150k.

 

BCC has water separate, that must be Logan you mean ?

The rates are high & they charge a hellish amount for water up there seeing they get so much of it.

That is basically 3200 a year, expensive even when with water.

Not to mention they hit you for extra if it is not a PPOR, robbers.

 

I have just compared a few of my Sydney west and Logan properties...
For a detached properties,
SW is council $1800, water is $1400
Logan is $3200 for council + council
(Both example include tennat usage charges)

I am not sure about attached dwelling charges such as OP example...I was expecting cheaper. But appears to be same/similar to detached dwelling charges

 

Regional NSW cheaper, house in Sydney elsewhere cheaper, water cheaper.

not by thousands, but it adds up

Just did a NSW regional, under 500 rates under 50 water
BCC 400 rates 250 water

Where I am in Sydney much cheaper too than your West example, I am not sure what water we use, but is not 350 IIRC.

Should start a rates thread, but I stand by what I said, Bris area is expensive (espec outside BCC) and water is a rip off

 

Worrying about rates is small picture stuff IMHO.

 

I think people are referring to net yield when comparing properties. Important to keep an eye on the numbers. It becomes even more big picture when you're building a larger portfolio.

 

Buying what you have bought I feel it is even more important as it eats the return, but each to their own.

I think you can ignore this if....

Not holding long term
You bought near start of the cycle where CG will be significant
CG is the main play & you have the income for shortfall.

Usually it is the brokers saying do not worry about the rate, sure they can say they, they not paying them. It must be something said at seminars or conferences

If you pay 1k a year more & you have ....

10 IPs = 10k a year
30 IPs = 30k a year

and this will increase over time. (forgive the crude maths lesson )

If your paying 3k more or worse... (and it is not hard to be paying that much more, I get more rent on a place I paid rates on today that is also cheaper rate wise, with no strata, let's just say it is 3k up on yours)

10 IPs = 30k +

Combine that with looking for best interest deals, good Insurance, lower maintenance & it can make a difference.

Holding costs are just that, it may come down to what cashflow you have.

I am not saying your wrong, or right, just cannot be dismissed unless you really earn a lot, but then you would be investing differently, or I would.

 

Exactly, ignore at your peril. Routine maintenance, damages and vacancies may also be missed from the calculations. Insurance rarely covers all. If growth doesn't arrive fairly swiftly you're running your own housing charity before you know it.

 

Hi @dabbler , which area do you follow or like if not Logan?

 

Not a matter of what I like or follow nor a dislike of say Logan......it is a matter of many variables and costs.

I would be fine with very high rates, water and insurance anywhere, for example, if the CG and or cash return can justify it. You have to try and nut out at what point in a cycle an area is too.

It is kinda personal what that level is for each too.

Hope that makes sense.

PS i see you were not talking about the costs, I think Aus is full of opportunity and say an area like Logan.....I will look when no one else is talking about it in 5 to 7 years (well probably not for a few reasons, but you get the idea)

 

Thanks @dabbler

 

Firstly congratulations on your first purchase!

How did you go about finding your tenant - assume from the Management Fees that you went through a Property Management Agency? If so, what made them stand out against the others?

 

Congrats on your purchase, I think you will see CG come but they wont be significant due the product you has purchased. Getting 100k (50%) in the next 5 years I think would be a great result for you, but I would think 50-70k is out of the question.

I would right now like others have said is get a depreciation schedule, I think you will get a fair bit by looking at it and you will likely get your money back to double (or more) in the first year as a refund.

 

We just used the selling agency as we thought it would be easy for them to have an open house while it settled so we could have a tenant from day 1.

That didn't happen and these idiots are refusing to send a written request from the tenant for repairs (they want it done verbally) and I've put my foot down and said no way, how do I know I'm not being defrauded through procurement.

November has come and gone, no statement and no reply as to when we will receive the statement.

I have NO idea what's going on, we will be switching ASAP as 8.25% is ridiculous.

 

Great thread, and I look forward to seeing your progress. Excellent answers and feedback from members already.

Changing agents in Queensland is easy, you don't even need to let the current agent know (assuming it is outside the term). You simply sign up with a new agent, they go collect the keys and it all magically gets transferred over.