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Logan buying guide

Discussion in 'Where to Buy' started by seanbrissy, 6th Dec, 2015.

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  1. seanbrissy

    seanbrissy Well-Known Member

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    Hi all,

    I've noticed the amount of interest in Logan city council for an alternative to Brisbane for investment purposes, it has a cheap buy in price, high yield and capital growth prospects combined. I've been buying and selling in Logan my entire life, my most recent deal I bought under 350k on a 6.5% gross yield which I increased to 9.7% straight away, and have sourced many similar deals.

    I consider Logan to be a "yield buy" to bolster cash flow, and as such you should look to buy cash flow positive property in Logan. My Logan properties have enabled me to replace my income with passive rental income, all whilst achieving capital growth over the years.

    Please note, buying in Logan carries more risk than Brisbane City Council, however these risks can be mitigated by researching the market, doing the correct DD and buying right the first time. I've seen many investors getting burnt buying "dud" properties in Logan. Overpriced stock sits on the market for a long time and the good deals get snapped up very quickly or are bought "off market".

    Risk factors for Logan:
    • Capital Gain: Generally in the upswing cycle Logan City usually moves after Brisbane City, alternately on the downward cycle, Logan is first to drop. Timing the market for capital gain is harder,as the window of time in each cycle is much shorter, as I stated before I buy cash flow positive in Logan so this is not much of a concern to me.
    • Tenants: Lower socioeconomic area will make getting a quality tenant harder to find, however from my experience once you find one, most will be long term tenants. Most of my tenants have been 5 years +
    • Building structures: Hard to source quality buildings; lots of housing commission, fibro, and dodgy home renovations are prevalent. Having said this buying a double brick structure in Logan doesn't necessarily mean your going to be able to charge more rent than a low-set timber home.
    • Flooding: Yes a risk factor, however widespread in BCC and surrounding councils.
    Suburbs in Logan:
    • Logan is split down the middle by the Pacific Motorway, anything East is considered the "good" suburbs, anything West the "bad" suburbs
    • Eastern suburbs run from Rochedale South to Eagleby, try to get as close as possible to the City. Rochedale South - Daisy Hill under 450k
    • The Western Side suburbs are the high yield buys, I prefer suburbs closest to the city and Pacific Highway to commute North and South these include -Woodridge, Logan Central, Kingston, Slacks Creek and Loganlea ideally buy under 350k unless it's a development site.
    • Further West can provide good buys - Crestmead, Marsden, Heritage Park, and Browns Plains, however prices are creeping up so ensure you don't overcapitalize, once again try to buy under 350k

    Dual Living:

    If your chasing higher yield dual living is common, however consider the following to reduce costs:
    • Tenants to pay all water costs
    • Unless the property is separate metered (which is rare in Logan) electricity is to be paid by tenants
    • Lawn maintenance- buy a mower for the property, tenants to share lawn duties
    • Keep rental prices $10-$20 below market rate for a similar low set
    • Features to look for- BBQ areas, big back yards, close to parks, sporting grounds and shopping centers.
    • Keep rental increases to a minimum
    • I self manage, however if you can't, ensure you employ a competent property manager who conducts regular inspections
    Other General points:
    • No units- many cheap ones on the market, however they're cheap for a reason
    • Avoid pools- wrong demographic for pools, and you won't be able to achieve higher rent.
    • Try to avoid renovated properties at inflated prices unless it's owner occupied.
    • Avoid house and land packages- they are asking ridiculous prices, for the same money you can buy much closer to the city
    Please note this is a brief guide only.
    Buying in Logan can be a fantastic investment, it's all about doing your research, knowing the market, and mitigating the potential risk factors.
     
  2. Wukong

    Wukong Well-Known Member

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    +1
     
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  3. MollyBella

    MollyBella New Member

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    Can I ask how you have tenants pay for electricity in a dual living situation? How do they split the bill? I could imagine this would cause tension between tenants as to who "used more" electricity.
     
  4. Biz

    Biz Well-Known Member

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    Install a sub board. Splits the electricty. They will put another meter in the box. House will likely need rewiring etc.
     
  5. seanbrissy

    seanbrissy Well-Known Member

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    Unless it's already done it can be a costly exercise and not worth it for a Logan property. Usually split the bill depending on the size of each tenancy. As long as you fully explain before they move in what percentage they cover, it's all good.
     
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  6. Biz

    Biz Well-Known Member

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    You're brave.
     
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  7. JDP1

    JDP1 Well-Known Member

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    nice write up @seanbrissy ...a balanced argument.
    I think you might have forgot one though: that being volatility. Correct me if I'm wrong, but the swings in either direction can be large and quick...hence timing the market for CG will be important. As you correctly said, if focussing on yields, then it might not matter, but CG...yes.
     
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  8. meme plecko

    meme plecko Well-Known Member

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    Townhouses seem to be priced at 50-65% of the average house price. If they're in small complexes with low body corporate fees, cash flow positive, are they still a no go from the CG perspective @seanbrissy? If you are not expecting these to grow in value, why is that?
     
  9. seanbrissy

    seanbrissy Well-Known Member

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    Yes I agree re- capitals gains, however from a timing point of view Logan has started it's upswing cycle:

    12 Month price growth on a few suburbs:

    Woodridge: 6.54%
    Logan Central: 8.19%
    Kingston: 10.60%
    Slacks Creek: 6.21%
    Loganlea: 10.39%

    Couple this with high yields makes for a strong investment, with associated risks.
     
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  10. RetireRich101

    RetireRich101 Well-Known Member

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    What is the best year to be in and out for this Logan cycle?
     
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  11. seanbrissy

    seanbrissy Well-Known Member

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    Hi Meme,

    I did a quick check on CG in the last year for units/townhouses, some areas haven't moved. Lastly how much cash flow positive are these properties? $20-$50 at best? That will cover a couple weeks vacancy, interest rate rise, or repair bill. Are you looking in the area? whats your budget?
     
  12. meme plecko

    meme plecko Well-Known Member

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    Bought a townhouse in Logan already earlier this year, let's see how it goes over the next few years...;)
     
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  13. seanbrissy

    seanbrissy Well-Known Member

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    Timing in Logan is tricky, biggest influence is interest rates - as long as they're low growth will continue. I tend to more focus on yield in Logan, lessens the risk.

    However to take a punt:
    In- 12 months ago
    Out- 2017
     
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  14. RetireRich101

    RetireRich101 Well-Known Member

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    I think you're much on the money with the timing...
    IR is a big one, but also APRA me thinks will push/delay this out few years.

    People trash these areas because they're often emotional. For me it is a just business. I treat these areas like penny stocks with a yield, in share market terminology . I like trading penny stocks, and it can be rewarding if you can put up with the associated risk and time it right....

    Sea Change times it very well with these penny stock.
     
    Last edited: 7th Dec, 2015
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  15. MsAli

    MsAli Well-Known Member Premium Member

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  16. seanbrissy

    seanbrissy Well-Known Member

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    @MsAli thanks, just had a read on your blog posts, absolutely fantastic information.
     
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  17. Beanie Girl

    Beanie Girl Well-Known Member

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    Ahem, SeanBrissy! :)
    Your posts are very informative on Logan and other Brisbane areas. I admire your knowledge (and also the photo you put up of yourself previously) :p
    But I have to let you know that I have been acting as the unofficial BA for Logan on Somersoft before Michael_X usurped me:confused:
    Wielding my knowledge of the new Logan Planning Scheme and brandishing my brash claims that Logan was THE place to invest (before you came into the picture) on Somersoft, scores of eager and unsuspecting Melbourne, Perth and Sydney buyers have plonked their money down and snapped up prime pieces of Logan property and have become slum lords extraordinaire, amassing large portfolios themselves.
    Indeed I do think Logan was featured on the Brisbane news recently as THE place to invest due to the singularly spectacular efforts of enthusiastic Somersofters so much so
    that upon joining Property Chat, I found I was no longer needed to hype Logan anymore :eek:
    others were adeptly and adroitly performing that role well.
    Being THE original spruiker of Logan and now made redundant 'unofficial BA' for Logan, I thus claim 10% of your future takings (and Michael_X will take 5% please due to his API article):D
     
    Last edited: 7th Dec, 2015
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  18. RetireRich101

    RetireRich101 Well-Known Member

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    no one can make Beanie Girl redundant. no one
     
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  19. seanbrissy

    seanbrissy Well-Known Member

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    @Beanie Girl thanks for your comments, should I put back up my previous photo then ?;)

    Good work on hyping Logan, I'm sure your knowledge has helped many obtain their slice of the goldmine which is Logan.

    No probs on the commission :D, and it's a shame you made yourself redundant, the fun is just beginning in Logan as you would well know...
     
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  20. bez23

    bez23 Well-Known Member

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    Thanks Seanbrissy for the posts. Any discounts for PC members? :p