QLD Logan Property 2017

{Note: thread continued from here: QLD - Logan Property 2016}

Hi PC,
Been a while since i've posted when i first bought a 994m2 splitter corner block in Marsden, Logan around a year and half ago. I found a lot of valuable advice here on PC to get me on the right track so thankyou so much especially to @RetireRich101 . I have now completed the subdivision and ready to now sell my newly created lot to a commited buyer or look to build and keep myself. Would love some feedback regarding what the seasoned investors here would play this card... 2 Options,

1. Sell the land $238,000 (to committed buyer) with Custom Duel key design already to go on vacant corner allotment. Existing house i would keep. Proceeds of sale would go to pay down PPOR to more comfortable mortgage amount. (True Profit $61,000) Existing house Bought for $350,000 + $15,000 assoc cost. Value of existing house after subdivision $290,000. Rent $370

2. Keep newly created land and proceed with duel key build. Total Cost $331,000 (Build $247,000- Subdivision cost $84,000) End product would create positive gearing with $680 weekly rental for 10.68% Yield on new build

We are are a young couple with a baby and i'm looking to build my wealth and create a property portfolio to better our future like most on here. If i was to take option 1. Sell, i would look to do something similar but keep in what i believe are better suburbs in the area using knowledge gained or move onto another area all together. Do people on here see Marsden, Logan with good long term prospects????

Please, any advice is gold as i feel this is really important decision to my families wealth creation especially our first steps

After so much work involved during the subdivision and extensive costs i would warn others that think its a easy ride. With most of the prices in the area for small development blocks there is no margin in today's prices i believe to take on such a project straight off the bat. I guess if it was easy everyone would be doing it!

 

Thanks for sharing YB. Great to hear we're finally getting this plan sealed.
Couple of thoughts.

If you go (2), you total cost will be 365k + 331k = 696k, say 700k. Yield is 370 + 680 = $1050 or 54,600. So giving a yield of 7.8% plus depreciation benefits on new build. Good yield but more debt which your baby won't be happy with, but you do have the option to keep 1 and sell the other down the track..

As I was typing, I was thinking of better use for your vacant land, probably better proposition that your duel key proposal. Will PM you.

 

I thought this post should be in this thread, thanks to @HUGH72

Queensland’s next boom town | Perth Now

UnEmployment wise, Logan City is at all time low...

12 months ago it was 8-9%, the Sept 2016 quarter was at 5.91%, even lower that QLD Sept 6.1%

The takeaway here is, there are less unemployed people today, currently at 8000 ( was 11,000 same time last year)

 

source of above screenshots
Unemployment rate | Logan City | economy.id

 

Great news l I think Logan is a real barometer of the South East Queensland economy as it has the most vulnerable people there in concentration. Often the least specialised and moore subject to the ups and downs of the construction and mining sector.

 

Not sure if this has been shared before, but as property investors we know that proximity to high paying professional jobs (e.g. Brisbane CBD) is a driver for capital growth.

Commute Times to Central Station on a Tuesday Morning

Good to see that the upper Logan suburbs are in commutable distance to Brisbane CBD

 

It's good that the unemployment rate is trending down. It's interesting how 20,000 people dropped out of the labour force since 2013. Even now the labour force in 2016 was 15,000 smaller than 2013. Did these people just stop looking for work?

 

Maybe the lower Logan suburbs could find work in GC...!! Logan geographical is best position for both city

 

I like the map! It is very colorful, but I think it shows an as the crow flies or as the buses run sort of analysis, only relevant to off peak times. Along the train line loganlea station is 25 minutes xpress from Park Road which is where the high paying professional jobs start. People are commuting on hte express from gold coast every day, and they get off at park road, the south brisbane stations, roma st and central, and even the valley. The express does turn into a milk run from park road through the city, so it is 40 minutes to central. Only problem is do we have enuf train drivers to drive the trains (current answer is 'no'). In peak hour the M1 can take hours, so due to traffic congestion the map would only be true on a Sunday afternoon when it is raining.

Some of the folk i know live on the gold coast and work in Logan. Who would have thought?

So commuters, leave your tie and coat at home, throw on a hoody and some loose pants with the undies cleary visible, and commute from (and to) Logan!!

 

Any thoughts please and other PCers
@Simon L
@Avi Kumar
@Beanie Girl

 

Whats the estimated selling price of the dual occ finished brand new?
How many bedrooms is the existing house, highset or lowset? Any reno costs on it to achieve 370 a week? How many m2 is it on now?

 

Thanks @Richard Williams for your interest.
The Duel Key is packaged to sell to the commited buyer at $485,000 but i would say in today's value (as this price was set a year ago) it would sit somewhere in the low to mid $500,000's looking at what they are advertised at in todays market. Not sure if they are selling at that price though.. Would like to know what the banks value these products at?
The existing house is a typical 3 bedroom highset that currently rents for $385 p'w but may change to $370 once a fence is constructed to the side of house when the new build starts. The land that it sits on is a corner block so no "battleaxe" needed or loss of backyard so to speak.

 

Hi Youngbull,

IMO you have done well with a simple subdivision in Logan if you can sell the land and move on.

Mortgage brokers can chime in but I don't believe the valuation for a dual key home will stack up that great due to a lack of comparables. Rental yield aside, you will likely be overcapitalising in the current market with the build cost and holding cost during construction.

In today's market, there will be more value for you to take the subdivision profit and purchase another standard property in Logan if you purchase well, or perhaps even repeat this subdivision.

Having negative equity in a property will hold you back from moving forward with your investment journey from a lending perspective and put you at risk if for any reason you are forced to sell. The yield is great, but it won't make you rich (unless you have a lot of them). Its also a lot more difficult to find and keep tenants for these dual key homes especially in an area like Logan where renters have plenty of 'normal' properties to choose from at a low price point.

 

Thankyou so much @Simon L for taking the time to give me such valuable insight. It's much appreciated. You make some great points and I have taken it onboard as you speak a lot of sense. Obviously you have your finger on the Logan pulse so I value your knowledge. All the best to you in 2017

 

Hi YB, I was mulling over your first message on Page 46
and my first instinct because you are a young couple with a baby
is to sell the subdivided land and put it into your PPOR
Reduce debt = reduced stress
And if there are changed circumstances - another addition to family, loss of work or reduction in hours, you are able to cope better

With 238k equity in your PPOR, I believe that will put you in a good position to use the equity in your house to make other great buys. Perhaps other MBs can comment on how many houses you could buy with that equity (with good yield and capital growth)

My next question was how much could you sell the new dual occ build for if you needed to sell it in a hurry. So cost to build is 331k, sale price is ?
That would have to factor into my decision making.

My third thought was perhaps move a dual living house onto the sub-divided land and keep and rent it out.
@Tim86 and his father have plonked houses onto land. Perhaps others too. Good solid hardwood frame houses. Good bones, Spacious . Well renovated with mod cons. Cost is probably less than half of 331k compared to a new dual occ build.

 

http://www.drakehomes.com.au/wpbdm-category/removable-houses-south-east-qld-northern-nsw/

Some of these Drake homes for removal are interesting and most are below 100k including transport and restumping services.

 

How is Logan still going? Shaping up to be a continuously growing/gentrifying area still?

Considering a commercial place there in particular.

 

Has anyone here done this previously in the Logan area? What needs to be done after the house is repositioned (e.g. Wiring, plumbing etc) and what sort of costs?

 

Thanks for your comments and feedback. Always appreciated @Beanie Girl Its great to get advice from such seasoned investors in the area such as you, @RetireRich101 and @Simon L You guys have given me great insight. Being a young fella and fairly new to the game i know that decisions early on in the property phase could be the catalyst or downfall for me and my family hence why i'm asking for advice from those that have been there and done it or made mistake along the way, Please anyone chip in if you have some thoughts on the matter.

The build cost is approx $250,000 and with the Subdivision costs added on that is the total of $331,000. On the market i could be fairly confident although it would only appeal to investors chasing yield or SMSF that $500,000 could be attainable @Richard Williams . Perhaps i'm wrong and could be a long sell but a lot of comparable's are selling in the low to mid $500,000's as a H&L. My buyer would be getting the package at $485,000 if i choose to sell to him on the back of my hard work regarding build price and no middle men. As i've found out "spruikers" or selling groups can take up to $30,000 in selling and advertisements fees for these products.

Regarding relocatable houses such as Drake. This type of house would fit in well with the suburbs and surrounds (I could be wrong) but i think this would work well using the "auxillery" planning scheme especially with blocks 1000m2 and over as you could have the 100m2 build. Since i've gone to the trouble of going through the subdivision the new duel occ build would be better value in my opinion. Considering you would be paying around $80,000 for the house plus lets say around $30,000 for connection ect. Plus you have to pay a holding deposit to Council prior to removal so you done just dump the house and leave the project for them to deal with. My conversation with my mortgage broker when this idea was getting floated prior to subdivision that finance and banks value could be difficult. In saying that this was the tactic i had prior to this purchase when i unfortunately got cold feet on a cracker corner block in Loganlea after doing building inspection and sourcing the perfect relocatable granny flat near by! Lesson learnt!! I still kick myself about this!!!! So there is certain blocks and properties where this could work.