QLD Logan Purchase and moving forward

Hi PCers,

Would love some feedback from you guys as there is a lot of knowledge on this forum.
I made a purchase a couple of months ago of a 718m2 corner block in Beenleigh. I had a successful project in Logan on a corner block a couple of years ago so had an understanding of what you can do on a block of this size and density. After I made the purchase, next door came up for sale (different agent) and due to the blocks perfectly aligning ect it made sense to purchase that one to. Now that has settled and hold the two almagamated blocks now next door has come up for so there is an opportunity to purchase the third block so all blocks would be aligned and almagamated. Both blocks currently purchased yield close to 6% and have development potential in the future. There would be same rough holding cost if the third was purchased and each parcel of land is 718m2.

I was actually wanting to purchase middle ring north of brissie (better capital growth prospect) but the deal itself and my knowledge of Logan had me go down this road. Although I know Logan will not deliver the capital growth than the middle ring (10km) brissie may deliver (crystal ball gazing) I will have a better yield (I have a young family) and from what I’ve learnt in the past by purchasing a property with development potential you will have accelerated capital growth versus a stock standard property.

My question for you all is that I have the ability to purchase another property in that budget so should I diversify ie( north of brissie) or take this opportunity the buy the third property to hold all three (all the eggs in one basket)

I really look forward to your feedback.

Cheers, Youngbull

 

I would also like to take the chance to thank Michael Xia @Michael_X who is now my mortgage broker who has been a massive help and a wealth of knowledge. I strongly advise anyone who is starting out or looking to build there portfolio to reach out to Michael as I wish I met him earlier.
The other person I would like to thank and reccomend is @Tom Rivera at properyworks from a property manager perspective. Being interstate I’m at ease knowing Tom is taking care of things. He goes above and beyond for his client just as Michael does. I can’t reccomend these two champions in the industry enough...

 

Your land holding size for two blocks looks fairly decent..

What's the zoning on the property currently?

Cheers,

 

Absolute no brainier for me.
Buy the 3rd one.
If you sold them all together you'd get more.
You're not paying a premium for it now
And down the track if zoning changes, it's a win win

 

I agree with others - if you're able to get 3 blocks together that'll give you excellent advantage moving forward. There are much more options you can deploy later on than just buying a bread and butter property somewhere else in Brissie.

Cheers,
David

 

I say go for it and buy the third property. Individually they're already sitting on fairly decent sized lots and holding all three will look very attractive to developers (if sold together).

I think these are the sort of purchases you look back on in 10 or 20 years' time and give yourself a pat on the back for having the courage to take the plunge back then.

Good luck.

 

Ps DO NOT let the agent or owner know you own next door!

 

The blocks are just normal residential but the second block would be likely to be given a higher corner density allowance due to the amalgamation when I spoke to council. I would presume the third would be the same. There is no zoning currently for high density (or townhouse) but I guess you would bank and hope there would be a possibility of such changes by council in the future.

 

Thanks so much for your feedback. Unfortunately it’s the same agent as next door (the second house) and not the corner.

 

Nice work man, i would definitely grab the third, land bank it and yep michael is a gun

 

You have done project in the past in this area and aware of council policies too. Experience is big tick.

My two cents - If zoning is not in your favour at this point, why not look into other areas such as north with right zoning.. And you already are banking on decent land size in this area anyways.

Cheers,

 

Are you sure about this?
Unless there have been changes to the planning scheme the higher density on corner blocks only apply to dual occs and not multi dwellings (remains at 20 per hectare for normal residential)

@YoungBull are you able to share any information on your previous successful logan development? Have been through the feasibility on one and numbers looked pretty bad

 

old thread but not sure if it's the no brainer it's made out to be

depends on your investment style and goals. For me I wouldn't want to tie so much money up for a long term hold.
Purely because i like to try and make some money as I go so that I can improve my lifestyle
Holding a large land holding for 10-20 years waiting to develop is a pretty big commitment and one you should only commit to if your financial situation allows you the flexibility to still invest/ take opportunity of deals elsewhere and the ability to maintain good lifestyle

I guess what makes sense in this case is that the yield will be decent so holding costs not too brutal

my partner and I have a long term hold in Brisbane on large block but we only tipped 370k + reno into that so we are happy to hold for a long time as it's not a huge burden

 

Is the vendor of the third block the same owner as the previous owner of the other block? It is possible that the RE is connected to the owners and they are stringing you along. Have you checked out recently sold prices for similar properties in the area to ensure you are not over paying.

 

How did I not get the tag for this earlier!? Thanks for the kind words @YoungBull !

Should we update everyone on the result?

 

Thanks so much everyone for the feedback.
I registered for the third block and set my price and got blown out of the water by an owner occ who I believed payed overs around 30K above market.
As discussed there were pros and cons regarding this possible purchase so the property gods made there decision on this one..
So back to the drawing boards and will look to hopefully purchasing a deal in the lead up to Christmas. May go north of brissie for diversification or If a deal popped up in logan that I could add equity and yield I would consider.

 

We should organise a welcome gift to the new purchasers for pushing up values on the street Great result!

 

Generally I would be inclined to take the specifics of the development potential upside from the combined blocks. That's a case of 1+1 being more than 2.