QLD Looking to buy DHA property in Raceview

We are looking to invest for the first time in QLD, in a DHA property in Raceview, on Valma St.

Given the border restrictions, we won't be able to do a physical inspection. Just wondering if anyone has any thoughts on this area... The house is only 2 years old and Google Maps don't have a streetview available on Valma St yet.

We are looking to hold the property long-term for an income stream but was hoping to get an opinion on the potential capital growth in the area. There seems to be lots of positives in terms of infrastructure and population growth forecasts in Ipswich.

If anyone can recommend a reputable company that does Building and Inspection reports, it would be very much appreciated!

 

What income are you looking at from this property?

 

It's a guaranteed $350 per week rent for 9 years. There is a 16.5% DHA management fee though.

 

Just be aware that infrastructure and population growth are only two components that contribute towards the demand for property. You must also consider the potential for future supply as capital growth will occur when demand outstrips supply.
The Ipswich and Logan shire regions in Greater Brisbane will contribute to the greatest volume of future land supply over the next 15 years (data from Matusik + Qld Government) so this needs to be considered.

 

Thank you! That's good to know.

 

It's a guaranteed $350 per week rent for 9 years. There is a 16.5% DHA management fee though.

 

Population increase does not necessarily equal capital gains increase... What's the land size for the property?

There's a lot of land to be developed around Ipswich be weary of that.

16.5% is right up there for management (yes they refurb for you) but you might want to consider something closer to the city for the same or similar money?

Whats the purchase price and net yield after DHA management fee's?

If you buy the right asset you shouldn't need a rent guarantee.

 

In the past, we've bought properties without a rental guarantee, but given the impact of this COVID-19 pandemic, we wanted that extra reassurance.

Net yield after the DHA management fee is 3.7%. Not great but we're weighing up the costs of buying a cheaper property in QLD (and have it paid off sooner) instead of buying here in Sydney.

 

3.7% is VERY low for Ipswich. My portfolio in Brisbane (all houses) range from 6% upwards. Why not find a house in Ipswich or other parts of Brisbane for 5.5-6%.....? As I mentioned before if you select the right asset you won't have an issue with rents. Even during this pandemic demand from tenants for houses is strong.

Just ask @Tom Rivera about rental demand at the moment. He's an expert with Ipswich and Logan.

 

Do you need to go dual key for 6% yield or is it possible for single dwelling as well?

 

It's not that hard to find 6% single dwelling in Ipswich and Logan.

 

6% NET yield (which is what Candice is talking about)? Sounds very high to me. Gross yield, sure - easy. To get a net yield of 6% on a $300k buy you're going to need a rent of at least $450 per week on average holding figures with a 20% deposit at low 3% interest rates. Given median prices for a 3 bed house in Ipswich are sitting in the mid 300k range and 4 bed around the mid 400k range those rents will have to be even higher to achieve net 6%, even though median rents for those are $330 p/w and $410 p/w respectively. Am I missing something?

In terms of purcashing, I would never buy a DHA property. The talk of refurb and rental guarantees are all but paid for in the rental guarantee by the owner themselves in the management fee over a 10 year period. They're often in areas or the type of dwelling that won't perform relative to other assets of similar sitting in other areas, often for the same price, and you're at the mercy of DHA in a number of ways. Not to sound crass, but it's a lazy purchase.

Use a buyer's agent, pay a fixed fee, and get them to reduce the risk you're looking to reduce by buying a better quality asset without the encumbrances of DHA. You will be better off long term.

 

For comparison my 4 2 2 in Raceview rents for 355 a week. Never had any tenant issues, 10 year old house. I roughly work on 10% agent cost once you add in extras like lease fees.

I just sold one around the corner and they move pretty quickly.

I know DHA refurb on exit and are also very strict with the defence tenants. So maybe apportion the cost of upkeep across the term of lease.

just make sure you don’t pay too much for the property because there’s nothing very unique about Raceview.

 

ABIS are the building inspection company I used last few times

 

Sorry, I was talking gross. But I have 8 and 9 gross on houses in Brisbane! (pretty hard to find admittedly)

 

What's the asking price on the property?

 

Hey Candice have you guys run the numbers/holding Cost on this purchase already? I had a quick look on the DHA site and if what Im looking is the same as the property you mentioned here it seems its in the Negatively geared territory.

RACEVIEW QLD, AU SUBURB PROFILE - FREE REPORT

 

6% yield is possible but also depands on when did you bought. Two of my brissie properties are getting 7.4% and 6.1% gross. I bought these two between 2014 to 2015.

 

Thanks for your input. How much does a buyer's agent normally charge to arrange a purchase of an investment property?

 

I think we are paying a lot more for the property given the average prices in the area - built 2 years ago for $410,000 (3 2 2). Still weighing it all up at the stage.