My experience buying 4 properties in Logan QLD during 2020

Thanks for sharing @Jyh888
Personally, buying 4 properties in one suburb seems risky, but my folks bought all their IPs in a suburb very similar to Logan, in Sydney’s west 15 years ago and people said the same thing to them. These properties have now tripled in value. Hopefully it works out for you as well.
A couple of things, 1) did you consider land tax? This may wipe out your yield? 2) I am surprised by the depreciation figures. These are existing properties, are you sure these values are not just for the first year?

 

Crestmead will do fine. Its a much newer suburb than its surroundings and there are much much nicer houses there than the older suburbs. House prices for 4/2/2 newish places are approaching the $400k mark now some well and truly over.

90% of ppl I met don't even have the balls to invest in a single property so you've done well just in that regard.

The entire Brisbane SE corridor will do fine and I think you bought at the perfect time when the entire of Brisbane is hot right now and just starting to heat up. Heck even Ipswich is going OK with growth and like 1.9% vacancy rates so Crestmead will have no issues.

 

Hey Shazz,

I do also hold properties in NSW and other areas of Brisbane in my portfolio to diversify the exposure to other markets.

My strategy has been focusing on growing my asset base with initially buying higher growth properties and this phase is now focused on stronger cash flow properties and my intent is to buy and hold for a very long-term.

There will be some landtax however still positive cashflow after taxes. Depreciation figures are good for the first few years as the properties are build in the late 90s/early 2000s which is a bonus, not the reason for investing.

With the view to hold long term (i.e. 20-30+ years) I'm not too worried about capital growth, it will come over time. However, it's also a lot easier to hold a property that provides strong cashflow especially when it puts money back in your pocket and help you build up cash buffers.

Here's an example of the historical prices for one of the properties I purchased in Crestmead:
1993 - $45,000
1996 - $91,000
2003 - $170,000
2005 - $220,000
2007 - $255,000
2020 - $330,000

733% return in 27 years. The last 10 years has been slow moving but that's the markets moving in different cycles. Hopefully we see a different story for the next decade

Jyh

 

Will be interesting to see how your figures work out after holding for a couple of years... You have yet had tenant issues which will come.

Things seem to be looking better at present for Crestmead, I was able to put my rent up ($10 per week) for the first time in 4 years this lease, vacancy rates seem to be dropping but don't forget to allow for maintenance and vacancy of your properties into your calculations. I would allow 48 weeks rent per year in Crestmead and a fair bit for maintenance each year seeing you have older properties in a low socio area...

You can pretty much throw a dart at a map of Australia right now and make money where it lands..
I am still trying to figure out with the below average data supplied, why the suburb would even get a mention..

All the best with your properties

Craig

 

Thanks Craig, great to see rents are rising too.

Agree with your point regarding vacancy and maintenance.

From what I'm hearing from on the ground experience the values are certainly moving up in Logan and the demand is not just coming from investors. Affordability seems to be attracting more buyers.

Will definitely be interesting to see where we land in a few years.

Jyh

 

If you want a 5th place in Crestmead, let me know...

We can do an off market sale

 

Did you look at shares?

Since April 2020, my shares have produced total returns of 46.5%, cashflow positive income (after all expenses) of 2.5% (more if one added back in dividend imputation) and growth of 44%.

I believe shares are better for income and property is better for growth, especially with the use of leverage.

 

Yep I'm investing in shares as well. Last year had some incredible returns!

 

Did they tank before April?
I sold out in March last year and bought back in this month. Reckon I've broke even

 

I bought my Crestmead IP (3/2 brick and tile) in late 2015 via a BA right on market value (1st ever property. Wouldn’t repeat) and it has flatlined in terms of CG. But I’ll stick it out. Tenants have been fine and not many maintenance issues. People seem to look after their properties in the little pocket where we bought and yield is good.

I wouldn’t advise against buying in that area but I wouldn’t hype it too much either. Growth will be slow and steady IMO.

 

Yep, they tanked during mid-February to mid-March.

I only used April as the starting point as that is when the OP bought their first Crestmead IP to give a direct comparison on returns.

I too believe in having a balanced investment portfolio but my strategy is to buy properties (using debt) for growth and to buy shares (using cash) for income.

IMHO, property is lousy for income, once one accounts for expenses and time managing them.

I am a B+H share investor. So never sold a share during the COVID crash, never sold a share during the GFC, never sold a share ...

Total Returns over various periods have been:

• COVID crash -31.7%
• Post COVID crash +58.1%
• This FY +21.0%
• Last 12 months +8.3%
• Last 2 years +17.1% pa
• Last 5 years +12.9% pa
• Last 10 years +15.2% pa
• Since first purchase (18+ years) +15.2% pa

We all know that shares can go up and down over the short-term (look above ) but 15%+ pa returns over the long-term (18 years) on my cash (no debt on my shares) is something I can live with.

I am also a B+H property investor. My first IP was bought 30+ years ago and we still own it. I wish my property portfolio would give me 15+% pa returns over the long-term. I know it hasn’t. The only way I can make property work for me is to use debt to increase the return on my cash contribution.

I find it ironic that the two items that I used to generate/turbo-charge my net worth, namely shares and debt, are the two things that “joe and jill public” say are risky and are scared to use them .

 

I'm guessing it was he who shall not be named was the infamous BA you used who is quite famous on the Logan threads on here...

 

Slow and steady wins the race. Everyone who is a budding property investor wants to become a millionaire within 3-4 years. It wont happen.

Once again Logan is a massive council and with some very very nice suburbs. I take you've never physically been there and just going off online trolls and misinformation 99% of the time.

Crestmead is actually one of the nicer suburbs compared to the older ones in Logan council. I would say its in the middle ranking of all suburbs in Logan.

I know many investors who purchase in these areas, are doing perfectly fine and some even have made very significant capital growth over a longer period of time and sustain very very good cashflow where the rent is fully paying off the house. So whats to complain?

The entire of Brisbane hasnt moved much since 2015 and its only now that the growth is expediting. Relax and enjoy the ride. Growth will come.

 

Yep, people are impatient .

In 1992, I bought a 3/1/1 in Mansfield (Brisbane); in 2000 (8 years later), the price hadn’t moved. My accountant (at the time) said I had bought a lemon .

Roll the clock forward another 20 years. It has now increased 500% to 600%, even with the GFC, COVID, ...

Some trees take a little longer to bear the good fruit .

 

If they are going off what the online trolls who own there say, how is that any different to you going off what investors you know say?

 

I dont know thats why I am asking him. I see you have one there - when is the last time you went there? Did you even go there when you bought yours?

I go there every single year to Brisbane and I visit Logan areas as well because I hold property there and also I want to grow my portfolio there as well. I have property everywhere in fact in Brisbane including BCC/Ipswich/Moreton Bay and Logan. Its all covered.

I've seen everything and every area of Brisbane. Logan is nowhere near as bad as ppl who have never been up there say. There is much potential for the lower suburbs of logan to gentrify when you have areas like Shailor Park, Daisy Hill, Loganholme etc...which are quite nice areas. That is why I said Crestmead has good potential as it sits right next to Park Ridge which is all new estates and all professionals and hard working ppl living there and not far from the upper suburbs of Logan. As the more affluent suburbs of Logan cost more and more the middle classed suburbs like Crestmead will 100% increase. Crestmead is acutally quite nice, very quite and perfect for home lifestyle.

The yield there is so high back in 2015 it would be costing you pretty much 0 to hold that place. Enjoy your tax offsets and BMT depreciation, claim the $10k on tax and let the rent pay itself off. If you have a bad tenant dont blame the suburb - blame the agent. I've had the worst of the worst tenants in Brisbane council and even in North Sydney. I literally mean worst of the worst grubs. These are multi million dollar suburbs. I've never once had an issue in Logan. NEVER once in over 10+ years

 

I wasn't asking for your life story, just a simple what is the difference someone listening to opinions online or someone listening to opinions in person..

 

I went through the general area a couple of weeks ago and it was vastly improved from.a couple of years back...signs everywhere of Fhb $ being injected which are completely changing the feel of the middle browns plains part of Logan. other oo suburbs like regents park are also going from strength to.strength. Many people said the same about Deception bay but that noise dropped off and is now almost unrecognisable and up 10% in 12 months. Logan will always be one of those polarizing areas

 

Totally with you on this. Especially when you adjust for leverage risk/availability in both classes.

 

I'm not sure who you mean (I'm new) but it was a female BA anyway. I'm referring to BAs in general. I think people often assume a BA will have special insights and connections, and be able to get unheard of discounts etc., but in reality that's pretty rare. I've since learned that, most of the time, you can do better by doing the hard work yourself!

(not to cast aspersions on the no-doubt excellent BAs on this forum of course)