QLD My investments in Rocky...

Hi guys,

Hoping for some advice if anyone can help.

I own 2 investment properties in gracemere, Rocky.

Im hindsight I purchased when the market was at its peak in 2014.

They are 3BR townhouses on very small blocks in a gated community. Its very well maintained , targetting FIFO.

Obviously the market isnt great and will stay flat for a while as I can understand.

The fees are really high to hold these properties, high BC, rates are $4k per year each and they are nearly fully mortgaged.

Im hoping to get some advice as to how I can best estimate my current and future position and a strategy for these properties. They have been losing big the past 18 months, hoping to decide whether to ride it out or take a hit now and try and sell etc

Im a novice invester and can now see the many errors I made .

Im Looking to move on and make it a learning experience but not wanting to make a further mistake and dump and run or stick it out too long with dud investments.

Any advice would be very greatly appreciated, many thanks

 

Hard to know what to do , depends on what you can sell them for . I've bought in rocky before and may again but it's too early , even for me . Vacancies are high , lots sitting on the market so I haven't checked what happening in the local economy .

That would be a factor for me .

What is happening in the economy ?

How are the local businesses track ? Any new industries , investments , people buying farms etc ?

If there was signs of a recovery that might sway in favour of holding .

Rocky is unlikely to move until Brisbane has moved further , so you could make a case for selling in rocky and buying in Brisbane and you may well make up what you've lost and more before rocky moves again ( which eventually it will do ) .

Cliff

 

sorry to hear of your situation, but thank your luck stars that your not as bad as the people that have lost 40% on their purchase price

 

Sorry to hear this.

I would start with finding out the value of the properties today, what is selling, chat to local agents in the area. Once you have this information at least you can work out a strategy from here, which way will be best for you

 

Thanks for the input guys. Ill get a valuation asap and see how im looking.
Keep you posted!!

 

REVEALED: Rocky bank experiences 'profound' $10M month

Anyone on the ground noticed a shift in confidence for the area? Prices seem stole but hard to tell without getting out and about.

Cheers

 

Does anyone have an update on Rocky? Some super cheap properties with 9%+ yields available... My knowledge is minimal in this market. At a glance Rockhampton seems like it's worth investigating.

 

The depressed resources sector has Rocky looking very...rocky still. The one hope in that area of QLD (McKay?) is the Carmichael-Galilee project (Adani) which has greenies up in arms and battling it still in the Courts. Its still being fought. It will create the world largest mine for coal that will be burnt and pollute etc.

Yield may reflect high historical rents and a depressed price for buyers willing to take risk it doesnt get worse.

 

9%Yields are most likely in Depot Hill, if so avoid, the whole suburb is subject to severe flooding. It is crucial to check if a property is subject to flooding, when the Fitzroy river floods many surrounding areas are affected to a far greater degree then in Brisbane when the BN river floods with dam releases.

We have a few places in Park Avenue on the north side. Vacancies spiked a couple of years ago and are still elevated. I haven't checked the offical numbers but speak to my pm fairly regularly. We haven't had any recent problems with vacancies but have had to drop rents, this has stabilised. Avoid units, townhouses and properties in poor condition unless you plan to Reno and investor areas outside Rocky like Gracemere, tenants have a lot of choice so stick to properties in greater demand.

I keep an eye on the duplex, small unit block market and I think duplex prices have decreased by at least 10% but so have rents so yields are still similar.
Insurance premiums have really risen eating into net returns but gross yields are still fairly strong.

I'm not intending to buy there again but I'm not selling either, I can't see any growth in the short/medium term until Brisbane grows strongly and the local economy picks up a little
Bottom of the market IMO but it might be there for a while.

 

I appreciate the insight

 

Sorry to hear of your investment journey so far. Not that I know from experience but from what I've read on PC/Somersoft forums it's never too late to turn things around! Learn from these mistakes and next time ensure you do you DD prior to jumping onto a deal that may very well be too good to be true.

Just out of curiosity however; who advised you on buying where you did and what were the diving forces behind your purchases? Hopefully for those new investors reading threads like this can gain some insight into the mindset of other less experienced investors who have made purchases they regret before it's too late.

Best of luck moving forward

 

You could always look to sell the property into the owner occupied market offering an element of Vendor Finance.

Market in Rocky is crying out for 100% financing with lenders generally tightening up.

 

Anyone got a PM that they would recommend? I think I'll have to get a new one.

 

One of the reasons we bought in rocky is that it is a lot less dependant on resources than most of the other nth qland costal cities . It did benifit from fifo , but it has a more balanced economy . It's acutually the " beef capital " of Australia and a local attraction is ( no bull ) The Big Bull ...

I think Herron Todd white still had it on their going down list , but most months they'll have something I disagree with based on my knowledge of an area .

I check it out occasionally and book mark properties of interest in good areas ( not depo hill ) with high returns and they seem to have sold when I look next time , so there are obviously some buyers out there who are picking up some good things .


Cliff

 

Rocky is worth watching , but , IMHO , I'd be buying in Brisbane before .

Last cycle , rocky didn't start moving until Brisbane was booming , and while Brisbane is moving , it's not booming . The comparison investors will make is do I buy in Logan , goodna or ipswich or rocky .

Rocky would not me on my list after a comparison .

Cliff

 

Thanks for the update Cliff. I'm looking at Logan and Ipswich at the moment for my 2nd IP. Are you on the hunt at the moment? If so, where?

 

Not at this stage as we simultaneously ran out of servicability and SANF , though we are debating about buying one in our super fund as we have cash in an offset account . just working out when we may need cash .

If we do it will need to be a cheapie , closer to 200 otherwise it doesn't leave much in the way of cash reserves .

Cliff

 

Fair enough. I will be in a similar serviceability position after this next 200-300k purchase. I estimate that I'll be able to borrow up to 200k max for my 3rd. Do you like any particular places for sub 200k properties which have decent yield and growth potential?

 

I would agree with this. Rocky suffers from that regional volatility. I would cut my losses with at least one of them.

 

Or Caboolture. Sub $300k properties in Morayfield a stones throw from the large mall. Serviced by train. That's a good proposition imho.