Join Australia's most dynamic and respected property investment community

My investments in Rocky...

Discussion in 'Property Experts' started by Deepsquat, 21st Sep, 2016.

  1. Deepsquat

    Deepsquat Member

    Joined:
    11th Oct, 2015
    Posts:
    9
    Location:
    Melbourne
    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 :)
     
  2. See Change

    See Change Timing Lord Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    2,203
    Location:
    Sydney
    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
     
  3. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    1,534
    Location:
    Melbourne
    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
     
  4. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    8,552
    Location:
    Perth, Melbourne, USA
    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
     
    Luke T likes this.
  5. Deepsquat

    Deepsquat Member

    Joined:
    11th Oct, 2015
    Posts:
    9
    Location:
    Melbourne
    Thanks for the input guys. Ill get a valuation asap and see how im looking.
    Keep you posted!!
     
    ellejay likes this.
  6. dan2101

    dan2101 Well-Known Member

    Joined:
    8th Jul, 2015
    Posts:
    350
    Location:
    NSW
  7. James G

    James G Member

    Joined:
    6th Dec, 2016
    Posts:
    21
    Location:
    Sydney
    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.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,620
    Location:
    Sydney
    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. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,204
    Location:
    FNQ
    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.
     
    James G and Phase2 like this.
  10. James G

    James G Member

    Joined:
    6th Dec, 2016
    Posts:
    21
    Location:
    Sydney
    I appreciate the insight
     
  11. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    119
    Location:
    Melbourne
    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
     
    Lollie likes this.
  12. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Brisbane Buyers Agent Business Member

    Joined:
    20th Jun, 2015
    Posts:
    194
    Location:
    Brisbane
    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.
     
    Lollie likes this.