QLD New to the scene / Where to buy QLD.

Hey All

Been lurking a bit here, seen some great threads, thought I'd ask a few questions.

Firstly a bit about me, I'm new to this I'm wanting a long term IP to buy equity to buy another and then another and so on. So here goes, I'm 30, I earn $110k p/a including super, after all bills etc I have around $500 a fortnight to play.

I'm pre approved for a loan of 230k, now I'm looking at you QLD. Wondering where to buy, Eagleby, Upper Mount Gravatt area (maybe). I've look around, there's some really nice, modern newish Townhouses in my price range (and lower). I've seen mixed reports on the area (old data however), I personally see a potential growth in the near future.. Any tips on location would be appreciated.

I've enquired about one townhouse that looks easy to look after maintenance wise and in a place I think will grow. However the rates are a killer IMO. The median rent is around $330 p/w, Strata is $650 p/q and Council Rates approx $950 p/q (Strata and Council rates from the Complex Caretaker..)

Lets say my repayments are $289 p/w so, some simple calculations

Rent - Repayment
$330 - $289 = $41

Strata + Council
$54.17 + 79.18 = $133.35

$-92.35 out of my pocket per week, this isn't including insurances and any other fees

As a total newbie to the scene, is this normal? I was under the assumption my rent should be covering all rates/fees or is this just wishful thinking? I'm obviously wanting to grow my portfolio, should I focus on Apartments/Units? (I've also found a few that are candidates).

Any suggestions / tips would be amazing!

Cheers
Dan

 

This seems high. How many townhouses in the complex please?

 

Hi Alan

Response from the caretaker, below. I missed the part about water, sorry!

Good morning. Thank you for your interest in this wonderful property.
Regarding your questions about the property, the strata fee/body corporate levies is $650 per quarterly in 2018, and the council rate and water usage is approximately $950 per quarterly including water usage.
Yes, the price is negotiable.
Also would like to let you know that I am the complex caretaker and property manager for 92 properties in this complex.

 

How did you arrive at that assumption? That's PI nirvana but rarely the case in an area with good CG. (doubt Eagleby has that)

 

Let's call my assumption, wishful thinking then

 

Run away and do not look back. Too many, nothing unique. When you and 4 others want to sell (sometime in the future) what makes yours a better proposition to a buyer?

 

That's a very good point! I never thought of that thank you!

 

It is all about risk management Daniel. You may plan to never sell (like me and my IPs') but life has a habit of getting in the way of our plans. You want to get yours rented first, sold first and for the highest price. Choose small boutique blocks if investing in townhouses or units.

 

Welcome to the forums Daniel!

What's your budget this time around? Have you made a bit of a plan with your broker?

You'll find that buying, and using equity to leverage into the next property, rinse and repeat will probably have you capping out at 2 or 3 properties - it's not a very sustainable model anymore due to the servicing limits being tightened significantly over the last few years.

You could buy more using non-bank lenders but it's a completely different risk profile than traditional buy and hold, which is generally quite a conservative strategy. It might be fine but it's going to depend a lot on what you've got behind you in terms of liquid risk buffers, and your own desire to push the boundaries or play a more conservative game.

As you can see, there's a few considerations that go far beyond 'what should I buy?'

It would pay to speak with an investment savvy broker who can look at this for you and help you devise a plan moving forward. Personally, I doubt a townhouse in Eagleby is going to get you where you want to go. When you're limited to only a few properties (in the near term) it becomes super important to make them quality assets that are going to give you long term bang for buck.

 

Hi Jess

Thanks!

What do you mean this time around? This is my first time, pre approved $230k with 1k per fortnight at my disposal as per the OP.

What I'm taking away from your message is, back for you buck with the highest return, which to me screams buy a unit in the city target the demographic (students).

The ideal of a unit and targetting students was my first idea, however with my budget I could only afford a small studio apartment. Comparing that to a townhouse for the same price, only 15 mins from the city...

 

NO! With IP's you want to target a demographic that can afford your rent and on-going rent increases (as the market allows), which ultimately boosts sales value allowing you to extract cash out of equity for subsequent purchases. This is generally professionals or families not students.

 

Yeah so count me out for a 2 bed unit/apartment in the city with my budget anyway, families want houses, single professionals want fancy apartments. I'm looking to start small and build my way up and honestly not sure where to begin.

I guess I have to do a lot more research, although I'm wanting to keep the IPs as long as possible, I'm not interested in selling them at all.

That said, I have no idea what rates are like or fair in terms of strata anyway...

 

So much to learn and the same amount of hours in a day that everyone is given. Enjoy the journey.

 

Sorry I missed your pre-approved limit

Bang for Buck = something you can manufacture growth, for eg, cosmetic reno's, subdivide it - even in 5-10 years time.

If your budget is too low for something that ticks the boxes, keep saving. Or look in some different areas.

 

Haha yeah, I have an idea and I can execute it. I need to learn more, I need to get some opinions and help, hence why I'm here

Obviously you're not going to do the leg work, unless I pay you!

If anyone can point me in the direct of a "here's all the stuff you should know before buying an IP" that's actually credible would be fantastic. I'm sick of reading conflicting information on random blog posts ...

 

For that I'd probably jump on some podcasts like "the property couch" etc. Really good foundational stuff. That along with books, forum content, reaching out to credible brokers and BAs. Honestly I'd spend 6 months immersing yourself in it all before even thinking about purchasing. Educate then act. There will still be deals in the future. Just run your own race. Trust me. We've all been in your position at some stage.

 

^ ^ this exactly!!

 

From reading your comments , I wouldnt invest a cent if I were you until you spend some time to learn the basics. Otherwise I see you making some very poor decisons.

 

Have a look around Moorooka inner southside ,for that money you may well buy a 2 bedroom older solid brick in blocks of 4-6 on 600-800 sqm's lmr future high-rise site .. Eagleby is not the best investment wise..imho..

 

The price disparity between townhouses and houses in QLD is really negligible. There is so much more value going into a house, so much more you can do to it to add value and so much more desirable for QLDers where outdoor living is important. All that and you don't have to pay ridiculous strata like your example

Like others have said (and in all other threads started by people looking to get started in XYZ areas), it will come down to your situation, short and long term goals, and appetite for risk. I have bought property in both Eagleby and Mt Gravatt for clients and both areas are completely different demographically and strategically.