Newbie Investor needs advice on SE QLD market!

I'm currently sitting on around 130K of equity which I'd like to put towards my second IP. Currently I've been monitoring the markets in SE QLD (GC & Brissy) and I've taken 4-5 trips there personally in the past 12 months. So far I've been leaning towards buying a detached dwelling with development potential or significant land holdings(quarter acre block+) around the 400-500K mark. So far I'm leaning towards one of these options...

1. Springwood area -> either detached dwelling with a quarter acre block and subdivision potential or a neutral geared block with future mid-rise + potential
2. Slacks creek -> dual income properties, however the area seems very poor and there's next to no renovations or new knock-down rebuilds in the area.
3. Daisy Hill, Shailer Park -> around 500K PP and a solid home with rental income growth
4. Moreton Bay area
5. Runcorn -> since it's near Sunnybank and a potential domino effect of being next to sunnybank
6. Richlands -> very high income growth in the past 5 years for families there
7. Southport -> blocks outside the PDA with dev potential or something closer to chirn park or university with dual income potential

Any advice would be appreciated as I'm still learning about the micro factors in play in the Brisbane market and I'm from Sydney...

 

You have North, South, West covered there.....

What do you want the property to do for you? You've called out - development, cash flow, capital growth in various areas.

If your budget allows, personally I'd get something close to infrastructure & with potential for either zoning changes due to the location or already zoned properties. Plenty to choose from in Brisbane at minimal negative cash out flow.

Cash flow is great, however with the lending being so tight and the assessments being at 7%+ P&I for the majority of lenders, you'd find the dual income property will only do so much for you. However a property with future potential may help you move forward whether by DA approval alone or by actually doing the development.

Make a list of negotiables and negotiables for your purchase - including
Minimum cash flow / rental yield
Location - how far from transport, shops, schools etc
Minimum block size
Block shape

Once you know what really ticks your boxes you are more likely to spot the deal than not knowing..

What's the reason for the focus on 1 IP....Have you considered 2 x $400k purchases?

 

As someone that has spend the last 5 years looking to start investing in property, I bought a house in Mount Gravatt East 12 months ago (moved into it and rented out my former PPOR) and I'm about to settle on a splitter block in Margate (already two lots).

Of the areas that you've mentioned here are a few points:

Springwood - Considered middle class by the low socio-economic areas around there. Currently a bottleneck for traffic but the government has been promising to upgrade the highway and once that happens, it will increase values as southsiders creep closer to work in the city. Also has a decent business sector considering it's suburban.

Slacks creek - Might have missed the growth here. Was super cheap but it's gone up a bit with Woodridge prices. Still industrial but I guess it could change in the future. I'm sure you could do well on the right property but I think this one is a risk if you aren't very picky on location.

Daisy Hill - Upgrades to the highway will help. Still some large blocks of land and potential for townhouses in the future. It will be a while before small lot houses are a thing here (unless it's a major sub-division).

Moreton Bay - I love the outlook for Redcliffe. New uni, hospital, train line, council upgrades to the waterfront. D-bay if you want to be a slum-lord. Margate & Woody Point for the inevitable gentrification.

Runcorn - Had some big growth and will likely keep going. Asian immigration to the area won't stop and Runcorn is on their list of areas to live. I wish I had bought a few houses here when they were in the low $300s.

Richlands & Southport - Unfortunately not on my radar.

 

Check out my Logan thread for springwood daisy hill area analysis. Recently purchased there and would lean towards those areas. You won't find anything in runcorn for under 500k let alone with decent rental yields and a decent size block.

 

Steady growth too can be found in the Redlands area. Close to the bay and Islands.
Railway line up to, and including Cleveland.
Low crime, family orientated suburbs like Ormiston, Wellington Point, and Birkdale
are often overlooked flying under the radar, but lots for your hard earned dosh.

Some major harbour remodelling refurbishments are on the Cards in Cleveland too.

 

Mine are in Birkdale and Scarborough. Both are desirable areas if you hold a long term view. Family friendly area, friendly people everywhere. The staff in the local shops are exceptionally nice in Birkdale. You can feel it's a bit like a seaside holiday destination. Not crowded, laid back.
There is a limited supply of homes near the bay... that's why I bought there. Plus rail infrastructure. Ticks my boxes.
Of course, inner locations are popular too. But I see no point in buying inland.
You want some sort of x factor.

 

If you are ready to buy now without hesitation I would be looking close to Sunnybank at either Runcorn or Coopers Plains. Both suburbs are along the train line and as people get priced out of Sunnybank they generally will look to the next suburb for better value.

Sunnybank is going strong and in the near future it will likely expand.

If you weren't looking at purchasing for another year you probably might one to consider another area but no one knows he future.

 

Don't look past Deception Bay near the waterfront. There has been vast rezoning to encourage gentrification. Zoning is 'Urban Neighbourhood' in the area between the Shopping Centre and the waterfront. This is for medium - high density and buildings up to 21m high. Focus on the 600 sqm sites. Alternatively minimum frontage 14m if you want to benefit from future development potential.

I think perhaps 5-10 years for the redeveloping/gentrification due to rezoning to kick in.

( you can use the same general criteria above within all the 'Urban Neighbourhood' zones in the Moreton Bay council area )

Zoning of my 600sqm site at DB suits nominally 4-5 townhouses or perhaps 12-14 units.

 

I will definitely focus on D-Bay in the future. I think you could probably wait a few years without missing too much growth there but I guess you never know!

 

Thanks, I'll get to that right away!

 

Yield on my DB property is 5.4%. Yield on my Petrie property is 5.9%.

 

I always find yield to be a little bit deceiving. The cost of sending out a plumber or the cost of rates doesn't really change for a property that rents at $350p/w vs a property renting at $650p/w. I would personally rather have 2 properties at $800k each over 4 at $400k each. I know that there are so many variables but yield is simply rent/purchase price. It doesn't factor in the actual holding and maintaining costs.

There will be hundreds of examples where I am wrong but it's just my preference.

 

I hear lots of negative things about Deception Bay (aka Depression Bay by some QLD'rs), and since the rezonings in Feb 2016, there has been only limited signs of new higher density building. Recently I was offered around 1600m2 in two properties and the more I spoke to the agent the more I'd get more and more owners in the area suddenly offer me their property. It was like a stampede out of the suburb, which made me wonder if DP is such a great opportunity, then why is everyone who owns there so eager to get out? Maybe they're not buying the redevelopment/gentrification story?

 

I ended up buying two post wars in Acacia ridge instead, which also has a rather rough environment, however so far all good. It is 15km out from CBD as opposed to 30km and both were around the 400K mark. I ended up buying into the story that being closer to the CBD for Brisbane is quite important. Couldn't afford inner ring, but guess middle ring LMR blocks ended up being the preference.

I've met a few people who have invested in areas like DB and Bray Park, heard some nasty tenant stories, but I guess it's luck of the draw with who you get. I'm leaning towards the southern side of BCC due to the large chinese and migrant community there.