Should I sell my Brisbane Unit ?

Hello, was wondering if there was some advice out there from all you property gurus whether to sell our Brisbane unit in Indooroopilly. We only purchased it about 3 years ago (ticked all the right boxes, close to train, shopping centre, university etc etc) and have never had a problem renting it out etc etc. but now find we are having to drop rent quite significantly to attract a tenant. Whilst the media is practically inundated with reports of huge doomsday oversupply in Brisbane, and loud warnings about not buying what about those who have existing units ???. Should we panic and offload ? They are talking about oversupply lasting a few years in which case have we just got a dud and cut our losses ? Because we have only held it for such a short time we would be making a fair loss if the outlook is bleak for 10 years not sure we want to hang around for it to turnaround. Any help would be appreciated

 

Please dont listen to the media its generally heresay and written mostly by someone trying to get attention.
3 years is not a long time, is it in a large complex or smaller ? Investing is also about patience !
Try and set your units apart from others if you can so that it appears more rentable ie tenants will go for yours before others. It depends which type of tenant you are trying to target too ie student, couple, family etc this makes a big difference.
A few years ago we did have to reduce rent a little in a large complex however at that time there quite a few vacant units so tenants were able to pick and choose and in some cases make unrealistic offers.
One of the things we did was drop the rent by $5 week for a 12 month lease and offer a $100 gift voucher. (they didnt even ask for the voucher when they moved in)
Do you have a good manager ?

 

Thanks so much for your response, I'm new to this and its so great to talk to other investors. We do have a good property manager, and she is the one recommending we drop the price, because every week counts and there happen to be a few other units vacant at the same time -which has never happened before. But its been quite a big drop - previously had no problem getting $440-$450 now advertising for $415 - its in a small boutique complex of 12 but has a few unique features, is the largest unit with an outdoor courtyard, away from the road so private and quiet, has a study nook and own private access from the secure carpark downstairs. It has a fairly broad appeal due to its size, so have had single working lawyer in there, students and even a single mum with two small kids !!! It has all the hallmarks of a reasonable investment or so we thought at the time, although the body corp fees are also quite high ($1100/qtr) but we felt the upside of that is the sinking fund is healthy so lowers risk of being slugged with special levies if a big maintenance job comes along. The complex is only 8 years only but I suppose the new shiny developments are going to be more appealing !

 

Not necessarily more appealing, the features you list sound good.
How long are you prepared to keep it vacant ??
If you say 2 weeks then I would prob suggest to the manager "what if we drop to say $425" ?
We have found that most agents are generally quite good, maybe you can spin her a sob story and tell her you need it rented now but cannot afford to go to below $420 ?? Has worked before !
Considering the features of your unit I probably would not want to match other units without those features if at all possible.

 

Nice thought. In fact I have the impression that the weekly rent would affect your bank valuation, if you still have mortgage that is.

 

Agree, but in reality every week without a tenant means we are $10/ week worse off anyway. My bigger concern is holding onto a property thats costing us money (although to be fair only about $200-$300/mth after tax) that has reportedly bleak to dire prospects (if I listen to media reports that is). We do have 4 other brisbane investment properties that are doing quite well with neutral-postive cash flows and low vacancy periods (so far anyway !) So I guess this is my first rough patch and am trying not to panic and reminding myself as you say, "property is a long term investment !!"

 

Possibly never thought of that, but at the end of the day one can only get what the market will pay !

 

So Jenny's going to drop the rent from $415 to $425?

 

What do you think is causing this? Indro has always seemed pretty up/down based on what time it is during the uni semester. Given that I'm pretty sure this week would be UQ's exam block, its probably just about the worst time to be trying to find new tenants if students are the price demographic for it. (because people don't want to move mid exams)

 

Didn't think of that, I would have expected my property manager to though !! Given she is the expert in the area !!! Good point though! Funny the current tenant was a student and she just moved out during exams. Maybe she was an A student anyways

 

You could be also lucky with the UNI that close to have students studying economics who don't understand maths too well..

 

RE should you panic and offload, I guess the way I would look at it is what are your goals & what's it costing you to hold?

If you bought it 3 years ago, I would imagine its positive geared at the moment. If you sold do you have confidence you would come out ahead doing something else with the money?

 

I just checked against UQ's website, Exam period semester 1 2016: 11/06/2016 - 25/06/2016
Academic Calendar - UQ Events, The University of Queensland

Current tenant might have had exams early in the period, but yeah I would imagine this week isn't ideal for finding student tenants.

 

Sounds like a good flat, Jenny. The outdoor courtyard would set it apart from many. Can you add value to that? Do have a BBQ at home you could put there? Are cats allowed in the building? You might be able to market it as 'pet friendly'.

 

Sometimes the fingers are quicker at typing than the eyes are at seeing

 

Hey, never thought of that ! An inbuilt BBQ is a great unique idea ! Thanks Am not a great fan of cats, gotta be honest but if it meant a good long term tenant, maybe.....

 

Jenny, from your description the unit sounds like an attractive investment.

Rents do bounce around a fair bit, and it is not unusual to have to drop asking prices by 10% or even 20% to get a tenant. Check online and ensure your unit is competitively priced. In your price range, every week vacant equals an approximate rental reduction of $8 a week.
Marg

 

I would still be patient if you can, longest we have been without a tenant is probably about 6 weeks as we didnt want to budge on the rent at that time (couple of years ago now)
Overall your in a better position than most by having multiple properties so hats off to you.
Having been in Brissy since 2003 I believe there is still the catch up we havnt seen yet, mind you I say that every year

 

Oh really ! Okay well that makes me feel better ! thanks

 

Yes, I recon there are lots of Brisbane investors going a bit blue in the face holding their breath for capital growth right now ! Myself included