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How to spot a good investment



The word “research” is thrown around willy-nilly in the property investment field. But what do “true” researchers look for when they investigate whether a suburb or region is primed for growth?

I’m not sure what they research, as I have never run into any other buyer’s agents or property companies when I’m buying in an area. After I have finished buying there, I talk to many real estate agents ongoing and they often tell me that buyer’s agents and property companies are buying there now, after all the great deals are gone. Doesn’t make sense to me. Well anyway, it’s about time I tell all!

I think the best way to point this out is through some real life examples on suburbs I have invested in recently. Note: I am not investing here anymore as the suburbs have seen significant recent growth and all the bargains are gone:

Murrumba Downs
The suburbs are located between 25 kilometres and 35 kilometres north of Brisbane CBD.

I was investing in these suburbs between March 2014 and February 2016. Now as you know, I hold my cards very close to my chest in relation to where I invest. I only disclose where I was investing for myself and my clients after I have stopped buying there. Competition from other buyers only comes when I cease to invest in any location. The buyer competition means we cannot secure bargains anymore; and I won’t compete for a house. It simply doesn’t make sense to pay more for a house to simply secure it.

My initial interest in the above areas was due to a poor performing property market in that region for many years. The GFC started this downfall but another kick in the teeth came in January 2011 with the Brisbane floods. That’s not to say that this region experienced flooding, but consumer confidence went out the window for all of Brisbane when the floods occurred, along with the years to follow.

Combining that with house prices under the $400,000 mark in a capital city, meant that these suburbs made my four main criteria:

  • Houses, not units, nor townhouses nor subdivided blocks
  • Poor performing region, significantly reduced prices since last boom meaning zero competition
  • Ability to secure under $400,000 ($390,000 actually)
  • Capital city suburbia or large regional

Notice how I haven’t mentioned one single infrastructure project going on, yet I have made the decision to visit these suburbs and spend time on the ground. Even with the best infrastructure projects in motion, the property market can still be dead. And Kallangur is a prime example of this. The infrastructure projects listed below have been approved and in motion for years, yet the property market was dead? Now don’t worry, we will go through these but honestly, they faired very little in my decision-making process to invest there.

Gut feel is my last main criteria for making a decision on whether this location is worthy of my money or not. I have walked away from many locations due to gut feel. Places like Whyalla, Midland WA and Elizabeth SA and more recently Logan (Logan Shire) Qld.

Inspecting houses on the ground allows me to work out what type of property we should be buying. And it varies a little between each suburb. In Lawnton, Petrie and parts of Kallangur there were some great older, three bedroom houses that offered opportunities to value add through low cost renovation. In Narangba, Griffin and Dakabin, I only purchased four-bedroom, two-bathroom houses with double garages that were 8-12 years old. Kallangur had some of these houses too as there is an old section plus a new section to the suburb. Murrumba Downs were more three-bedroom, two-bathroom houses built in the early 2000’s.

So, let’s get to the infrastructure part and talk about what’s going on in the area.

Employment: All these suburbs, with the exception of Griffin, are located on the western side of the M1 Bruce Highway. On the eastern side is a suburb called North Lakes. Following the highway north on the eastern side is the North Lakes Business Park. This sits right next door to North Lakes Westfield. Once complete, the North Lakes Business Park will employ over 13,000 people (excluding Westfields). The likes of Ikea, Costco and Bunnings sit next door to car yards and many other large retail outlets that are already open. Westfield itself is undergoing a $220 million upgrade, allowing the suburbs on the western side of the M1 to gain access to this area as there was only one over pass. Now, there are three major overpasses making it very easy for all suburbs to get across.

To the north, and only 15 minutes away, is Caboolture. The drive in on Morayfield Rd, which is kilometres long, is filled both sides with retail and commercial businesses. The short drive north makes this very accessible for many employees.

The same occurs on the southern side in Strathpine, which again is only a 6 minute drive from Kallangur.

Currently under construction is Petrie University, due for completion in 2020 and employing 2,800 people ongoing.

One of Brisbane’s biggest employers is Brisbane Airport (BAC). Currently employing 20,500 people, the airport has major expansion programs in place, resulting in employment of over 50,000 people by 2029 – that’s only 12 years away. Given it’s only a 20-minute drive from Kallangur to the airport, this means many employees will be living in this region.

And let’s not forget Brisbane CBD, being a 35-minute drive from Kallangur, making it very accessible for employees.

Transport: With so much going on in and around this region, it’s no wonder the population growth is around 2.5%. That many people moving to a region can put a lot of pressure on the transport system very quickly. And I’ve always said, train lines and highway expansions are only built when congestion becomes a problem. They don’t build a highway to nowhere and hope everybody moves out there, they wait until everybody is pulling their hair out in frustration, then they expand the highways by one lane each way etc. Well, that’s what’s happened here.

The M1 has been going through many stages of expansions from the airport right through to Caboolture. These expansions are still continuing but the highway is much better than previous years.

For those working in Brisbane CBD, the existing train line works a treat with stations at Narangba, Dakabin, Petrie and Lawnton. But for those Kallangur property owners, the new line from Petrie to Kippa Ring opened early October 2016. This will make things easier for the Kallangur residents to work in Brisbane.

Education: Throughout the region there are many public primary and high schools.

One of the private schools in North Lakes is the Lakes College, which made it in to the top 50 schools for Qld in NAPLAN results. Another private school is in Dakabin, the Northpine Christian College. These are both schools from Prep through to Year 12.

For younger students, the Caboolture Montessori School offers private schooling for kids from three years old to 12 years old.

Now, for university education, Petrie University is currently under construction. The local council purchased the Old Paper Mill for $50 million and the University is due to take on its first 10,000 students in 2020.

With so much going on, why not invest in new houses in North Lakes, Deception Bay and Mango Hill?

Simply because the blocks are tiny. Many are built on 250-380 square metres. With four-bedroom, two-bathroom, single garage houses that left no room for any yard. Most were built with 9-foot ceilings so that you felt the sense of space, but as the roof tops were so close together it blocked any sun light filtering into the house. As a result, almost every house I inspected there, was very dark and had a mildew smell. And with tiny blocks and single garages, the streets were full of cars. Not appealing at all. Now, Mango Hill has a separate issue, flooding. I honestly don’t know how some of the new developments are being approved here because flooding is not an ‘if’, but a ‘when’. The lower part of Griffin also falls into this category.

But to re-iterate my point on infrastructure, it’s not the only driver of a property market. All of the above infrastructure projects were approved and underway when the property market was dead. Not even the volume of projects with all those benefits to investors and home buyers, made an ounce of difference to consumer confidence in the dead part of the property cycle. Sure, they are a great selling point now for many buyer’s agents and house and land package companies, but by investing there now, they have all missed the boat.

To secure volumes of properties in any area, real estate agent relationships are paramount. And this location was no exception. Although I had many agents keeping me in the loop, there were two relationships I had in this area that meant that the public and other investors never stood a chance in getting the best houses in the area. As an example, one of my key agents there worked for a house and land package company before the GFC, selling H&L packages to hundreds of interstate investors. When the GFC struck and the investors disappeared, he changed his job and became a real estate agent. This worked fantastically for me as he was contacting these same investors and telling them he had a buyer’s agent looking to buy similar houses to what they owned and we were willing to pay a certain figure for their house, then asking ‘would you like to sell’? As many paid way too much for these houses in the peak, along with giant hidden kickbacks to property companies when they were sold, they were now willing to sell at a huge loss, to simply get that bad investment out of their life. Their mistake wasn’t investing in the wrong location; it was simply wrong market timing.

So this meant we were buying under market value and buying lots of houses that never made the market. Allowing us to see significant growth even though the stats show less.

Let me explain:

These H&L packages were being sold for around the $440,000 mark 8-12 years ago. I was buying them for between $365,000 – $385,000. That’s 20 per cent less than what they paid all those years ago! These houses are now selling for $430,000+

If you read the latest CoreLogic suburb July growth stats you will see:

Three year growth – 7.26 per cent

Three year growth – 13.72 per cent

Yet we have achieved growth of 15 per cent in a little over one year, not three. And the good times have only just started. The next two years will see double digit growth each year, taking these houses to the $500,000 mark in value.

Research is knowing where to invest along with when, but you also need to know what to avoid. Without going into specifics, there are a few no-go neighbourhoods in this area. Avoid high sets as they are too much maintenance, unless you live nearby and can do the renovations easily yourself. Townhouses are definitely to be avoided at all costs as there are way too many being built and will sit vacant without a tenant for some time. And lastly, Griffin should be only for those investors who know the suburb very well. Given the much higher risk of flooding, it’s probably best to avoid completely.

Another positive to the area is the ever increasing family wealth moving into the region. This is simply the suburbs closer to the city moving outwards due to affordability. We’ve seen this in Sydney and Melbourne and this is already underway in Brisbane. Higher family incomes means rents are able to increase along with house prices. And that’s exactly what we are after.

The past six months have seen an immense amount of available houses to buy, where real estate agents are fighting for every listing and buyers are ready in droves. As a result, vendors are pushing the boundaries with increasing list prices of their properties and buyers already are, and will continue to, keep paying higher and higher prices.

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Market Place

Cost of Brisbane land lots fall 14pc as blocks shrink across the capital



Cost of Brisbane land lots fall 14pc as blocks shrink across the capital

6 & 8 Nabeel Place, Calamvale, was part of a 1,400sq m site that was split and re-split to see the development land gross profit of $500,000.Source:Supplied

THE cost of residential land in Brisbane fell a massive 14 per cent last year with lots on the Gold Coast now more expensive than the Queensland capital. But the devil’s in the detail.

New data by Oliver Hume found buying a block in Brisbane set buyers back $358,500 at the end of last year – a median price drop of 14 per cent in just 12 months.

Land on the Gold Coast was $25,700 more expensive than Brisbane, according to the latest Oliver Hume Quarterly Market Insights, with the glitter strip pulling off an 8 per cent rise in median lot price to $384,200.

But Oliver Hume senior research analyst Amanda Bittenbinder said Brisbane’s massive median price decrease was not because of a struggling market but the type of blocks that were coming to market.

“The Brisbane market is shifting towards smaller lot sizes, due to land availability and affordability,” she told The Courier-Mail.

“Our data shows that 48 per cent of project land sales in Brisbane over Q4 2017 were between 301-400sq m whereas the Gold Coast recorded 52 per cent of sales over 500sq m.”

She said the Gold Coast had a higher median lot size than Brisbane.

Broken down, the data showed “the rate per sqm in Brisbane was $899/sq m in Q4, whereas the Gold Coast recorded $513/sq m – that’s a difference of $386 per sq m”.

In the December quarter alone, 1,956 lots were sold in South East Queensland, a fall of 5.5 per cent that had more to do with stock availability than demand.

Agent Tom Zhang of Yong Real Estate said demand was outstripping supply in Brisbane.

One of his recent sales included 6 and 8 Nabeel Place, Calamvale, which was part of a larger 1,400sq m block that a developer had bought for $1.1m.

“A developer bought it, they subdivided the rear 800sq m out and further subdivided that into two 400sq m blocks. For 400sq m that was selling for over $400,000 each. Those two blocks at the back sold for $800,000 and he still has the front house that will sell for more than $800,000. So his total income of over $1.6m minus development costs still ends up a fantastic return in a short period of time.”

<a href="" title="">122 Roscommon Road, Boondall</a>, was split in two with each block on the market for over $350,000.

122 Roscommon Road, Boondall, was split in two with each block on the market for over $350,000.Source:Supplied

He said “small to medium developers are so hungry for this type of product”.

“It’s easy to sell the land. The normal homebuyer can’t afford big blocks but a 400sq m block they might be able to. The worry now is the low supply of empty blocks of land in Brisbane and in the southern suburbs like Sunnybank and Calamvale.”

Redland – which includes mainland suburbs like Capalaba and Alexandra Hills as well as island suburbs like North Stradbroke and Coochiemudlo Island – had SEQ’s third highest block cost. Its median land lot was $312,000, a figure that had dropped 3 per cent last year.

Popular Moreton Bay – which covers a large area including Caboolture and Redcliffe – saw a 4 per cent fall to $238,000, while the second cheapest land lots in SEQ came out of Logan where the median was holding steady at $230,475.

The cheapest place to buy land in the region was Ipswich ($199,500), though that’s changing rapidly with the area posting the second highest cost increase last year (4 per cent).

Despite low retail land supply and strengthening demand, the median land lot price in Queensland was fell slightly to $260,500, the Oliver Hume report said – mostly because of shrinking block sizes.

Median Retail Lot Price:

Moreton Bay $238,000 (-4%)

Redland $312,000 (-3%)

Logan $230,475 (0%)

Brisbane $358,500 (-14%)

Ipswich $199,500 (4%)

Gold Coast $384,200 (8%)

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The best brand new developments in south-east Queensland



The best brand new developments in south-east Queensland
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Market Place

Property sales strong as Mango Hill house listed for $1.1 million



Property sales strong as Mango Hill house listed for $1.1 million

North Lakes is one of the top three outer Brisbane areas where property prices are appealing to more homebuyers, new figures reveal.

It was one of seven suburbs within the greater Brisbane region where more than 400 houses were sold in the past 12 months, according to new figures from CoreLogic.

Caboolture leads the pack with 492 houses sold, with Morayfield close behind with 452 sales.

North Lakes recorded 436 house sales during the period and all seven suburbs had median house ­prices of less than $490,000.

Amanda Pearce from Raine & Horne North Lakes said the area’s attractiveness for families was one of the main reasons people wanted to move here.

“When I’m talking to my clients and asking them why they are looking to move to North Lakes, there is usually more than one reason,” she said.

“They have heard that North Lakes is not just a community but a family and they want their kids to grow up where they can go to school with the same friends.

“More than 60 per cent of the North Lakes population are families with children.”

Ms Pearce said some of her clients were either moving from interstate to get away from city life, or because the suburb had everything they wanted nearby.

She said more than 680 houses, units and lots had been sold since January 1 last year.

“The change in the median house price in 2017 in North Lakes was at plus 3.28 per cent compared to the Moreton Bay region, which was plus 2.73 per cent,” Ms Pearce said.

Raine & Horne’s Adam Ingram said shopping and transport facilities also added to the attractiveness of the North Lakes area.

Matt Goodall from NVRE Agents at Narangba has a house at Mango Hill listed for sale for offers of more than $1.1 million.

He said as far as he knew nothing had previously sold for the magic million-dollar mark at Mango Hill.

“It is the first of its kind at the moment,” he said.

Mr Goodall said the two-storey house was a standout in the street, as it was on a slightly elevated block.

“It has a unique design and certainly won’t suit everyone that comes through,” he said.

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