Home' API Magazine : October 2014 Contents 58 n APIMAGAZINE.COM.AU n OCTOBER 2014
BA: When we’re buying units for clients for investment we look for
good internal layouts and finishes in tidy complexes that are well
built and preferably low maintenance. The unit is around 70 square
metres internally, which is a reasonable living area. The property
was built in approximately 1997 and is well constructed out of face
brick, which is a low maintenance finish and therefore cheaper for
the body corporate levees. The complex is located in a reasonably
quiet suburban street close to a train station, shopping centres and
nWHAT ARE ITS CONS AS AN INVESTMENT PROPERTY?
SM: The garage is separate from the main building. The unit is
located on the top floor so access with furniture is a problem. It’s left
corner, which catches the western sun. There’s no air-conditioning
and there’s no dishwasher.
BA: Despite the property being for investment purposes, we still look
for aspect and breezes as these can ultimately decide whether a tenant
will stay for one term and then vacate due to the property being a hot
house or stay for a much longer period as it’s comfortable to live in. In
this case the unit is on the western side of the block which means that
it could heat up a bit in summer. Despite that, it should still catch the
prevailing breezes as it’s got reasonable elevation.
nWHAT ADDITIONAL QUESTIONS WOULD YOU ASK
SM: How long has it been on the market? Have there been any
offers? Why are the vendors selling? What are the body corporate
fees and rates? What money is in the sinking fund? Who manages
the body corporate and who is on the body corporate committee?
Are the vendors negotiable on price? Have they done any recent
improvements? What’s the rental history of the unit, in the building
and the general area?
BA: What are the rates and body corporate fees? How much money
is currently in the sinking fund? Is there any maintenance or repairs
planned in the future which would affect the sinking fund?
nHOW HAS THE MARKET BEEN PERFORMING IN THIS
SUBURB AND FOR THIS PROPERTY TYPE?
SM: The market in the surrounding area generally has been quiet
over the past few years, which is the same as Brisbane in general. Late
last year there was a pickup in activity and properties like this one
have started to increase in value.
BA: This suburb has been ticking along over the past few years. There
was a big run in the months leading up to Easter so available stock is
fairly low at the moment. Two-bedroom, two-bathroom units tend to
be the sweet spot of all types of property for returns.
nWHAT’S THE MARKET OUTLOOK IN THIS SUBURB AND
FOR THIS PROPERTY TYPE?
SM: The outlook for Alderley is positive due to its proximity to the
city, transport and shopping amenities. There’s a planned shopping
centre to be built within one kilometre of the subject property
anchored by a well-known supermarket. Off the back of that,
this property type will perform well as it’s at the affordable end of
BA: Alderley is a good suburb within seven kilometres of the city.
It’s close to schools, shopping and transport. I expect the market
for properties such as this one to be reasonably stable in the
nWHAT SORT OF INVESTOR WOULD THIS PROPERTY
SM: This is an excellent investment for a first time investor who
wants something that’s low maintenance and low risk, which is circa
15 years old.
BA: I call them “set and forget” investments. Buy them and keep
them tenanted forever with internal makeovers as required. They’ll
keep going up in capital value and rental value year after year.
nAT ITS PRICE POINT/RANGE, WOULD YOU LOOK
TO TALK TO THE AGENT FURTHER OR WALK
SM: It would be worthwhile talking to the agent to understand why
the property is on the market, are the vendors testing the market or
do they really want to sell?
The main reason why that is, there’s very little reasonable quality
stock on the market circa $400,000 price range. It’s usually the case
that a vendor will price their property too high in the beginning,
miss the market and then have to drop the price and sell below what
they may have achieved in the first few weeks if the asking price was
BA: We identified this property for a client. At that point the asking
price was $10,000 more. At the current asking price the gross return
is 4.96 per cent, the net return (after body corporate fees and council
rates) is 3.92 per cent, which is under the threshold of 4.2 per cent to
4.3 per cent (net) that we usually look for.
It would take a discount of around 10 per cent on the asking price
to bring this property into line with our requirements even to do an
initial inspection. We walked away. API
“It would take a discount of around 10 per cent on the
asking price to bring this property into line with our
requirements even to do an initial inspection.”
Here’s an update of properties previously analysed in Open for inspection
Walk Under contract
Walk Under contract
At upper end
OPEN FOR INSPECTION n Black Forest, SA and Alderley, Qld
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