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Looking at investment unit on Gold Coast; Don't want a fight, just some perspective
Topic Started: 26 Aug 2012, 05:45 PM (6,746 Views)
ScottyB
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Been doing some research now for a few months on the Gold Coast market for an investment property. Initially wanted a house around Pacific Pines area in the high 300's but wasn't convinced there were better opportunities available so I started looking at units around the Broadwater ... Labrador, Biggera Waters, Runaway Bay area.

I am now focusing on reasonably modern 2 bedroom, 2 bathroom units / townhouses / duplexes within a block of the Broadwater. Just throwing some searches through realestate.com seems you can get something that fits the description in the mid 200's and renting at around $300 per week. This seems to me like a reasonable return, just wondering if there are any local experts or property watchers out there who have any tips on anything better around. We have had investment properties before but now only have a principal place of residence, of which we have a bit over 50% equity so finance will be 100% to maximise tax deductions. I have only ever bought houses, not units.

I know most of the contributors are bearish on the market, but after monitoring selling prices locally I have gone from an angry bear to a fence sitter ... not saying its boom time again, but I think the worst is over down here on the coast. From a lot of my research and speaking to selling agents it appears prices are now just under the 2007 peaks and closer to the 2005/6 prices .... I have seen this at auctions and in selling prices. Eg an auction yesterday, owners paid 625k in 2008, sold under hammer at 589k. Compared to the horror stories at the high end, I thought that was a fairly positive sign.

Looked at a 2 bed 2 bath smallish unit, 6 years old, owners bought off the plan for 370k, listed at 279k and currently vacant to make the sale so I infer quite negotiable. Estimated rental $320 (ambitious I think, maybe $300). Body corp $50 per week. One block from the broadwater, walk to restaurants, hotels, public transport, shops. I am keen to jump in but is the value there????
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peter fraser
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ScottyB
26 Aug 2012, 05:45 PM
Been doing some research now for a few months on the Gold Coast market for an investment property. Initially wanted a house around Pacific Pines area in the high 300's but wasn't convinced there were better opportunities available so I started looking at units around the Broadwater ... Labrador, Biggera Waters, Runaway Bay area.

I am now focusing on reasonably modern 2 bedroom, 2 bathroom units / townhouses / duplexes within a block of the Broadwater. Just throwing some searches through realestate.com seems you can get something that fits the description in the mid 200's and renting at around $300 per week. This seems to me like a reasonable return, just wondering if there are any local experts or property watchers out there who have any tips on anything better around. We have had investment properties before but now only have a principal place of residence, of which we have a bit over 50% equity so finance will be 100% to maximise tax deductions. I have only ever bought houses, not units.

I know most of the contributors are bearish on the market, but after monitoring selling prices locally I have gone from an angry bear to a fence sitter ... not saying its boom time again, but I think the worst is over down here on the coast. From a lot of my research and speaking to selling agents it appears prices are now just under the 2007 peaks and closer to the 2005/6 prices .... I have seen this at auctions and in selling prices. Eg an auction yesterday, owners paid 625k in 2008, sold under hammer at 589k. Compared to the horror stories at the high end, I thought that was a fairly positive sign.

Looked at a 2 bed 2 bath smallish unit, 6 years old, owners bought off the plan for 370k, listed at 279k and currently vacant to make the sale so I infer quite negotiable. Estimated rental $320 (ambitious I think, maybe $300). Body corp $50 per week. One block from the broadwater, walk to restaurants, hotels, public transport, shops. I am keen to jump in but is the value there????
I would think that body corp fees would be coser to $100 per week, and then there are rates on top of that. Rents in the future should be better that what is being achieved now. If you are ok to hold through the tough times, which is right now, then the good times will eventuallly come. Generally stock levels on the Gold Coast are decreasing with almost nothing coming to the market. It will take some time to see gains, although if the economy gets worse and the dollar falls, then that will be good for the Gold Coast so perhaps it is a hedging strategy on property.

On the Gold Coast position is everything.

Best of luck.
Any expressed market opinion is my own and is not to be taken as financial advice
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silverx
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ScottyB
26 Aug 2012, 05:45 PM
Been doing some research now for a few months on the Gold Coast market for an investment property. Initially wanted a house around Pacific Pines area in the high 300's but wasn't convinced there were better opportunities available so I started looking at units around the Broadwater ... Labrador, Biggera Waters, Runaway Bay area.

I am now focusing on reasonably modern 2 bedroom, 2 bathroom units / townhouses / duplexes within a block of the Broadwater. Just throwing some searches through realestate.com seems you can get something that fits the description in the mid 200's and renting at around $300 per week. This seems to me like a reasonable return, just wondering if there are any local experts or property watchers out there who have any tips on anything better around. We have had investment properties before but now only have a principal place of residence, of which we have a bit over 50% equity so finance will be 100% to maximise tax deductions. I have only ever bought houses, not units.

I know most of the contributors are bearish on the market, but after monitoring selling prices locally I have gone from an angry bear to a fence sitter ... not saying its boom time again, but I think the worst is over down here on the coast. From a lot of my research and speaking to selling agents it appears prices are now just under the 2007 peaks and closer to the 2005/6 prices .... I have seen this at auctions and in selling prices. Eg an auction yesterday, owners paid 625k in 2008, sold under hammer at 589k. Compared to the horror stories at the high end, I thought that was a fairly positive sign.

Looked at a 2 bed 2 bath smallish unit, 6 years old, owners bought off the plan for 370k, listed at 279k and currently vacant to make the sale so I infer quite negotiable. Estimated rental $320 (ambitious I think, maybe $300). Body corp $50 per week. One block from the broadwater, walk to restaurants, hotels, public transport, shops. I am keen to jump in but is the value there????
i would try to steer away from the townhouses or units. if you really have to, go with duplexes. there are quite few duplexes selling for low 200ks at the moment close to new hospital and uni. these 3 bedders will attract 300-350pw (make sure you get the one close to public transport too) around arundel/labrador/southport area

but having said that, i cant see how the market will improve anytime soon, i would have sold mine if the condition isnt this bad and im getting pretty good rent on it for the area too (345pw) but the future doesnt seem that promising
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stinkbug
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The Gold Coast is one of those markets that really booms and busts.

Right now is probably an OK time to buy, provided you're happy to wait foir capital growth.

If you can find something that is cashflow positive from the start, your overall risk exposure will be lower.

I'd be more inclined to find something at a similar price range somewhere else (such as around the centre of a major city).
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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silverx
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stinkbug
27 Aug 2012, 02:49 PM
The Gold Coast is one of those markets that really booms and busts.

Right now is probably an OK time to buy, provided you're happy to wait foir capital growth.

If you can find something that is cashflow positive from the start, your overall risk exposure will be lower.

I'd be more inclined to find something at a similar price range somewhere else (such as around the centre of a major city).
logan city comes into mind :) 20-30km from brisbane and you can get HOUSE for low 200ks and currently renting for 300-350pw for 3 bedders
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The Ponz
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peter fraser
27 Aug 2012, 09:08 AM
ScottyB
26 Aug 2012, 05:45 PM
Been doing some research now for a few months on the Gold Coast market for an investment property. Initially wanted a house around Pacific Pines area in the high 300's but wasn't convinced there were better opportunities available so I started looking at units around the Broadwater ... Labrador, Biggera Waters, Runaway Bay area.

I am now focusing on reasonably modern 2 bedroom, 2 bathroom units / townhouses / duplexes within a block of the Broadwater. Just throwing some searches through realestate.com seems you can get something that fits the description in the mid 200's and renting at around $300 per week. This seems to me like a reasonable return, just wondering if there are any local experts or property watchers out there who have any tips on anything better around. We have had investment properties before but now only have a principal place of residence, of which we have a bit over 50% equity so finance will be 100% to maximise tax deductions. I have only ever bought houses, not units.

I know most of the contributors are bearish on the market, but after monitoring selling prices locally I have gone from an angry bear to a fence sitter ... not saying its boom time again, but I think the worst is over down here on the coast. From a lot of my research and speaking to selling agents it appears prices are now just under the 2007 peaks and closer to the 2005/6 prices .... I have seen this at auctions and in selling prices. Eg an auction yesterday, owners paid 625k in 2008, sold under hammer at 589k. Compared to the horror stories at the high end, I thought that was a fairly positive sign.

Looked at a 2 bed 2 bath smallish unit, 6 years old, owners bought off the plan for 370k, listed at 279k and currently vacant to make the sale so I infer quite negotiable. Estimated rental $320 (ambitious I think, maybe $300). Body corp $50 per week. One block from the broadwater, walk to restaurants, hotels, public transport, shops. I am keen to jump in but is the value there????
I would think that body corp fees would be coser to $100 per week, and then there are rates on top of that. Rents in the future should be better that what is being achieved now. If you are ok to hold through the tough times, which is right now, then the good times will eventuallly come. Generally stock levels on the Gold Coast are decreasing with almost nothing coming to the market. It will take some time to see gains, although if the economy gets worse and the dollar falls, then that will be good for the Gold Coast so perhaps it is a hedging strategy on property.

On the Gold Coast position is everything.

Best of luck.
Fair advice Peter

ScottyB unless I missed it in your OP whats your reason/motivation for wanting to purchase? Captial gain, rental retuirn, saving plan, bricks & mortar security?
Edited by The Ponz, 27 Aug 2012, 04:14 PM.
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ScottyB
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Thanks for the contributions guys, I really appreciate your input. I dont believe the Gold Coast is about to boom by any means either, but I am quite comfortable dipping the toe in the water right now with the entry price and rent returns making it fairly low risk to start. I also like the Gold Coast, I work here, I know the area, I can checkout and inspect prospective buys, I can talk to people around the place. I think the mining boom will slow, certainly not over, but with that there is some upside that the mad rush to head west or north will slow, and perhaps return a few people back to the coast, at the very least, looking for a bit more of a fly in fly out lifestyle. Pre boom I knew a lot of miners that lived here and flew in and out for work for the lifestyle. I think a return to that is quite likely.

My reason for buying are many - have enough equity in my home to 100% finance a small investment and start building a portfolio, starting to bracket creep tax wise and would like to get our household taxable income down so that we still qualify for family tax benefits etc (we have three kids but now just above the cut off). I love real estate and could spend all day looking at it, but shares go well over my head or interest for that matter. I procrastinated over buying so many houses years ago and missed out on a couple of what turned out to be great investments, I dont want to make that mistake again. I also agree that rents will increase and with the higher returns would look to keep building that portfolio.

I love this forum, there are certainly some characters on here, but the depth of knowledge and research people go into is really good. Heaps better than buying some property magazine that seem to be tainted with bias towards the bulls (not that I disagree generally, just love the balanced arguments from contributors on here).

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Dexter
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ScottyB
27 Aug 2012, 06:46 PM


starting to bracket creep tax wise and would like to get our household taxable income down so that we still qualify for family tax benefits etc (we have three kids but now just above the cut off).

You need to be aware that any investment losses don't reduce your assessable income in relation to FTB payments.
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ScottyB
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Dexter
27 Aug 2012, 06:52 PM
You need to be aware that any investment losses don't reduce your assessable income in relation to FTB payments.
..... that makes a lot of sense with our last tax return where we had partial property expenses to claim but centrelink didnt seem to take them into consideration on their assessment of what our actual income was.

Top advice. Thanks.
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nipa hut
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Taking a step back from any particular style of dwelling, or any (substantial) discount available from a previous peak, it's worth asking: what were the fundamental economic drivers of Gold Coast property when it last boomed, and are they, or other new drivers, actually showing signs of bouncing back? Or was the GC just fundamentally overbought, at the levels of 4 - 6 years ago?

At one point it was cashed-up Japanese tourists that drove the market, then cashed-up NSW retirees. And there was a less-cashed up wave of the builders and real-estate and financial services types that built off those fundamental wealth inputs.

That financial ecosystem might all bounce back as before, of course. But is it showing signs of actually doing so? Or, are there any new fundamental and substantial drivers of GC capital growth on the horizon?

Or, is the GC settling in as a very nice, but expensively distant, commuter suburb of Brisbane?

(Don't get me wrong; I love the GC hinterland (e.g. Springbrook) and some of the coastal areas as well. But I'm hard-pressed to see how I could make an everyday living there now, and retirement is 20 - 30 years off.)

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