Queensland Unit Purchase

[mackap]

Hi I would be interested in any first hand experience that investors have had in investing in the unit market in Queensland.Preferably body corporate management.Hi rise or low rise,existing developments and buying of the plan.
Things like the return on investment,if the property was managed ,how did the management work out ?.
How did investors find the bodycorporate management ?.But most of all was it a good investing experience.Did it return good yields and are there unforeseen pitfalls for new investors.

Mack

[Trisha]

Hi Mack
I have been investing in QLD property for the last 9 years. The first venture to buy turned out to be the wrong property as it was over priced by $36,000 so one does need to be careful.
From my experience properties with Body Corps do not do as well as house & land. It is the land component that normaly increases, with an apartment or a townhouse or unit, one only owns a very small percentage of land.
The body corporate is to cover the cost for the upkeep of the facilities in the complex, i.e pool, BBQ area, gardens etc. From experience the BC can increase quite considerably over time and does affect the cash flow.
High rise or low rise - one needs to know the market very carefully - is the property for permanent rent or holiday let? Holiday let occupancy rate is only in the 60-70 % range in Gold Coast so unless is was for life style (personal use-but one needs to make sure the accounting is adjusted accordingly) I would not buy as an investment. Recently RPD released a report on apts and their capital gain - nothing on the Gold Coast was in the top of the list! I have recent re-sales data on a top holiday apartment block over the last 5 years in the Gold Coast which does not make for good reading!!!!!
Body corp on high rise blocks may be higher due to cost of lifts etc.
New or off the plan again one needs to know the market values. Personally from experience I would buy h & l only - (although i do have 2 with body corps) but again one needs to know the areas to buy - Ipswich is popular with the mulitilist companies but I personally would not buy there from what I know of the area.
How to finance a property in Australia can be challenging - Mark Uden of Kiwi Mortgage Managers - [email protected] could offer some information and puts the clients needs first. I have used his services a few times.
The correct structure to use is also important re tax and accounting and CGT.
Property management - a little more in favour of the owner than the tenant but the lease agreements provide a little more certainty than NZ with a 6 or 12 month agreement being the norm. Can provide more info on this if required.
Australia is a good place to invest which provides diversification and hedging the bets from a currency aspect. It has provided some very good returns for me but you do need to know your market and NOT buy on hype.
Does this help or create more questions?

[Dean@Massiveaction]

Hi Mackap. Apartments have outperformed house and land for the last 18 months in Melbourne and South East Queensland. This is a continuing trend as generation Y move there and they all want to live in apartments. Holiday let apartments have potential to yield much higher income than houses obviously as they rent daily for what a house rents weekly.
In Queensland bodycorp, like everything is legislated so you don't get huge spikes in costs like NZ. There are many buildings there more than 5 years old that have had zero increases in bodycorp rates.
Quality of the property manager is important.

I am personally an anti apartment kiwi investor but in Australia I am buying only apartments as the capital gains and positive cashflow achievable outperforms house and land considerably, unless you buy properties with subdivision potential.

Stick to new or off the plans and stick to quality developers. I really only know the Gold Coast and there you want to deal with Azzura Corporation, Mirvac, Raptis Group or Juniper. They all build good quality product at reasonable prices.

PS: financing Aussie is very easy. The only thing to know is which banks to use to avoid paying non resident withholding tax. Otherwise it is simpler than NZ, as low and no doc lending is still easily available there. My broker in NZ is now accredited in Aussie but borrowing in Oz is simple.

PPS: Ipswich has had over 22% capital growth every year for the last 5 and looks like doing 30% this year so I would and do invest there. Rental vacancies are now below 1%. The place rocks if you want low entry cost.

[drelly]

I've just come back from 10 days in the Gold Coast and of course had to check out the market there. Rental return is as poor as here on apartments, which make up the bulk of the market there. Also, there are still HUGE (like 77 stories) developments going in. I also noticed that there are the $1000 down type deals being offered which might be a sign of desperation. The apartment block I was staying in had two up for sale and a couple for rent. Apparently zero enquiries in the last 3 weeks on the rentals. Having said that, Coollangatta (sp?) airport has over 5m people going through every year and is building a $120m upgrade.

[Russell]

As a new member to this site but someone who has been involved in property throughout QLD for nearly nine years, I can certainly agree with the concept that apartments have failed most of the people who have invested in them. Yes, there are a significant number of "new" projects underway on the Gold Coast right now and it is the "new" prices that are putting apartments in the current "growth" category. Try selling an existing one for profit and see how you get on! Chevron Rennaisance is prime location with resales well below original purchase price.

[drelly]

Also there's the one I alluded to... The 77 floor Soul Development and very close to it, the new Gold Coast Hilton, which is also selling apartments off the plan. There's also masses of small (2-5 floor) apartment complexes strung all along the coast that look to have been built from the early 70's on.

[Dean@Massiveaction]

It's the people who buy early who make the money Drelly. What was selling in Juniper on Soul off the plans for 920K originally is now 1.85 mil and they are only now breaking ground. You don't have to get full retail when you onsell if you get in early. Steel is increasing in price by nearly over 20% a month world wide. Concrete and timber are also going nuts. The cost of building is increasing so rapidly you can achieve significant gains even in a flat market if you get in early off the plans in the right developments. That's what I'm doing anyway.

[drelly]

20% a month??? How long has it been doing that?

[Dean@Massiveaction]

I'm not sure. Since before Xmas!!

[GJB68]

Global steel prices: the sky is the limit

http://www.reuters.com/article/ousiv/idUSL0887074020080225

[Russell]

Apartments

Pooomba is obviously trying to justify an apartment purchase and subsequent sale for profit as a high risk speculative move. The fact that steel and other raw materials are more expensive now than they were before does not justify a property value. The real investors know that value is in land, not in a depreciating white elephant. To encourage and promote Pooombas style of trading is NOT prudent for most and he is quite clearly unconcerned about any consequences to the unsuspecting multitudes who may be unwittingly drawn into this scheme of investing. My considerable experience suggests that the golden pavements of Surfers are littered with the corpses of those who have been taken in for the profits of others.

[Dean@Massiveaction]

hi Russell. I can't find anybody who has lost money on apartments on the Coast, but have met plenty who are making considerable profits. Would love to catch up and discuss things further if you have info to the contrary.

From Midwood and Matusik reports over teh last 4 years there isn't one single development on the Coast I can find that people have not made between 20 and 50% by buying off plans and onselling at or close to title. Hardly risky :-)

[Russell]

Pooomba the depth of your "research" is shallow indeed. Try RP Data. If you can't find anyone who has lost money on an apartment on the Gold Coast then I simply wonder who you are talking with and where you are looking. 50% of my time is devoted to assisting those who have been over sold and over hyped into apartments.

Indeed, I only looked at this website a few days ago because I was advised of your statements of encouragement towards Gold Coast apartments and I'm compelled to direct some balance to your outrageous claims. Marketeers and double teer marketing is NOT a place where honest kiwis should be led to their imminent disaster.

I shall monitor.

[Dean@Massiveaction]

2 tier marketing is illegal so you don't have that issue in Queensland with honest developers. As I said love to meet up and discuss. Show me some evidence.

[rustica]

Hi Mack
Mark Uden of Kiwi Mortgage Managers - [email protected] could offer some information and puts the clients needs first.

I would second that. He has 10 years expereince in Queensland property and runs an open 'question and answer session' He is no hype, no glamour, low key, with quality research.

I have personally lived in Aus for 4 months last year (on the GC) and as I have mentioned here before, be very careful of who and what you do with property in Australia.