Humid, humid Brisbane

The City of Sweat

I'm staying in Brisbane tonight, on the northern side, not far from the Bruce Highway. I can just hear the cars, the trucks, the slightest echo of travel wheezing by at breakneck speeds, wondering what important places people need to be at this time of night.

The thing is, I like this place. It's handy to everywhere, the house is small but nice and it's been a place we have visited over and over again for almost 16 years now. What I don't like is the humidity.

Every time we come here, it feels like a sauna. Not that saunas are bad; I love to sweat now and again and I love the feeling that comes with cooling down after such a sweatfest. I do however hate sleeping in the heat and Brisbane unfortunately gets to the uncomfortable humidity level more often than not.

Yet many many people choose to live in this city. Do they like the weather? Do they like to choose to either sweat continuously until they become a sticky mess, or, choose to rather pump air con which, let's face it, is killing the planet. Neither really appeal to me, and it's times like this I love Toowoomba again.

I then get confused as to why houses prices are so much more here than in the town I call home right now. The climate, in my opinion, is 10 times better in Toowoomba, you can actually see four seasons and really, it's quite an awesome place. But obviously this isn't a factor for most, as if it was, Toowoomba would be the capital by now. So the obvious conclusion is that climate, while important for some people, has no bearing on house prices.

In other news, I think finally conditions might be right for a bit of movement in house prices in Queensland. The recent rate drop, the strength of the job market, the flatness in real estate all point to a buying frenzy. I do hope it happens, the markets need a bit of a boost.

Brisbane Property Market: The Outskirts

And the winner is: Housing Commission House of the Year, 2012

Recently I've had a fascination with trying to secure a cheap property in one of the fringe suburbs of Brisbane. When I mean 'fringe', I mean fringe. I mean 'fringe' like Caboolture, Moronfield, Kingston or Woodridge. These aren't technically "Brisbane" but they are not far away. It's the type of suburbs that are chosen by those who couldn't be bothered; just a place to live, no McMansions around here. 

And the entry prices are dropping. I mean $220,000 dropping. This is good news for me, as I'm in the 'couldn't be bothered' category at this stage of my life and I live in a Toowoomba suburb in such a house. So the question is, should I buy? Are these properties worth it? Is an investment NOW in one of these 'burbs  going to pay dividends in, let's say, 5 years? 

All very tough questions with unfortunately ambiguous answers. Stay tuned, I may be reporting a new acquisition soon.

Are prices getting cheaper or are we paying too many peanuts?

When it comes to house prices across this great brown land, there are many sources of confusion in today's mad media world. Are prices going up, are they stagnant, are my farts stagnant? Unfortunately there are contradicting thoughts coming from different commentators and nothing is as clear as they were lets say 10 years ago.

Prices get an erection, prices go limp...

The suburbs that I'm watching are no help either. One suburb in Tasmania seems to be on the up up and away, yet another suburb in Brisbane is probably THE definition of 'stable'. Reading into these two suburbs is a bit silly, it does however show that different markets still operate amongst not only our states, but within our cities and even sometimes within a suburb on different streets. 

If I try to sum up all that is going on with buying an investment property right now, I would say do A LOT OF RESEARCH. I don't mean like hours and hours on the internet, I mean days and days and weeks and weeks until you realise that you are doing the "haven't had a shower for a while and the skin on your arse is starting to rot from your computer chair" type of research. 

There are bargains out there everywhere at the moment, it's just a matter of picking the right suburb to go with it for future growth. 

Happy hunting.

Ownership pushed to the suburbs?

I often fail to see past the obvious notion that our nation's journalists are a bunch of idiotic, moronic, 'non-life experienced' idiots. I mean for instance, read this article. 

While the statistics about how far people travel for work are indeed very interesting, the wording is just all wrong:

"Young people are most at risk as housing affordability worsens and first-home buyers are increasingly pushed to outer suburbs."

Does this writer suggest first home buyers should be buying the premium properties in the exclusive suburbs AS THEIR FIRST HOME? Get a grip please, a grip on the reality that the typical first home owner SHOULD NEVER buy ANYWHERE NEAR the CBD. No wonder we have our 20 and 30-somethings complaining about 'affordability'. 

In Brisbane, where should a typical first home owner, in 2011, buy their home? It isn't going to be any of the 'leafy' burbs, not the Indooroopily corridor, definitely not the CBD, not St Lucia, not Kangaroo Point, none of these places are for FHOBs. 

Young people need to get a grip on reality and realise that home ownership is rarely about living where you want to, but rather a compromise between four main factors: distance to work, the suburb 'age', the size of the property and the entry cost. 

1. Distance to work: As in the article, the closer the better, but this needs to be balance with other factors. 

2. Some suburbs, like those popping up near Ipswich at present, are new suburbs with new homes. These come at a premium. Some more established suburbs, say, Oxley, have generally older homes, but are a tad closer to the city. 

3. The size of the property is always a factor, and as the typical back yard becomes smaller and smaller (read 250 square), a premium is paid for the 'larger' lots.

4. Entry cost is probably the most important factor for FHOBs. The market dictates the overall value of a property, considering ALL factors related to the 'livability' of a property, and this is continually forgotten by many many people. Entry cost dictates basically where you will live, but FHOBs can not enter the market with a $700,000 inner ring home. The article talks about stress etc., imagine what it would be like when you need to make the repayments on something like that, AS YOUR FIRST HOME. 

Ciao.

The Brisbane Property Market must be VERY interesting.

Throughout the last week or so, basically since this blog post, I've been intently monitoring which of my blog posts are getting the most hits, and basically it comes down to one about the Brisbane property market from mid 2009. So the question is, how come this particular post IS the most commonly hit post, again and again and again? I think I can put it down to a few points:

1. It has the words 'Brisbane Property Market' in it a number of times. This of course must be a keyword worthy of looking at, as my Russian friends attest to, bombarding the comments with junk (which by the way I've left for entertainment purposes). 

2. It also has the words 'Sydney, Melbourne, Adelaide' etc. etc., once again, words that must be high hit keywords.

3. This is an earlier post on my blog, basically it's been there for a while, with all those juicy, yummy keywords, sitting pretty. 

So, the dilemma is this; do I keep writing blog posts that are meaningful to me, that, I believe, may actually entertain a few people, or do I switch over and become a keyword robot, making sure that I have words like 'Brisbane' and 'Australia' and 'Sydney' and 'potato', just for the sake of getting hits?

Perhaps I need balance, a bit of Column A and a bit of Column B. Lets see, what other words may score highly? Any suggestions?

Also I am now going to add a little message to the bottom of my posts, similar to the way smonkyou does whn I read the entertaining posts on Google Reader. So...

Can I ask you a small favour? Pretty please? With a cherry? Please put a link on your website to this website. In return, if you notify me, I will back link you, or whatever else you want me to. Cheers...

Out of Flood

Luckily our Brisbane property survived relatively unharmed during the recent round of flooding in Brisvegas. I wish everyone effected by this disaster a quick recovery, both economically and emotionally.

What will happen to the Brisbane market now? I tend to think not a hell of a lot. You see, humans have very short memories and although there may have been a huge flood in 1974, the next one occurred in 2011. That's a 37 year gap to forget, to put it out of our minds, to not worry about. The multi million dollar properties on the river, well, seriously, if you can live there, you can afford the damage bill. There are those people doing it tough right now, but in four to five years we will have to think hard to remember the "inland tsunami" and the 4.6m Brisbane River peak.

Let's see if you can remember the year of these devastating events:

1. Newcastle earthquake?

2. Cyclone affecting Cairns?

3. Cyclone affecting Darwin?

4. Cyclone affecting Innisfail?

5. That huge drought? How long did it last again?

6. When was Birdsville last cut off?

7. Ingham floods?

8. Victoria bushfires?

This is just a tiny list I came up with from the top of my head.

Memory is short, money is king. Long live money.

Time to stocktake the portfolio

It's the end of financial year 09/10 and it's time for my little "business" to have a stocktake. So, let's see what we have now:

Bought this year:

1. Ingham (north Queensland) 3 bedroom highset. Currently our PPOR.

Continued to hold:

1. Ferny Hills (north Brisbane) 3 bedroom brick and tile. This was supposed to be our PPOR one day. Mortgaged. Rented. CF-

2. Invermay (Launceston, Tasmania) 3 bedroom + sunroom, dodgy weatherboard in an excellent location. Mortgaged. Rented (sort of...in the process of eviction). CF-

3. Glen Aplin (near Stanthorpe, south Queensland), 810 square block in an old small subdivision. Sitting pretty. Not mortgaged. No income.

4. Lachlan (40min from Hobart) 29 acres of splendid mountain/valley/river/town views and about an 8 minutes drive to New Norfolk. Sitting pretty, but looking to do SOMETHING to derive income. Not mortgaged. No income.

Sold this year:

1. Toowoomba (1 hour west of Brissie) 3 bedroom colonial in a historic estate. Was a dog when it came to cash flow.

So overall, our portfolio has entered a "consolidation" phase. By buying Ingham to live in (in town, better for missus and myself), our earlier Toowoomba purchase had to go. Cash flow this year reduced thanks to my beautiful little baby boy arriving and allowing my missus to be a stay at home mum, which far outweighs the benefit of additional cash flow. This does hurt our ability to maintain a negatively geared portfolio though. Balancing act anyone?

So how are we travelling? With the sale of the Toowoomba dog, we are OK. Capital gain (CG) has, according to valuations, dropped, but I am putting that down to the bank being cautious. I think at worst, we have increased our CG by approximately 2% this year. In my day job, I have yet again received a pay rise, so things are comfortable, but that bloody Rich Dad, Poor Dad book is still fresh in my mind. Look out for news around a business I may be buying.

Where to in 10/11? The portfolio is negatively geared and our serviceability is low. There are a number of scenarios, such as further down selling, which could increase our ability to service another property or two, but do I really want to? It would involve selling Lachlan, the block which I think has so much potential. I can't bear the thought of "little short term gain" over the "massive capital gain" that COULD occur. It's all a question of time. I will probably put it on the market, mainly because I see bargains EVERYWHERE at the moment and I want to jump in...BUT CAN'T!!!!! I have found some very good properties, close to CF+ and in great up and coming areas....what to do, oh what to do???

PS. Don't forget to vote on the right, some clear patterns are developing, but it would be great to get a few more people's opinions.

A super bargain in Ferny Hills...

This property is a genuine super dooper bargain. Actually, I'm going to recommend it to my brother and sister in law, so get in quick!!!

I'm back...

Property investing has taken a backward step for a while, as my wife and I welcomed our first little one into the world. It's interesting how perspectives change with some of live's important moments. A visit to see grandmas in Brisbane allowed my a chance to check out how the tenants are keeping my Ferny Hills property, a 3bedroom house, positioned ideally in the north-western Brisbane suburb.

Well, to be perfectly honest, it's sort of what I expected. From the outside, nothing had really changed, it's still a typical highset, leafy amongst other similar houses. On the inside however, it was a different story. There were holes in a few places, carpet in living room was virtually ruined, the main bedroom had a slight smell of cigarettes and the downstairs rumpus room was empty, but the storage room next to it was so chockas full of crap, I couldn't even get to the rear access door. It wasn't all bad though. The kitchen was neat, the pool (usually the bane of rentals) was kept absolutely spotless and the yard was kept neat. The little doggy that used to inhabit the place too was gone. So overall, I was.... neutral. I'm thinking of replacing the carpet for them, as a courtesy, especially for keeping the pool so neat, but I'll have to see if I have the funds first.

My main concern is if I have to put it on the market in a hurry. If this was the case, I'd have to spend a fair few thou, fixing up this and that, and, perhaps most importantly, getting the outside rendered. That would bring the place up a treat and no doubt we'd get a premium price. It lends itself so well for an extension, blocking in the carport to create a master (ensuited) retreat, and for an extension of a triple garage out the front. This would cost, let's say around $40,000, but would make the house 4 bedroom, double bathroom, triple garage, all integrated and rendered. I think it would add about $80,000 extra onto the selling price....sweeeet.

Oh well, only a dream for now...but you never know...

I've been watching the market intently over the last few weeks. Agents are calling me saying investors are getting busy, which is great for my properties that I want to sell. I am concerned about the prices though....there seems, and I repeat, seems, to be a great amount of low end listings. Is this a sign of investors offloading low end stock, or is it something else??? Something else disturbing....

realestate.com.au just got more wicked!!!

I'm sure some of you may have noticed the cool new functions that www.realestate.com.au have slowly rolled out over the past few months.

My favourite so far has to be the "reviews" section. Not only can I now read about the awesomeness of a town, but thanks to some realistic individuals, we can all find out about the crap side of things as well. Upon clicking on a listing, voile, the towns score, based on feedback, is revealed. You can then click the relevant links to see more, get into the nitty gritty of a suburb/town to get a REAL feel. For example, I LOVE Toowong, a smallish mainly university occupied suburb not far from St Lucia (Brisbane). I have been looking for units there, but upon reading the reviews, I was surprised to hear about how bad traffic had gotten recently, which I hadn't really thought of much. So in essence, it's a great tool, especially for investors.

On the flip side, this could mean the end of little towns. Why you ask? A lot of the little towns I have checked out have very unfavorable reviews, mainly of course because of a lack of jobs and/or facilities. This may, and I must stress, MAY, drop house values, reduce the attention of investors, put a negative on "spin," which the real estate so often rely on, etc. etc.

Let's hope this isn't the case and hope that we get balanced opinions...

Cheap...

This property is a bit of a bargain. Looks neat, low 400's and probably could get it even cheaper. Check it out..great part of Brissie...

A few weeks later in investment land...

Not a lot has happened in terms of my portfolio this past few weeks and it seems not a lot is happening across Australia, with loan approvals down and from my perspective, a lot of houses sitting idol. This begs the question, if, and I do mean, IF we have an interest rate rise in February/March, will property totally stall? It's possible....demand seems to have dropped, albeit I think on a psychological level more than anything.

I am now constantly thinking of downgrading my investments. At the moment, I am shelling out a fair amount of cash in meeting repayments, insurance costs, rates and the occasional maintenance on my IPs. I know, I know, it's negatively geared, but I'm starting to get a bit sick of it. In the 5 years or so since I started on this journey, at no time have I felt that my efforts are so worthless. At no time did I think of "offloading" property just to increase cash flow. Could it be me, have I changed? Have I listened to the media too much with the doom and gloom predictions? Yeah, sure, Brisbane seems to be going ahead, but my other investments, for example the one in Toowoomba that I am trying to sell, is static. The block of 28 acres I have 40 minutes form the Hobart CBD has not moved an inch since the GFC. I suppose I'm feeling a new feeling, a period of no growth, of uncertainty, except now with interest rate rises.

I have also noticed that I no longer have an urge to bring up the topic as much as I used to and people are not as interested to pick my brain about the topic. This is a good and a bad thing....I always get into the downward spiral of fighting mini battles with hypocritical people who don't invest and then continue on to tell me that houses are too expensive. On the other hand, I like discussing property investing with people because often I get a little insight into someone else's head, someone else's mindset about money and property.

Anyway, I hope everyone has a Merry Christmas and a Happy New Year, I have a little baby on the way, so I probably won't be posting as frequently as I have in the past...

Ciao...

Start of November Ramblings....

Real estate in Australia has come a long way this year. By this I am inferring that a lot of soul searching has occurred amongst investors, home owners and renters alike, a lot of "is grass greener on the other side" type of thinking. Should I buy a house at these low rates? What should I do with the spare cash I have available now that rates have dropped? Should I continue paying down my PPOR, or is now the time to jump onto the investment bandwagon? 2008-2009 has indeed been a turbulent time for us all and the head scratching no doubt will continue deep into 2010 and beyond. House prices this past year all of a sudden became a mystery, mainly due to stupid doom and gloom predictions and silly hype created by the media. It seems that, in some cases, nothing has happened. The "average" 300K-500K segment has remained solid, with some growth over the period, but this is coming off a very productive 2007 and was expected anyway. Those in the upper million/s certainly felt the pinch, but the bottom end of the market remained strong and performed well. My cheapest investment for example rose 16% from when I bought it last year (roughly), whereas my most expensive made a modest/crappy 1-2%.

A lot was learned in this period too, I myself am slowly becoming more and more aware of the impact of sentiment, of confidence, and the associated mindset of watching house values and rates go up and down. But it has been one hell of a ride. For the first time in my property investment life, I felt a strange sensation, something peculiar....I think people call it stress. Now, I'm not a stressful person, in fact I am the least stressed individual I know, but the looming rate rises and my purchases earlier this year are starting to create a little bit of, dare I say it, stress. The "sleep at night factor" or SANF as we like to refer to it in the heady world of investment circles, is slowly getting worse, although, I don't really have trouble sleeping, I guess it's more that it's in my mind. My SANF, or my stress, related from property investing, has just eased a little this past week and I think I will once again lull back into my usual care-free self once again.

So, are people worried about interest rates? Am I worried about interest rates? Yeah, of course we all are, it's not very nice watching your money fly away in interest, only to see SOME of it again at tax time, but for me, it's a little bit less of a problem, for the time being.

On a bit of a side note, I wonder what the Australian market has in store in the next five years. I have now been investing for 5 years and during this time have seen, a slump after a boom, a slow mini boom and then a larger steady boom, followed by a stagnant period. I have made SOME money, not as much as I would have liked (has anyone?) and have learned a hell of a lot. What will the next 5 years bring? Will it be fortune? Will we see 50% increase in prices during this time? Will the average cost of a house in Brisbane break the 500K???? It's all possible, it's all ahead of us and most importantly, I'm in it. If you're not in it (property investing) you'll watch from the sidelines, probably complain that they're too expensive already and that you're waiting until they become cheaper. I laugh at you...I laugh at you heartily....

North Brisbane bargains have me worried...

For a while now, I have kept a keen eye on the North-Western Brisbane corridor. You know the one, starting at The Gap, heading towards Ennogra, up towards Ferny Hills and Ferny Grove, and leading into the mountainous backdrop, what I like to call motorcycle heaven. But I'm not here to talk about bikes (although I would love to blog about my love affair with my Ducati, but that's for another time), I am here, sitting in a slight panic at seeing property such as this.

It;s listed for 399K, has had over 2000 views at realestate.com.au and is still not selling.

This is alarming. On a more personal note, it's very alarming for me. Yes, it has a very steep driveway, it needs updates here and there and it is weatherboard. But by now, in the current market, this should have been snapped up for around $380K-ish, someone should be ripping up the old steps at the front and making it into an excellent rental or PPOR. But no, this is not the case. In fact, there are numerous examples of absolute middle market bargains right now. Houses in this price range are taking a bit of a hit, and it's evident here.

I own a house in this corridor and it's valued more than this one, but the market stalemate means my equity is not growing. My hard earned cash is going to the bank for no other reason than to wait for the price or rental income to go up. So yeah, I'm slightly worried. Some of you may be thinking, just sell with that mentality, but I'm going to hang in there. It's the same feeling when I bought my first house in 2004. Flat prices after the boom in the Logan area. House prices were going nowhere for quite a while. BUT, I stuck it out then and will do it again here. The only way is up...or across. Hopefully up.

The Brisbane Property Market...July Comments.

Well, after months and months of continued searching, I am finally seeing a bit of movement in the Brisbane property market. It's not a huge wave, in fact it's probably more of a ripple, but at least it's there. This will have wide ramifications for the property market, especially the outlying first home owner suburbs. Bargains are still to be had.....500-600K will buy you a nice place near the city, and virtually a castle on the outskirts.

It appears a lot of people are saying Sydney is due to begin the new boom, but I see no reason why Brisbane can't be the city that drives the next boom, or mini boom at least. The indicators are clear, outer suburbs are being bought, inner suburbs are still relatively flat (my feeling based on my research) and this is going to result in an outer ring push which will increase inner ring prices. Usually, as I am led to believe, it's the inner ring that goes first, followed by the ripple outwards, but Mr Rudd's FHB boost has changed the scenery.

Melbourne seems to be on everyone's lips, a lot of chat on SS about it's suburbs. While Melbourne is indeed an attractive market, it is still way over priced compared to Brisbane or Adelaide. All of these markets need to cool first, in the next three months, and then KAPPPOOW, it should all take off again...I think starting with Brisbane.

It's official!!! Brisbane house prices are going through the roof!!!

Attempted to put a contract on a house in Ferny Hills ($389,000), in two days they had 5 offers and it sold for $8000 more than the listed price!!! Get in quick everyone, because soon there will be nothing under $400,000 ANYWHERE near Brisbane...that is my prediction..give it 2 years and all property will be over 400K...

Don't forget to check out my website!!!
http://members.optushome.com.au/~andrewkiss88/index.htm