A cracker of a buy

We’ve been looking at this market for some time. Our investing appetite recently has been focused on a certain asset class – that is lower end properties in terms of capital value, but with high yields.

The last few properties we’ve picked up have been within this class around the Western and South Western suburbs of Sydney – where we’re averaging yields across our portfolio over 7 per cent.

We’ve felt confident investing in these areas – we know them well and being based in Sydney it’s convenient to travel to undertake research, attend open homes, auctions and the like. I also grew up out west and have a good appreciation for the demographics, the ‘better’ suburbs as well as housing dynamics.

Our decision to invest in Brisbane has been driven by a bunch of reasons. As well as the market dynamics, and prospects for growth in certain areas of the state capital, we’re able to maintain our focus on lower end properties that deliver excellent yields while geographically diversifying our portfolio.

In many ways, the Logan area is not that dissimilar to the Western Suburbs of Sydney – I see a lot of similarities in terms of demographics, the demand for housing, rental appetite and ability to purchase low end, high yielding properties that offer good growth prospects in the future.

The place we’ve picked up is a cracker – although I won’t claim all the accolades for the find as our buyer's agent has been integral in identifying and negotiating this purchase.

The property is a two bed townhouse over two floors. We’ve settled on a price of $132K which will rent, after we spend about $5k on a quick cosmetic reno including carpets, repairing some woodwork and a tiny amount of termite damage and painting, at between $250-$270 per week. It’s well located near a train station and shops.

Considering all our purchasing costs, we’ll be looking at a yield at around the 9 per cent mark, which I’m very pleased with; the property will also be positively geared.

We’ve done an AVM (Automatic Valuation Model) with RP data and its estimated value is $177,144 – so not a bad buy indeed. Looking back at previous sales figures it’s worth noting that it sold in November 2007 for $205k!

I’ll update you further as we near settlement and undertake the work, but I thought this a good example to share with investors of how it’s possible to buy under market value. We're going to be showcasing this property in the magazine so keep an eye out for it.

About Phillip Tarrant
Phillip is a media professional as well as an active property investor. He has over 10 years’ experience reporting on the mortgage and property markets and has worked extensively with Australia’s leading mortgage lenders and brokers as a corporate communications and public relations consultant. As a property investor Phillip advocates the principals of research, due diligence and surrounding yourself with the right team to make informed and educated property investment decisions. As well as being editor of Smart Property Investment, Phillip sits on the Board of the Property Investment Professionals of Australia (PIPA), the peak industry body for the property investment industry. He also sits on the Board of Publishers Australia, which represents best practice, innovation and professionalism in publishing.  These two positions offer Phillip insights and awareness to the latest issues, activities, techniques and best practice principals across both industry sectors and ensure Smart Property Investment remains focused on delivering quality content to its readers.