Our first Investment Property - Step 1: The Buyer's Agent

[CanOz]

I mentioned i would start a new thread regarding our property purchase and since we have not settled yet i thought i would cover the beginning of the story leading up to the purchase including our hiring of a buyers agent.

My wife and i wanted to purchase our first investment property, something we should have done a couple of years ago when we first got married. After taking care of some other goals and in the meantime seeing her favorite property market (Sydney) go ballistic, we decided we were going to need some help finding the best place to invest. I was concerned about buying the top of the Sydney market but yet she wanted something in the city.

Trainspotter suggested a place outside of Brissy, a house near Helensvale. Then he suggested a buyers agent, Todd Hunter of the WhereGroup. My wife, being of Shanghai origin was quite skeptical of using a buyers agent. We even got some sceptism from a friend of hers, a RE agent from Australia...

After we searched hundereds of properties online around the Brisbane and Sydney areas (a couple of weeks of work) I managed to convince her that a buyers agent in our circumstances made allot sense.

So we start to research buyers agents. We shortlisted two. Todd Hunter of the WhereGroup and Matt Reeves of Your Property Hound. Let me first say that both these gentlemen we very professional, extremely savvy with property and very passionate about investing for the future.

In the end Matt won out, partly due to the price. He was cheaper than Todd and he was from Brisbane, Todd is from Sydney but researches all across Australia....much broader focus.

So with Matt hired we scheduled our trip to Brissy and eagerly awaited his research. A week or so later he delivered us a half dozen or so places to look at. We soon left for Brisbane and met Matt the following day to start the inspections.

Our brief was to find a place with a gross yield of over 5%, net over 4%. So we wanted low costs. We had approximately 400k to invest, so that limited us to units/apartments. We wanted good opportunity for growth and a good vacancy rate. So that meant close to the CBD and the public transport options, schools, shops etc.

Matt found us these half dozen unique properties. We looked at them all, some more than once and then eventually selected one. We peppered him with so many questions about proprty investing he didn't know what hit him...he was very gracious with his knowledge and was very keen to teach all he could in our brief time with him.

I'll go into more detail on the property and the process a little later after settlement.

For anyone not familiar with an area, a buyers agent can potentially save you thousands and give you a great hands on start in your property investment education as well.

The WhereGroup

Your Property Hound

Todd's blog is very good to subscribe to as well. There are lots of little interesting views of the property market that he posts quite regularly.

So thanks allot to Trainspotter for the great ideas...

Oh, the gross yield was 6.5%, net was 4.5% and the property gives us cash flow of 570 per week when fully rented.

 

[coolcup]

Great start - well done! It must have been a bit stressful second guessing yourself buying in this market! Great to see the unit you have bought has such good fundamentals. At that sort of yield, I am guessing it should be washing its face against the loan, if not positive cash flow already - many congrats!

 

[skc]

Congratuations CanOz. It's very exciting and nerve wrecking buying an investment property... esp your first! Some comments / questions:

Trainspotter suggested a place outside of Brissy, a house near Helensvale.

Helensvale is a suburb on the Gold Coast (a major city in itself), but I don't really think anyone living in Brisbane considers it "a place outside of Brissy" (albeit true in the literal sense). Also it's worth noting that Gold Coast properties run on a pretty different tangent to Brisbane. Not saying there's anything wrong with the location, just saying it's not a common perspective.

Matt found us these half dozen unique properties. We looked at them all, some more than once and then eventually selected one. We peppered him with so many questions about proprty investing he didn't know what hit him...he was very gracious with his knowledge and was very keen to teach all he could in our brief time with him.

Can you tell us what the buyer agent offered that you couldn't have got from the internet or a tax advisor? Don't mean to derail your story so please put it in anywhere down the track, thanks.

I know a few friends who's used buyer agents before, and they are helpful when you are house hunting from abroad / out of town. They can also be quite helpful in the negotiation and the auction process, especially if you are prompt to make emotional decisions.

Our brief was to find a place with a gross yield of over 5%, net over 4%. So we wanted low costs. We had approximately 400k to invest, so that limited us to units/apartments. We wanted good opportunity for growth and a good vacancy rate. So that meant close to the CBD and the public transport options, schools, shops etc.

Oh, the gross yield was 6.5%, net was 4.5% and the property gives us cash flow of 570 per week when fully rented.

$400k @ 4.5% net = $18k p.a. or $346 per week. $400k @ 6.5% gross = $26k p.a. or $500 per week. They don't seem to reconcile with $570 you mentioned above?

Anyway, look forward to the story unfolding.

 

[So_Cynical]

Helensvale is a suburb on the Gold Coast (a major city in itself), but I don't really think anyone living in Brisbane considers it "a place outside of Brissy" (albeit true in the literal sense). Also it's worth noting that Gold Coast properties run on a pretty different tangent to Brisbane.

Having once lived on the Gold coast i can confirm that Helensvale is not the gold coast and its certainly not Brisbane, its in that bit in between..if the old location location location rule is worth anything then Helensvale is certainly not prime but i can think of worse places.

 

[qldfrog]

Am I right Canoz that you purchased in albany creek (north Brisbane) and that you are based O/S;
This would perfectly explain the use of a buyer agent, and confirm that you indeed bought in brisbane.
Great yield if you reached these .What have you missed?
well done anyway
I have an IP in the city (Brisbane) bought at a good price 3y ago but after all costs, I only get 3% net return;
and if I buy the same today (with 10% value increase) would only return 2.6%
Well done anyway, and we are nearly neighbours , when you are next around CanOz, PM me and we can have a coffee

 

[CanOz]

Actually Coolcup the property is in Holland Park West, south of the CBD. We want positive cashflow low depreciation at the moment as we don't pay tax. The income will be used to refurbish the interior in a couple of years, just update it really.

Helensvale is close to the Uni and the place TS suggested was a house in a great area, above the canal homes. that's what got us started looking in the first place.

SKC it was a little nerve wrecking....but glad to finally be in the market and not buying a hot market. All the doomsayers aside Australia is still a very beautiful, unspoiled country that is a very desired place to live for Asia's wealthy, hopefully Brisbane catches on eventually, its been flat for a couple of years it seems. Actually we obtained a bank valuation of the property from 12 months ago, valued at 400,000. Today, we got our bank's valuation, 403,000.

Matt Reeves basically offered us the "feet on the ground" and some great knowledge and experience. We certainly couldn't have done it without him, living overseas. That said, we would still have had the benefit of his service even if we lived in Australia, just to go through the first purchase.

We didn't see many auctions around Brissy, SKC you mentioned its not an auction market typically. We may buy another if we can get our crap together quick enough, we were torn between two places. We may still make an offer on the second place. Got a bit on the go at the moment.

Just checked with the boss and the rent is 530 per week for both places.

qldfrog - don't think we missed much on the costs, Matt was very detailed on his cost analysis, having several properties himself as well. Anyway, my wife being an accountant will go over it with a fine tooth comb no doubt. Of course there could be unexpected costs....fingers crossed.

 

[qldfrog]

my mistake cf location but indeed fully understand the use of a buyer advocate when O/S
All the best for this first step

 

[CanOz]

my mistake cf location but indeed fully understand the use of a buyer advocate when O/S
All the best for this first step

Some nice houses in the North though, we really like Redhill and Paddington...

 

[Julia]

Well, I'm thoroughly confused. We now have three p.w. prices: $570, $530, and SKC's calculation (which is what I'd calculate also) of $500.

Perhaps I have not read the thread properly. Have you bought two properties - one at Albany Creek and another at Helensvale which if I remember correctly from being through there a very long time ago, is a bit south of Logan.

 

[Julia]

Some nice houses in the North though, we really like Redhill and Paddington...

High prices there as most of the rest of inner Brisbane.

 

[skc]

Am I right Canoz that you purchased in albany creek (north Brisbane) and that you are based O/S;

I am in the same postcode...

Actually Coolcup the property is in Holland Park West, south of the CBD.
Just checked with the boss and the rent is 530 per week for both places.

That's a good area for investment property. Close to hospital and TAFE so a steady stream of respectable tenants, and bus service to the CBD is as good as it get in Brisbane.

Having once lived on the Gold coast i can confirm that Helensvale is not the gold coast and its certainly not Brisbane, its in that bit in between..if the old location location location rule is worth anything then Helensvale is certainly not prime but i can think of worse places.

Helensvale is in the Gold Coast municipal. It's not sand, sun and surf Gold Coast that's for sure. Doesn't soundlike that's where CanOz's bought anyway.

 

[CanOz]

No no, we bought the property in Holland Park West. The rent is $530 per week....please forgive me, i have bouts of CRAFT (Can't Recall a Frigging Thing). My wife is the details person.

I'm the visionary

 

[SuperGlue]

No no, we bought the property in Holland Park West.

Holland Park West?

Did you pop in at Sunnybank, Market Square?
What do you thing? Feels like home

 

[CanOz]

Holland Park West?

Did you pop in at Sunnybank, Market Square?
What do you thing? Feels like home

No its a little outside our radius of 10 km. We had looked at homes there online, but Matt focused us closer to the CBD.

I tell you though, the South Bank area really impressed me. There was a Buddhist festival of some kind on there and there was heaps of stuff to do and see. There was a little man made beach there, the beach was littered with pink flower pedals, it was the nicest litter i'd ever seen!

 

[SuperGlue]

I tell you though, the South Bank area really impressed me.

There are great plans for the South Bank area and West End area too.

http://brisbanedevelopment.com/queensland-cultural-precinct/

 

[trainspotter]

No its a little outside our radius of 10 km. We had looked at homes there online, but Matt focused us closer to the CBD.

I tell you though, the South Bank area really impressed me. There was a Buddhist festival of some kind on there and there was heaps of stuff to do and see. There was a little man made beach there, the beach was littered with pink flower pedals, it was the nicest litter i'd ever seen!

I didn't know Buddhist flowers rode push bikes?

Congrats on the purchase CanOz ... With your wife as an accountant and expecting her first child I am sure the buyers agent would have had to jump through burning rings of fire to close the deal.

 

[CanOz]

I didn't know Buddhist flowers rode push bikes?

Congrats on the purchase CanOz ... With your wife as an accountant and expecting her first child I am sure the buyers agent would have had to jump through burning rings of fire to close the deal.

Arrgghhh, my splelling is hopeless before i've had my coffee's:cup:

 

[CanOz]

Holland Park West?

Did you pop in at Sunnybank, Market Square?
What do you thing? Feels like home

We really liked Brisbane. It was my first trip to Sydney and Brissy. Sydney was very nice too, outside the CBD had the small town feel, really liked Randwick and Coogee beach. its just so over priced at the moment though.

Brisbane is just beautiful, with lots left in development for the future. We really like it there. The city is clean and tidy. The climate is even better than Sydney. My wife was also very impressed with Brissy. I'm also happy they have an AFL team and the Gabba is so easy to get to with the free shuttle buses...also love the free loop bus.

 

[Ves]

Arrgghhh, my splelling is hopeless before i've had my coffee's:cup:

Speaking of which, Deedot Coffee House is highly recommended in Holland Park West for your next visit. It is right near the Dan Murphy's on Logan Road.

 

[SuperGlue]

Holland Park West?

Did you pop in at Sunnybank, Market Square?
What do you thing? Feels like home

Sorry Canoz, what I meant was Sunnybank has a large Asian community & Market Square shopping centre is the place to go for Asian Food, Yum Cha, etc.

Very busy during lunch & dinner time, can be a headache looking for parking spot.