Property Investment Brisbane

Property Investment Brisbane

In property investment terms Brisbane doesn’t have the glamour and excitement of Sydney or Melbourne – but that’s also a good thing. Right now it’s the slow and steady tortoise in the property race as other cities around it crash and burn.

Why choose Brisbane?

It’s easy to forget that Brisbane is the third largest city in Australia. It’s quietly undergone a major cultural and cosmopolitan shift in the last twenty years. It’s no longer a redneck capital as it was once considered back in the 1980s. Brisbane is booming in population both from overseas and interstate as young families and professionals flee the high cost of living in Sydney and Melbourne. It’s a tech and industry hub of burgeoning global stature.

In Brisbane, Chinese make up 23% of the population according to the 2016 census. It’s a multicultural city with beaches, culture and attractive lifestyle and a rebounding industry.

Unlike Perth its economy doesn’t rest on just one thing (mining) so its not vulnerable to a sudden collapse. And it doesn’t have the eyes of the world on it, like Sydney or Melbourne, nor the rapacious rush for property investment so it’s not as prone to the same peaks and troughs.

Follow the growth cycle

Just as Queensland is one hour behind NSW and Victoria with daylight saving, their property cycle is also a beat behind. For property investors this is great news. It’s like having a time machine to travel back to opportunities you missed out on! Brisbane’s growth cycle follows Sydney and Melbourne approximately 18 months afterwards.
Now that Sydney has boomed and peaked a lot of investors are starting to move from Sydney to Brisbane. Yet it still remains somewhat off the radar.

Affordable and cash flow positive

Brisbane is in that very rare position of being affordable with a positive rental yield and strong capital growth. It’s the Holy Trinity of property investment.

So consider that the property price range in Brisbane is roughly half that of Sydney. In the last quarter of 2018, the median house price was $670 000. This was a record high for Brisbane. Meanwhile the median house price for Sydney is around $1.11 million. Yet the average wages are only about 10 – 18% less than Sydney, so if you live there it’s extremely affordable. And if you’re an investor south of the border, it’s a very attractive proposition to buy into.

The return on investment for Sydney Melbourne market is 3% yield meaning that the rental income is not enough to pay for the mortgage repayments. However in Brisbane property markets the yield return is a stunning 4.5 to 5% .
This means that the rental income is enough to pay for mortgage repayments and also pay for the rates, insurance, water and maintenance.
Brisbane properties therefore are cash flow positive. Whilst in Sydney and Melbourne rent only covers half the expenses.

So, where to invest?

There are basically 4 main areas in Brisbane worth targeting. It’s Brisbane North, west Brisbane, South Brisbane and Brisbane South West.

What makes these areas so appealing? It’s that they are all based around job concentration. Huge office complexes and large warehouses and retail centres are the foundations of these suburbs.

The formula is simple. As long as there’s work there should be tenants. Because Brisbane is still growing, it’s easy for most people to live near their work. However, in Sydney for example, there are many areas where people have to travel a long way to work. Consequently these regions they tend not to grow as fast. The latest State Of The States report published in April 2018 found that Queensland is leading the nation in fast jobs growth. So employment is likely to keep rising, making property investment in Brisbane a safe bet.

What kinds of properties to choose?

We recommend fixed price properties and turn key.
Fixed price means that there are no additional costs. The price you’re quoted from the very beginning remains the same is the price. There are no additional costs. This means investors can adjust their finances and know exactly what they’re in for and can budget accordingly.
Turn Key means the property is at such an advanced stage that tenants can simply move in straight away.

This means the property has:

● blinds and curtains
● TV aerials
● power and electricity
● water and telephone connection

It may have a garden, a post box in place, a cemented driveway and completed fences. So all the tenant has to do is walk up to the front of the door and turn the key and move in.

The advantage of investing in only fixed price contracts means that so you know the exact cost up front and as they’re turn key, someone can move in straight away and your investment is making money instantly.

Know when to fold them

This is the common trap property investors fall into: not knowing when to sell and being badly burned. This is where we help. We watch the market and advise when it’s time to release the property.

When you’re looking at the exit strategy you’ve got to look at the depreciation cycle.

The more the property depreciates the less the tax returns you get. And, equally, as the property depreciates capital growth and capital gains tax implications are affected. We always ensure that we sell at peak time to get the maximum benefit.

The longer we hold on the less tax benefit we get and more capital gains tax we have to pay and capital growth may also come down. So it’s a matter of waiting until all three are absolutely perfect and reach their peak.

Based on the growth cycle Brisbane has a slower more sustainable growth than Sydney or Melbourne. It doesn’t have the sugar hit you get in Sydney. But you also don’t have the stress of a suddenly plateauing market. In other words, Brisbane is slower but more steady. For anyone looking to dip their toes into the property market, it’s a very sure bet.