Every day I search the Brisbane property market for good investment properties for my clients. Every Monday I send one out for free to give you an insight into how an investor finds and assesses properties. Sign up to the club to get the full report each week.

Property of the Week #52 – 4th July, 2016

Address: 12 Kevin Grove, Caboolture South QLD 4510

Area: Moreton Bay Region

Property Type: 3 Bedroom, 1 Bathroom, 2 Car House

Listing: http://www.domain.com.au/12-kevin-grove-caboolture-south-qld-4510-2012865680

Estimated Market Value: $319,000 (sign up below to get the full valuation report)

Listed Price: $279,000

Rental Return: $320 to $350 per week (5.9% yield)

Affordability: Negatively geared by $1/wk (calculated for an investor with an income of $50k/yr).

The Verdict

I would recommend this property for investors with a subdivision and/or small development strategy in mind. In addition to development potential it represents high capital growth potential, and a discount below market value.

High capital growth potential

Here’s what Terry Ryder (Australia’s leading property researcher and Director of Hotspotting.com.au) has to say – “With a new university and a new town plan in prospect (including the new suburb of Caboolture West) the Caboolture-Morayfield   area   is   destined   to   continue absorbing urban growth. This region has been identified by the State Government as a Principal Regional Activity Centre for major growth in the Brisbane area. The proposed Caboolture West Master Plan covers 6,500ha west of Caboolture and Morayfield.

Increased sales are usually a prelude to an increase in prices and this is evidenced in a number of suburbs recording median price growth of 6% or more in the past 12 months, with Upper Caboolture up 16%. The appeal of this precinct is affordability – houses at prices below $350,000 are readily available across six suburbs. Vacancy rates throughout this precinct are low. Rental yields are generally in the 5.2% to 6.1% range. This presents an attractive package for investors: affordable prices, low vacancies and high rental yields.

For suburb analysis I turn to successful property investor and self-confessed “property data nutcase” Jeremy Shepherd. Jeremy has pioneered the use of the Demand to Supply Ratio Score (DSR). This score allows an investor to measure the supply vs demand of houses or units in a suburb. This week’s suburb (Caboolture South) has a DSR Score of 58 – This means demand only just outweighs supply in this market. This is a healthy market for investors wanting to apply some value adding strategy. Buyers are sometimes able to get away with low-ball offers. Sellers are getting the prices they ask for more often than not. Expect growth to marginally exceed the national average.

Future Development Potential

In our industry this type of property deal is affectionately known as a “chunk deal” – in other words, it is a good investment property “as-is” and can be rented out immediately. But it also provides potential to add value and manufacture your own growth in the future because it is situated on a large block that has the potential to be subdivided or developed (subject to Council approval of course).

Discount ($40,000)

This property has been listed at $279,000. The estimated market value of the property is $319,000 (sign up below to get the full valuation report) which potentially puts you $40,000 in front from day 1.

Affordability (-$1/wk)

With a rental yield of around 5.9% this property provides a good return. Our cash-flow analysis estimates that this will be a negatively geared property, costing $1/wk to own. In practical terms it’s neutrally geared, making it a no-cost property to hold while the market grows.

Get the full details, analysis, and research

Join the Property of the Week Club to get the full report on this property. It includes:

  • The valuation report.
  • The rental appraisal.
  • Cost calculations for an investor earning $50k p.a.
  • Profile of the Moreton Bay Region as a growth area.
  • Links to the resources we’ve used for our research.