North Central Gold Coast local investors driven by location and amenity: HTW residential

Most local Queensland investors are not driven directly by yield on the Gold Coast, according to the latest Herron Todd White (HTW) residential report. 

No doubt their investment decisions will involve an assessment of property price versus income less outgoings but largely indications are that they are more inclined to be driven by decisions of location and amenity, the valuation firm said. Interstate buyers have a quite different approach.

The valuation firm took a look at the rental yields across the country. 

"Local real estate agents report that the magic gross yield rate currently sought by interstate investors is 6%. Generally speaking, agents will not get any marketing traction on properties when this minimum yield cannot be demonstrated," the valuation firm said. 

The report suggests the lower end of the local market (say $170,000 to $350,000 price range) in the suburbs of Labrador, Southport and Biggera Waters is currently quite weak with sales volumes down and values falling 5% to 15%.

Local property managers are reporting higher vacancy rates and in some cases a drop in rent is required to secure new rental agreements.

"We also note that local property managers are reporting that there has been a surge of tenants who are exiting their rental agreements in order to buy their own properties in response to the very low mortgage rates now on offer," the valuation firm added. 

A circa 1990, two-bedroom, one-bathroom conventional strata unit, situated on level two of a three-level, nine-unit walk up complex on a concrete footings and slab, floating concrete slab foundation with brick walls, tile roof and one car garage.

The property at 5/145 Muir Street, Labrador has fair external condition, fair internal condition and fair presentation. Areas: Living - 89 square metres, Outdoor - 10 square metres and car - 27 square metres.

The subject property has a north-westerly aspect with no significant views.

Ancillary improvements include concrete driveway, partially enclosed yard, concrete paths and moderate landscaping.

The estimated rent is $290 per week and gross yield 5.97%.

"The family home market (say $550,000 to $950,000 price range) has been the strongest performer, albeit this is a very stable market segment with steady demand and turnover in most locations. This market is not typically driven by yield," the valuation firm continued. 

The report notes an interesting strategy has been for some investors to convert family style homes into student style accommodation.

A typical four-bedroom, two- bathroom dwelling will be modified to become seven or eight bedrooms. The laundry may be converted to a third bathroom and the garage partitioned to form say, two bedrooms. The kitchen and main living area is utilised as common area.

Rentals on these are reported at circa $150 per bedroom. A $625,000 outlay for a property may return as much as $50,000 gross per annum (allowing for vacancy) reflecting a gross yield of 8%.

"We caution that many of these operations may not strictly be council approved and lending policy will value or assess these properties on typical residential use only. The suburbs of Southport and Parkwood are popular for this practice," the valuation firm said. 

A Parkwood dwelling converted from four bedrooms to an eight-bedroom, two-bathroom floor plan is currently rented as student accommodation.

"The higher end or prestige market is not driven by yield rates. Rental rates typically fall considerably at this end of the market," the valuation firm said. 

A two level, circa 2016, modern style, rendered fibrous cement sheeting, four-bedroom, two- bathroom, dwelling, with colorbond roof and two-car garage.

Dwelling is located on an easy sloping, regular shaped, inside lot situated slightly above road level.

Canal views with western frontage to the canal.

Ancillary improvements include: exposed aggregate driveway; partially enclosed yard of rendered brick construction; aluminium pedestrian gate with manual access; concrete and paved paths; established landscaping; concrete in ground pool, featuring frameless glass pool fencing; and pontoon jetty.

The property has good external condition and good internal condition.

With a land area of 570 square metres, the rent is $1,200 per week and gross yield is 3.67%