Case Study – Windsor, Brisbane

There are a lot of people interested in units close to the Brisbane CBD right now, so I’ve been spending a bit of time looking at some of the key areas in Brisbane that offer fantastic value within 5-10km of the Brisbane CBD.  I was specifically asked recently to find a 2-3 bedroom unit or townhouse, with some renovation potential that could achieve close to neutral cashflow, with good prospects for growth.

I came across this unit in my travels and thought it would make a good case study example of an entry level property with real potential for growth, both organic capital growth and manufactured, based on the brief discussed above.  So let’s take a look!

The Location – Windsor, QLD

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Windsor, Brisbane

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Windsor, Brisbane -27.436836, 153.031090

Here are some quick facts about this location:

  • Windsor is a suburb within about 3.5km of the Brisbane CBD in the Inner North area.
  • The predominant age group in Windsor is 30-39 and single parents and childless couples make up more than 50% of households.
  • The median house price in Windsor is approximately $635,000.
  • The mediam unit price in Windsor is $355,000.
  • The median rental for units in Windsor is $360 per week.
  • The average 10 yr growth is 10%, but like many other suburbs in Brisbane and Australia, the last 12 months have seen negative growth of 7%.
  • Surrounding suburbs include Newmarket, Herston, Bowen Hills, Albion and Lutwyche.  All of which have higher median values that Windsor.

The Property – 2 bd Unit – $277,500

  • The property is a 2 bedroom ground floor unit in a block of units
  • It has a private balcony
  • Old style timber kitchen
  • A single garage
  • Private laundry
  • A spa bath (!!? what the?)
  • It is currently achieving a weekly rental of $340

The Strategy

Our property looks a little tired and old inside – but I love it!  Why?  Well because means we can achieve a purchase price here that is way under the median for the location and it gives us lots of scope for creating equity!

Even with just the initial information provided, you can already see that the property currently has a 6.3% yield.

I’m thinking that put a little money into the property for a cosmetic renovation.  Spruce up the kitchen, possibly the bathroom and some paint, spending approximately $8k or less then we could end up with a nice property with a good yield in a location that has some good potential for growth.

You can see by the image of the kitchen here, that you could make a big impact in this property by renovating the kitchen:

An example of the sort of numbers I’m talking about here are:

  • Purchase – $270,000
  • Purchase Costs – $13,500
  • Renovation Costs – $8,000
  • New Rental Return – $380 pw

In this instance we’re now looking at a rental yield of 7.3% and an increase in value of the property.

On these numbers, if you were borrowing 100% of the value (i.e. using equity as a deposit and loaning the balance) then you’d be looking at this property costing you  just over $50 per week (7% interest rates, 38% tax bracket).  If you decided to use your own money as a deposit and only loaning 80% value then you’re looking at this great little inner city gem costing you about a cup of coffee a week!

It’s easy to see how everyone can invest in property and it doesn’t need to cost you an arm and a leg to buy into a great little property.

We’d love to help you find an gem in Brisbane too!

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