Suburb review: Kawana Waters,QLD (Part 3—The Case Studies)

In this last instalment to our series on Kawana Waters’ suburbs review we are sharing three case studies on two  properties. If you missed the first two parts of this series, check out the links below:

Suburb review: Kawana Waters, QLD (Part 1)
Suburb review: Kawana Waters, QLD (Part 2)

Kawana-Waters-Property

 

Given that the options here are quite varied, I’ve presented two investment options to consider as our case study properties.  The buy and hold newer style apartment close the hospital precinct and the older, established property on the beach side of Nicklin Way in Warana.  Let’s look at how the numbers play out.

New style apartment

Our first case study property is a newer style 2 bedroom apartment in Birtinya overlooking Lake Kawana.   The property is very close to the new health precinct and would suit an individual or professional couple working nearby.  The property is attractive and has a nice outdoor balcony.  This sort of property offers a pure buy and hold strategy with depreciation benefits.

Birtinya-Apt

Let’s take a look at the numbers (note that we have made some assumptions here including 100%LVR, interest rate 6%, marginal tax rate 38%):

Birtinya-Numbers

As a long term buy and hold the property sits at just over 5% yield. Being a newer style apartment there isn’t really any add value potential in it and there will be body corporate fees, however the depreciation benefits will assist with cashflow.  Overall it’s a passive buy and hold for capital growth.  The question is, will there be capital growth to justify this property as a good investment?

Established House

This property is an established 1980’s brick 3 bedroom, 1 bathroom, double car garage property on the beach side of Nicklin Way in Wurtulla.  The property is in a great location being an easy walk to Currimundi Lake and the parklands and a 10 minute walk to the beach.

Wurtulla-HouseThe property is on a decent 600m2 block with side access for a boat or trailer and is in original but neat and tidy condition.  The property could be easily rented as is but also offers some good potential to add value through some cosmetic renovation and even a conversion of the double garage into more living area or additional bedroom space.

Here’s our numbers based on 3 different scenarios (note that we have made several assumptions here, including 100% LVR, interest rate 6%, marginal tax rate 38%):

Wurtulla-Numbers

 

As a long term buy and hold the property sits at just over 5% yield, even without doing any work to the property.  With some minor cosmetic work, the yield improves to 5.7% and then if you were willing to do a full renovation on the property including converting the garage to a bedroom, ensuite and walk-in-robe then we see a dramatic improvement in yield, not to mention the increase in property value.  This investment is a more active investment if you choose to implement the add value strategy to manufacture some growth and increased yield.  The location also shows some promise for long-term organic capital growth.

Summary

The Sunshine Coast, like other coastal locations in Queensland did experience a slow down over recent years following earlier boom times.  Within the last twelve months, however, we’ve started to see the money flow back into this area and the current list of large scale infrastructure projects on the Sunshine Coast demonstrates the extent of population growth and development there is to come in the region.

With the large scale hospital precinct development, the airport expansion and city centre development around Maroochydore we are seeing favorable conditions for investors and the volume of sales throughout the coast is further evidencing that property is back on the coast.  There are many types of properties to look at, with houses and apartments, big and small, new and old.  The hardest question to answer for investors is which type of property should I be looking to buy to give me what I need in my portfolio?

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