‘I made 50 offers in less than 6 weeks’

If you're in need of proof that the Queensland market has taken off, look no further than Jonathan Preston’s latest purchase experience. With diligent research and friends in the right places, he managed to secure himself a high-yielding bargain – but not without first battling some tenacious real estate agents. 

“My latest purchase was in Redbank Plains, in Ipswich, Queensland.

My portfolio up to that point had consisted of Sydney properties, but I wanted to move more towards making some investments up in Queensland based on the higher yields available. While my existing properties in Sydney are still achieving solid yields, I found it near on impossible to replicate that in the 2015 market.

I’m also bullish on where Queensland is going to go in the long term, being one of the more desirable climates in the world and still a developed western economy. I think there will be good employment opportunities up there in the future – perhaps not on the scale of Sydney and Melbourne, but solid nonetheless.

I started looking at the outer suburbs of Brisbane, heading toward Ipswich, around 30 minutes’ drive from the CBD.

I soon came to the realisation that postcode snobbery was creating a two-tiered market. I can’t say that I love all of Ipswich, but if you compare the prices of properties where the city boundaries border Brisbane’s to their neighbouring suburbs which are actually considered still in the Brisbane council area, the price difference is truly beyond belief. As soon as you cross the fence to what’s considered Ipswich, to suburbs like Redbank Plains, prices take a dive.

Fortunately, rental rates don’t.

The yields on properties in Ipswich were a lot more attractive, because the rents were very similar. There’s always some prestige associated with where your postcode falls. A lot of people in Brisbane prefer to say that they live within Brisbane city limits, as opposed to Ipswich. But when it comes to renting, that concern doesn’t seem to come into it.

They’re more concerned on getting a good rate and value for money. I realised that just by looking one or two suburbs inside Ipswich I would be able to pick up a property achieving a good rental rate at a lower purchase price, maximising my yield.

That’s all well and good, but picking up a property turned out to be far more difficult than I had anticipated. The demand in Queensland has become quite strong relative to the eastern seaboard of Australia. Agents are turning stuff over really quickly and they’re starting to get the ‘I don’t need you mentality’ that we’ve seen in Sydney for the last couple of years.

I made 50 offers before buying this place, and I probably made around 200 to 300 contacts with agents. A big part of doing well in property investment is being able to hustle a bit, and I found in Queensland that I had to do a bit of hustling to do a deal. When I gave some of the agents a reasonable price that was going to provide a good yield they would snap back at me and say things like ‘If it was that cheap, I’d buy it for myself’ and ‘We don’t see yields like that anymore’. Obviously you have to be polite about it and be prepared to go back to them with counter offers.

It took me four to six weeks from the beginning of my search to find the place. Every night I’d hit the phones for an hour or so and I took some time off work and sat down and pretty much called agents from about 8am to 9pm from my place in Sydney.

Fortunately I have a friend up in Queensland who has a number of properties in Brisbane and is well-versed on the market. He drove out and had a look at the Redbank Plains house when the offer was accepted and checked it out for me. Without him the whole search would have been 10 times harder, and I almost certainly would have had to fly up there a couple of times to check things out for myself.

The hours of research and phone calls turned out to be worth it. I purchased the property in August, paying $253,000 for a three-bedroom, free-standing house with a decent landscaped garden that was built in the 1990s. The rental appraisal on the property was $310 a week, so the yield was a lot more attractive than what I’ve been able to find in Sydney in recent times, and it’s now securely tenanted.” 

‘I made 50 offers in less than 6 weeks’
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