Best growth potential? (WA)

[hamm]

I'm looking at buying in suburbs around South Perth like Como or Kensington. I have a tight budget of >600k so I thought this limited me to townhouses, however I see places such as this crop up from time to time,

http://www.realestate.com.au/property-house-wa-kensington-107623188

So I'm wondering if a place like the above, on a busy st that looks like it has trebled in price since 2001 (sold for 192k) could have any potential growth left? If so would a 3x1 house outperform a 3x2 townhouse such as this,

http://www.realestate.com.au/property-townhouse-wa-kensington-107825811

Obviously not looking for crystal ball gazers, just people's previous experiences and advice.

Thanks
Hamish

 

[Aaron Sice]

I'm looking at buying in suburbs around South Perth like Como or Kensington. I have a tight budget of >600k so I thought this limited me to townhouses, however I see places such as this crop up from time to time,

http://www.realestate.com.au/property-house-wa-kensington-107623188

So I'm wondering if a place like the above, on a busy st that looks like it has trebled in price since 2001 (sold for 192k) could have any potential growth left? If so would a 3x1 house outperform a 3x2 townhouse such as this,

http://www.realestate.com.au/property-townhouse-wa-kensington-107825811

Obviously not looking for crystal ball gazers, just people's previous experiences and advice.

Thanks
Hamish

at $192k, everyone probably thought it was due to hit it's $200k psychological limit.

 

[Rixter]

I've been purchasing new or near new property over older style property for the past 11 years. Several reasons for doing so, the main ones being (in no particular order) -

1/ To maximise my Non-Cash deductions
2/ To minimise my maintenance & repair costs
3/ More modern & Attractive to tenants - thereby minimising potential
vacancy rates
4/ Ask a higher rent - thereby Maximising yields

Without getting into the "which is better debate, houses or Units??", I prefer to purchase Townhouses & Villas with a 30% or greater land component thereby eliminating multi story units or high rise apartments, for several reasons. The mains ones being (in no particular order) -

1/ lower maintenance & upkeep for the tenant
2/ lower purchase or entry level into a Higher capital growth suburb area
3/ rapidly growing marketplace (starting both now & into the future) wanting these type properties. This is due the largest group of people to ever be born (being the Babyboomers and Empty nesters) starting to come into their retirement years. They will be wanting to downsize for the following main reasons - lifestyle & economic.
4/ greater tax advantages & effectiveness thus maximises cashflow.
5/ able to hold more individual properties spread across your portfolio - thereby minimising area over exposure risks by not holding all your eggs in only a few baskets, so to speak

If it was me with your budget of $600k I would be looking to purchase 2 Townhouses and or Villas spread across a couple suburbs (instead of exposed to just the one suburb) thereby increasing your rental yields / cash flow and minimising your exposure risks.

I hope this helps.

 

[Samwise]

You dont have enough cash for south perth but como and kenny are probably good bets - as youve found, property nearer the busy canning highway is cheaper. I prefer como as there's limited services in kenny, no easy access to the river and it gets a bit more ordinary the closer you get to george st.

I'd be looking for a new-ish villa or townhouse in one of the quieter streets.

Cheers, Sam

 

[Kent Cliffe]

Have you looked into the City of Belmont?

 

[hamm]

Thanks for your responses and advice, - has opened my eyes somewhat more on the advantages to townhouses & villas. 2 properties @ 300k would definitely limit my risk but would mean buying further out, into suburbs I am not too sure or confident about.

Belmont is a suburb like this, though I have been looking at Rivervale due to it's proximity to river & city. Another suburb which seems relatively affordable given it's proximity to Curtin & public transport is St James.

Thanks again reading your threads and responses has really helped me to start thinking as an investor should!

 

[sanj]

rixter has posted a few times about how you need to work out what your goal is first and then work out a strategy to get there and only then find the property that suits

i personally agree with his thoughts on that, im sure you could find his posts if you searched.

what is it that youre looking to for?

 

[JWR]

Hi Rixter,

I like your strategy.

My strategy is a little different though. My aim is to buy the worst/cheapest houses possible (but still tenantable as I am not good at reno's yet) on the most land (700sqm+) and put a granny flat out the back.

In the future I hope to knock the front one down (or move it, along with the granny flat, to another site) and build 4-6 townhouses on it (10 years+). By doing 4-6 at once you can command better prices - especially if you are doing it at different locations at the same time with the same company!

Regarding Perth; aren't the rental yields too low to consider investing in the city? I prefer Rockingham, Bunbury and Geraldton as they are higher yielding with good growth prospects.

What are everyone's thoughts?

 

[sanj]

Hi Rixter,

I like your strategy.

My strategy is a little different though. My aim is to buy the worst/cheapest houses possible (but still tenantable as I am not good at reno's yet) on the most land (700sqm+) and put a granny flat out the back.

In the future I hope to knock the front one down (or move it, along with the granny flat, to another site) and build 4-6 townhouses on it (10 years+). By doing 4-6 at once you can command better prices - especially if you are doing it at different locations at the same time with the same company!

Regarding Perth; aren't the rental yields too low to consider investing in the city? I prefer Rockingham, Bunbury and Geraldton as they are higher yielding with good growth prospects.

What are everyone's thoughts?

inner city rentals are pretty good atm, apartments arent selling all that well (apparently picking up) but are renting stupidly well, especiallyh if furnished

a friend of mine settled on a standard finbar 3x2 unit without views 4 or so months ago, worth around $600k, is getting $950/wk. i doubt there would be much change out of 3k for yearly strata fees though

 

[INVSTOR]

Have you looked into the City of Belmont?

Kent, what do you think of Morley's potential with the new Conventry Markets. How far off do you think it is from becoming a more vibrant area?

 

[Kent Cliffe]

Funny you should say that, we have been looking up in Morley for a while. The agents/sellers in the City of Belmont as starting to get a little greedy (not saying you can't still get a bargain).

Morley is still only 9ks from the city and aesthetically the suburbs are generally nicer. I would stay on the west side of Tonkin Hwy and ideally close to Morley Galleria or the city side of the suburb. The properties are generally 1960s homes, but be careful as to what the agent says is sub dividable in this area. We have found the planning office a little more stringent on guidelines. Also, the zoning is not as high as other areas as most properties are dual zoned R17.5/R25 or R20/R25.

The City of Bayswater hasn't had and "rezoning" as such, so redevelopment normally takes longer, with the natural sale of properties rather than a spike in redevelopment that we see in City of Belmont. The area has a fairly low supply on market at 2.95% which is always good for growth. The only thing this place lacks is a decent transit system. However, we do see the expansion in rapid transfer buses being introduced under the new draft public transport scheme.

But big thing to watch out for is what is really a redevelopment, get your geography boots on when checking sites!

 

[sanj]

Funny you should say that, we have been looking up in Morley for a while. The agents/sellers in the City of Belmont as starting to get a little greedy (not saying you can't still get a bargain).

Morley is still only 9ks from the city and aesthetically the suburbs are generally nicer. I would stay on the west side of Tonkin Hwy and ideally close to Morley Galleria or the city side of the suburb. The properties are generally 1960s homes, but be careful as to what the agent says is sub dividable in this area. We have found the planning office a little more stringent on guidelines. Also, the zoning is not as high as other areas as most properties are dual zoned R17.5/R25 or R20/R25.

The City of Bayswater hasn't had and "rezoning" as such, so redevelopment normally takes longer, with the natural sale of properties rather than a spike in redevelopment that we see in City of Belmont. The area has a fairly low supply on market at 2.95% which is always good for growth. The only thing this place lacks is a decent transit system. However, we do see the expansion in rapid transfer buses being introduced under the new draft public transport scheme.

But big thing to watch out for is what is really a redevelopment, get your geography boots on when checking sites!

im a fan of morley and a few other suburbs in city of bayswater, maylands and bedford specifically

unfortunately margins are tighter for small developments in morley and where it was easy to make 20% 2 years ago (i made more than 25% on mine on a simple one) now it is a lot harder and generally involves having to build

bedford also is starting to see some value after being a bit overpriced compared to 2 years ago.

i have only briefly looked at belmont and rivervale but returns on smaller developments (i dont do big apartment blocks or 10 townhouses etc) have always been ****, reminds me a bit of balga etc where i wonder if anyone apart from builders can make good money

long term growth wise though i think morley is good, close to the city, still cheap and close to tonkin hwy etc so easy access to employment hubs.

 

[INVSTOR]

Thanks Kent and sanj for opinions. I think it has long term potential. I had started looking at Mount Lawley, it looked over-priced and kept heading further from city. I didn't look into Bedford much, but Morley started to look reasonably priced. I started looking into the council stuff. The plans around Galleria sound good, but I guess nothing is concrete yet. Plus, it has been talked about for around 10 years, with little progress. It's probably a lot closer though to being rejuvinated. It's fairly close to some good private schools. Will keep my eye on the area.

 

[jaycee]

I asked a resonably experineced investor what he thoguht of Morley and with the Coventry markets coming etc.. he said yes and suggested simlar to Kent -this side of Tonkin, close to Galleria and this side of the city.. he also suggested Morley over say Embleton, depsite close proximity.

 

[INVSTOR]

Coventry Markets are looking pretty average, I wasn't that impressed. Tourist attraction