Hi guys, lots of professional investors from what i can tell on this forum. I'm not one for a high amount of risk, but I'd like to buy a cash flow positive property in a sustainable area - where there's prospects for long term growth. I've been reading up on Karratha in WA, there seems to be some good investment going on in there over the next few years, rents are good 9% to 11%, but entry point seems to be quite high. Is this high sustainable? Or will these property prices see a correction?
Cash Flow Positive with reasonable growth prospects
- Thread starter Rhianna
- Start date
...Because it's worthwhile? Or because it's not?
The answer is yes.
I need someone to please explain what "below market value" means. Isn't what someone is prepared to pay the actual market value ?
If however you are referring to market value vs Bank value then it's a whole different conversation !
i've got to be honest, i think the Karratha boat has sailed if you're looking at getting in now.
if construction is your thing, you could always put some money into a small suburban resi apartment development (like 2 or 3 apts total). doing 2 deals right now, one is 10% and one is 12%.
if construction is your thing, you could always put some money into a small suburban resi apartment development (like 2 or 3 apts total). doing 2 deals right now, one is 10% and one is 12%.
I was thinking now might be the right time to get in on a counter cyclical basis? seems to be a lull in the market whilst the next round of projects come on line
are you basing your yields on dev capital or end value? because yield on karratha devy is generally 20%+
That was a bit facetious.
The markets in the northwest have probably got about another 2 years of strong rent growth and hence CG (as yield determines value). After that, projects in the forward pipeline seem to be drying up.
So, I think construction will be booming for the next two years with the workforces driving the rental demands higher.
When these capital works end, the operational workforce will be about 10% of construction and the rental demands will drop. Also, land is being released across towns in the NW (Karratha/Port Hedland/Broome) also reducing the likelihood of rental increases.
Must guessimation, probably no more than a 10% rise in the next two years, but expect some volatility after that, maybe 20 to 30% drops after that.
have a gander at these.....
Port Hedland
Karratha
Onslow
Broome
Derby
Kununurra
Newman
basing it purely on costs - ie cost of land + cost of build + taxes + finishing - so that you're only taking the yield against what you owe.
It's another one of those places where when you think it cannot go up anymore it does, meanwhile the government and council in the background are trying to release more land to appease demand and ensure council workers and trolley boys can afford to reside within the shire boundaries
But, places like Karratha etc will still have a base cost to buy into as determined by the high building costs.
To build a 4x2 (either prefabbed or split transportable) it will cost at least $500K for a high specced house (which is demanded by people living with familes these days). Add on the land cost of about $300K (at least) and you are looking at at least $800K. Still very high end.
Even if more land is released, this might have a slight saving in the land component of housing but the values will still be quite high.
To build a 4x2 (either prefabbed or split transportable) it will cost at least $500K for a high specced house (which is demanded by people living with familes these days). Add on the land cost of about $300K (at least) and you are looking at at least $800K. Still very high end.
Even if more land is released, this might have a slight saving in the land component of housing but the values will still be quite high.
Would you really want to risk it going to Karratha?
Dunno.
But people have been saying that for 10 years+. If you keep on saying something it will eventually become reality, I guess?
Thanks everyone for replying.... i think i'm more confused now lol
i did see a post for 'keep reading' so i think i will take that advice.
with regards to the comment on inner city Sydney achieving 10% yields - is this not in serviced/managed apartments which are then harder to onsell??
i did see a post for 'keep reading' so i think i will take that advice.
with regards to the comment on inner city Sydney achieving 10% yields - is this not in serviced/managed apartments which are then harder to onsell??
Interesting with regards to the "land appreciates, buildings depreciate" issue doesn't it
Look at the price of getting a concrete pad for you house done in Karratha, Port Hedland, Broome, Derby or Kunnurra
Actually, maybe Ausprop or Kph have these prices handy
I'm not a fan of the saying "Land appreciates, buildings depreciate"
Whilst it is true I can guarantee you buying a 1 bed apartment in any eastern city will out perform 50 acres of land in central Australia
Supply and Demand moves markets - not land components
Whilst it is true I can guarantee you buying a 1 bed apartment in any eastern city will out perform 50 acres of land in central Australia
Supply and Demand moves markets - not land components
