Country WA

[StuartHall]

Hi,

Just wondering if anyone has bought any properties in country WA in places such as Geraldton and Kalgoolie? It appears like you get excellent rental returns in these towns, but what is the vacancy rate like?

Thanks for your help,
Stuart

 

[Jamie]

Hi Stuart,

Try this link here

You can also have a look for previous posts yourself by using the SEARCH button up the top of the page.

Best wishes,

Jamie

 

[Henry]

Hi Stuart,

I am currently purchasing a property in Kalgoorlie.
I have spoken to about 5 R/E agents and the general consensus regarding the vacancy rate is around 4%. They intimated that their rental lists are significantly smaller than usual at present. They all said good quality, modern 4x2s and 3x1s are renting very quickly, but older places are taking longer to let. I got the impression Boulder is harder to let. Kal is very cheap at the moment : the property i am buying (mainly for land value) is $83k, 1012 sqm zoned r40 in town centre. My parents paid the same price for a similar property nearly 10 yrs ago. The lowest rent for a house in kal is about $150/wk. A caravan at the caravan park or a tiny bedsit will cost you about $105/wk.
Back onto vacancy rates, my parents have 4 units & a house in kal and all have been continually tennented for past 10 years.
You must do as much due dilligence as you can though as I beleive it to be a risky proposition if you don't.
I hope this helps

Henry

 

[Peter Parker]

interesting comments, particularly from Henry.

I bought in Kal earlier this year. There are lots of crappy fibro places, but also some 1980/90s units which are fine.

I've found rents are about as follows:

1br unit: $110-120pw (though there are not many, and one claimed to fetch $180pw which seemed excessive)

2br villa unit: $130-140pw

3br villa unit: $160-$180pw

Newish 4x2 houses are much more, but there aren't so many of them in town - need to head up to Hannans for them. Whereas my 3x1 villa unit is <10 min walk to town. The land component was far less than yours, but I was buying for lettability, yield & convenience. 9% yields seem fairly common - 10% and higher should be possible if the seller is desperate.

That $83k property sounds good - I take it's an old fibro house on it for that price? As for the best (most convenient) street to buy in, Egan St is my pick.

Peter

 

[Henry]

Hi guys,

Yes, definitely a shortage of new 4x2 rentals at the moment.

My parents villa/units are 2 (full size) bdrms & are currently let for $180/wk.

The property I'm purchasing is a 'crappy' older house that I will spruce up and should rent for at least $150/wk for the short to medium term. I am buying for the development potential of the block though in the medium to long term.
I am also buying at the moment as I beleive the Kalgoorlie market is on its way up over the next 12 to 24 months wheras I am reasonably confident the rest of the country (in general) will experience some sort of correction & is way overpriced at present.

Peter, Egan st is very good, not the only good'n though. and its only 2 mins to town from there.
Do you have any conflicting info re the vacancy rates?

Henry

 

[Peter Parker]

Hi Henry - When I was over there, the general consensus from PMs was around 2%. Waited for a while in a REA and in a few minutes saw a couple of people come in and ask about renting properties - a good sign.

Another good area is a bit south of Egan St, near the uni. But if you go too far south, you get to the state housing area around Adeline - with a bad rep for crime. Though they are intending to do this up under the 'New Living' program.

Peter

 

[Henry]

Mr spiderman,

Yeah central kal is good also lamington and O'connor or Hannans for 4x2s.
Wades First National R/E said their rentals are going excellent, they are renting out before they become available, 2-3% vacancy.
But they did say it depends on the property & price particularly for older ones. They were especially meaning older houses in Boulder taking longer to let.
They also said there is a lot of investor action in kal at the moment.

I used to live on the border of Adeline, I would be interested to see how the place changes under the new living program.

There is going to be a liftout in the West Australian newspaper on Wednesday Sept 17th dedicated to Kalgoorlie/Esperance region covering living/working in, investing in & visiting the region as well as education, tourism, local govt, industry and planned developments etc.
It may be interesting......it may not.
Hope this helps

Henry

 

[Peter Parker]

Yep, Lamington & Oconnor are regarded as 'better suburbs'. But
I'd be wary about West Lamington near the far end of Picadilly St (especially as it's no cheaper than Kal Central).

It's quite a hike to town from there and there's been soil movement problems causing building damage in a couple of the street there. Even some agents warned me about that. Also for some reason some of the concrete driveways turn to dirt well short of the street!

But don't be scared by all this if you've got a good deal and the building is structurally OK.

I'm not surprised re older houses being hard to let. The area has HEAPS of asbestos hovels! Unless I wanted a big backyard, I'd pick a newer brick unit any time. I didn't go to Boulder, but was told it was a bit of a dump.

If you see the West's liftout, please let us know if there's anything worthwhile in it!

rgds, Peter

 

[D.T.]

Hi,

You've mentioned Egan St as a decent one to invest in, any other streets that you dont mind recommending?

On a more financial basis, what are the current yields like in these areas, and how did ya go with Bank LVR's?

-Regards

Dave

 

[Henry]

Dave,

Its not particularly different streets, but different locations.
There are quite a few streets close to town that would all be equally as good to invest in.
I'll have a go for ya though.
Any street running parallell to Roberts St back to hannan st would be considered ok (central kal) eg egan, macdonald st. Also town end of Wilson & Lionel streets.
Also, the north end of the suburb lamington, such as picadilly st, collins st, addis st, all the way back to cambell street and just about anywhere inbetween.

As for yeild, you should be able to get 8-9% easy. I looked at a property a little while ago with +12% (was in Boulder tho).

LVR= not too sure, I have got pre approval for a 90% loan, but its not an investment loan as i want fhog, so I dont know if that would make any difference.
My parents props are all 80% LVR.

Hope this helps,

Henry

 

[Peter Parker]

I agree 100% with Henry re location & yield.

Re finance, Westpac would only do 70% LVR in Kal so I gave them a miss. NAB gave me 80%.

Peter

 

[D.T.]

Hi,

Thanks for the comments so far in this thread. I think high yield stuff like this would be great for paying for the quality stuff in the city.

I checked it out what was said in this thread on a real estate website and came across a 3x1x1 house on Azamor Drv for $149k, rented at $290/w until the end of the year. Walking distance to St Joseph's school. Do most 3x1 houses rent for this kinda money?

Im guessing in a place like kalgoorlie (i've been there a few times), A/C is a high priority for tenants? What are the council and water rates like in Kal Central and Lammington? Also, is insurance and management more expensive there compared to Perth?

On the same website I just found a 3br villa on a government lease to 2008 at about 11.5%. Would I be right in thinking the the Body Corporate / Strata levy would be huge here?

-Regards

Dave

 

[Peter Parker]

Hi Dave - No reason why you can't get 'quality' in the country ; )

Not sure about rents for houses, though your figure sounds highish. Maybe ring (other) agents and ask to talk to their property managers.

The PM charges 9.35%, which seems to be the going rate across WA.

Yes, rates are higher in country areas (relative to property value) and could approach $1k. Insurance is reasonable.

But that villa sounds good!

Peter

 

[Peter Parker]

BTW, an air conditioner is a must. 99% of places have one.

Peter

 

[D.T.]

Hi Spiderman,

Thanks a bunch for your thoughts.

The villa was interesting too, because there was 2 for sale in the same complex. One was $169k on a 320/w government lease for almost 5 years, and the other was $155k on a 230/w private lease with a couple of months left. I'd assume the villas to be equal and the better lease is being sold at a premium.

No reason why you can't get 'quality' in the country ; )

Everyone knows that the less land available, the more capital growth there is. And theres a whole ton of land in central WA

-Regards

Dave

 

[Peter Parker]

'Everyone knows that the less land available, the more capital growth there is.'

That's what the Japanese thought before the last property crash ; )

I should have clarified what I mean by 'quality property'. For Monique Wakelin it means an architectually nice house, villa or flat in a 'good' street within 10km of the CBD of a major city and with local facilities.

You can get all that (bar the major city CBD bit) if you choose wisely in a regional country city. That's what I meant by 'quality property'.

I wouldn't bank on huge cap growth, but the property should always be attractive to tenants because of the scarcity value caused by its convenience (ie walk to town centre in 5-10 min).

As the price gradient in country cities as you move from CBD to outer suburbs is pretty flat compared to a major metro area, it should be possible to get high returns too.

Peter

 

[Nicko]

Mm

Dont forget Geraldton which is very cheap!!!!!!!
But good!!!!

 

[TheBacon]

Nicko,
do you have any insights into Geraldton?

Why is it good? Because of low prices and rental return?
Do you think there will be capital growth and why?

What else makes Geraldton such a good investment buy?

TheBacon

 

[bkw319]

The problem with Geraldton as far as CG goes is that there is alot of land available and the local government keeps releasing more and more.

There is a lack of scarcity. Yields arnt great compared to other areas of regional WA.

 

[Peter Parker]

bkw: Re yields in Geraldton, around 8% should be possible with a fair to good property in a good (coastal) suburb. This compares to about 9% for a comparable property in Kalgoorlie. You might get 9% in Geraldton, but unless you're a super negotiator or get something fully furnished this will probably be an asbestos house in a less desirable area.

As for yields not being great compared to other parts of regional WA, I'd agree that Kalgoorlie produces higher yields. Also some declining towns (eg Katanning, Narrogin, Merredin) would have higher yields.

But I'm intrigued about the comment re yields not being great compared to other parts of regional WA. I'd put Geraldton's yields as being higher than Bunbury, Albany, Busselton, Margaret River and all suburbs of Perth.

Geraldton does not offer as much capital growth prospects as these areas (IMHO), but there are several interesting local projects going ahead. Also there is heaps of interstate investor activity there at the moment. I'd guess that this is because it's the last major town in the southern half of Australia where you can still buy coastal property fairly cheaply.

Peter