First IP in Perth - Need advice!

[Tamanho]

Stats:

• 
  $300K cash in bank.

• $120K (excl. super) pre-tax base salary.

• I don't own a PPOR because I work as an expat, so my employer pays for all my accommodation expenses (not included in the $120K figure). My work takes up quite a bit of my time so I would prefer something quite simple and stress-free to begin with

• I'm not sure if it makes a difference to anything but I am an Aus citizen and have never owned a PPOR. So I'm still eligible for the first homebuyer's grant if I buy a property for less than $500K.

Goal:

To seek CG on land and earn passive income over time.

I'm looking for:

• 
  1) Older houses on larger blocks of land with the potential for high CG of the land and suburb as a whole (either due to gradual gentrification of area or infrastructure being built nearby); and/or

• 2) The potential to subdivide, maintain & renovate property on front and build at rear; or

• 3) The potential to demolish and build triplex villas.

Price:

Seeing this is my first property I am looking for something cheaper (i.e. around the 500K mark or less). Once I get more experience, I will start looking at more expensive developments. I'm happy to pay less for a run-down house and renovate if I can add value.

I am only looking at Perth for the time being, looking at suburbs within 12-15km from the CBD (i have a bias towards suburbs NOR and towards the west having grown up in West Leederville and living in Mt Lawley at the moment).

I am looking into the following areas because I believe they are lagging compared to surrounding suburbs and/or have subdivision potential:

• Koondoola (i believe they have proposed higher density zoning amendments?)

• Beechboro (see above)

• Mirrabooka (no proposed zoning amendments but i think its value may be lagging compared to surrounding suburbs)

• Scarborough (I could only really afford an apartment for sub-$500K here, but it would leave me cash flow positive and i could use this equity to purchase a second property in one of the suburbs above).

Any advice on these areas or my strategy would be greatly appreciated.

Thanks!

 

[D.T.]

You mention first home buyers grant, but to qualify for this the property has to be a new build as opposed to established property. You also have to move into it. I'm not sure how these affect your plans.

You also mention that work takes up all of your time yet you're willing to buy something that takes a bit of renovation. This sounds a little contradictory.

Scarborough would be my pick out of the suburbs you've listed but you won't find anything decent there in your price bracket. Mirrabooka is probably best value proposition out of the remaining.

 

[Blair007]

I Prefer buying something with development potential, and with your high savings and income this could be a good option for you. A much better option in my opinion as you can manufacture your own equity rather than relying on market growth.

If you are pretty busy at the moment then suburbs like Beechboro with proposed rezoning could be a good option. Although if you employ a town planner to manage development projects for you then that takes away a lot of time and stress.
I don't study many areas north of the river but have also heard Mirrabooka has some value aswell. Steer clear of areas like Balga and Girrawheen and also Belmont, theres been a lot of growth in these areas over the past 2 years and prices and it looks to have peaked.

Hamilton Hill is a good area with some proposed rezoning in certain areas, Id have a look there aswell.

Cheers

 

[Tamanho]

D.T:

So for the first homebuyers grant, do you not even get the stamp duty exemption if its an old property?

About my work-life balance : I'm generally working full-time during the week, but on weekends I have as much time as I need to work on a development. So what I meant was that I probably only have the time to work on one IP for the time being.

Re Scarborough: I have only looked at apartments here but what would be a good buy for a sub-dividable block? The zoning is R25 right?

 

[Tamanho]

Blair:

Thx for the comment. I'll have a look at Hamilton Hill as well.

My issue is that when looking for a property to manufacture my own equity from (either by renovating or subdividing), you generally need large blocks. And large blocks in Perth are obviously quite expensive at the moment in most inner-mid suburbs.

So what's a good LVR to shoot for in an investment property so that you still get tax deduction benefits but do not over-leverage yourself to the extent that you are risking default? (apologies for the newbie question).

Thanks!

 

[Tamanho]

Also Blair:

Could you please tell me a bit more about what's happening in Hamilton Hill?

It looks to be in a fairly ideal location (within 15km to CBD, close to sea) so any reason why it's underpriced compared to surrounding suburbs?
Is there a stigma associated with it?

I don't venture SOR too often so don't really know too much about the suburbs down there.

 

[HD_ACE]

Fhog for established is still 3k and nil stamp duty upto 500k and then steped sd after that.

My picks would be beechboro in rezoning area or stretch your budget and hop over to morley for something already developable.

Cloverdale and kewdale you maybe able to find something that suits.

Hamilton hill looks promising. Go for rezoning properties in the good areas. But prob looking around 550k+ mark.

Or further north padbury and craigie rezoning, but prices have risen there aswell.

Look for out of area agents and property zonings which are not apparent.

Plenty of options if your willing to look for them.

Cheers

 

[Blair007]

Blair:

Thx for the comment. I'll have a look at Hamilton Hill as well.

My issue is that when looking for a property to manufacture my own equity from (either by renovating or subdividing), you generally need large blocks. And large blocks in Perth are obviously quite expensive at the moment in most inner-mid suburbs.

So what's a good LVR to shoot for in an investment property so that you still get tax deduction benefits but do not over-leverage yourself to the extent that you are risking default? (apologies for the newbie question).

Thanks!

Yip development sites are expensive and obviously buy in a price range that's comfortable and won't pressure your finances, if that means heading to outer ring suburbs then so be it. You seem to have a fair bit of savings and high income so affordability shouldn't be that big an issue?

Perth in the last few years has seen a lot of growth and ecspically development sites. So any area that you choose to target make sure you speak to the local agents and research the different pockets within that area to get the right site. Finding good deals is a bit harder in this market but with persistence you can find them.

No stigma with Hammy hill at all, I just think there's more value there when the rezoning goes through and I don't think it's been targeted as much as the northern. Suburbs undergoing rezoning like girrawheen etc..

You should get in touch with a good broker as well, they can give you advice on loan structures.

 

[janglesey]

I agree with Blair. It is imperative to know your target area really well so that when the right deal appears you can pounce on it. Develop good relationships with the agents - it will pay off for you.