How to best take advantage of new R codes in Perth

[hematite]

Im a FHB with 500k budget (and 100k deposit). I work FIFO so prefer to live near the airport, not too fussed on the socio economic class of the people I live with for now. Convenience is king at the moment. Im good at renoing, and dont mind living in a bad house provided its bones are good.

I see that the R Codes have had some changes which leads me to believe I should be buying larger plots with not so much importance on the house, with the view to developing later.

I have very little idea about developing, but willing and keen to learn more.

How can I best place myself so that I can benefit from the new R codes?

My idea was to buy a larger property (1000m block or thereabouts in bayswater, ashfield, bassendean etc) for about 500k (might be tough), and look to develop further or subdivide down the track.

Obviously I have very little capital (but a decent job earning low 6 figs), so developing now is not possible (I guess three townhouses would cost at least 450k all up plus council etc fees, so I wouldn't be able to afford it with a 400k debt).

Any thoughts on how I develop my strategy based on income/deposit/existing strategy?

 

[Corey Batt]

Aaron, I summon the!

Developing is an interesting beast. Whilst I understand your idea, have you also consider whether you'd rather first cut your teeth on a simple property transaction with a lower budget, then use the excess funds to purchase a develop-able site? I'm personally just thinking from the perspective of gaining knowledge in development before expending substantial funds.

Good work on the deposit and job though! You're in a good position.

 

[hematite]

Aaron, I summon the!

Developing is an interesting beast. Whilst I understand your idea, have you also consider whether you'd rather first cut your teeth on a simple property transaction with a lower budget, then use the excess funds to purchase a develop-able site? I'm personally just thinking from the perspective of gaining knowledge in development before expending substantial funds.

Good work on the deposit and job though! You're in a good position.

Hi Cjay,

Thanks for your reply. That might be a good idea, however I would like to maximise my ability to claim the stamp duty exemption (maxes out at 500k) and also I would like to buy a house as I believe I can add more value to a house rather than an apartment. Im good with renoing having done a house before.

If I were to buy a house for say $400k (achievable) (would use $80k deposit), then i'd only have $20k to start the next deposit. I believe that most of the properties that I can purchase with 500k will be only slightly CF- which means that I could build a deposit at a similar rate to if I purchased the 400k house instead of 500k.

However you are right, I really don't have much of an idea about development. How does one learn? Furthermore, will I miss the boat if I purchase in about 1.5 years. It seems that there is very little supply of houses in the areas I want, hence I am worried about missing out.

 

[thatbum]

Best way to learn is probably to go through the R-codes and the explanatory memorandum for it, with a focus on the minimum lot sizes and building envelopes for the different zonings. Match this up to the lots you are interested in, and you will begin to see how it works in practice.

I've pretty much taught myself starting that way.

I'd be very wary of buying property with development potential without having a fair understanding of how to assess development potential yourself (or have an adviser handy who can do it for you!).

 

[INVSTOR]

I haven't developed but had/have properties in the area. $150k per property would be a minimum to build. To build two storey properties in Perth costs a lot more so keep that in mind if your looking at higher zoned properties. When you build the bank lends at commercial rates rather than resi so your paying a couple of percent more. I'm not sure about now but back when I was researching developing in Bassendean, I found just about every local RE Agent I spoke to also did a bit of developing. I've heard this agent has developed also in Basso, I'd have a chat to him. http://www.realestate.com.au/property-residential+land-wa-bassendean-200152501

 

[thatbum]

I do a bit of development property analysis on the side, and don't mind doing a freebie for you - I've recently just been looking at some Town of Bassendean properties for some clients anyway.

They have some tricky split code zoning over a lot of the area, and there's some pretty big misunderstandings over how to actually qualify for the higher zoning. I don't think all the Real estate agents get it because there's some pretty misleading adverts for properties with "development potential".

Up to you, but feel free to PM me.

 

[INVSTOR]

I do a bit of development property analysis on the side, and don't mind doing a freebie for you - I've recently just been looking at some Town of Bassendean properties for some clients anyway.

They have some tricky split code zoning over a lot of the area, and there's some pretty big misunderstandings over how to actually qualify for the higher zoning. I don't think all the Real estate agents get it because there's some pretty misleading adverts for properties with "development potential".

Up to you, but feel free to PM me.

yes, very true, I found also selling a property with development potential the agents didn't get it either. I like to keep my eye on their other listings!

 

[Dazz]

How can I best place myself so that I can benefit from the new R codes?

By far and away the quickest way to get you up to speed is to chat with Aaron Sice, a member of this forum. He is a guru on the WA R codes. What he doesn't know about them isn't worth knowing.

My idea was to buy a larger property (1000m block or thereabouts in bayswater, ashfield, bassendean etc) for about 500k (might be tough), and look to develop further or subdivide down the track.

Just had a quick squizz in those 3 suburbs. There are plenty of houses in your price range, but not on that much land.

The biggest land component I saw was 759sqm in your price range, with a 3x1 house at 14 Iolanthe St in Bassendean. It was listed at 395 to 425K.

The nicest house I saw was 30 Margaret St in Ashfield, listed at 485K. It was a 4x1 limestone and slate house on 611sqm.

There were vacant 1,000sqm lots selling for between 560K and 600K in the areas you specified.

 

[INVSTOR]

By far and away the quickest way to get you up to speed is to chat with Aaron Sice, a member of this forum. He is a guru on the WA R codes. What he doesn't know about them isn't worth knowing.

Yer but you might have to fight Aaron for the best sites.

 

[MTR]

Im a FHB with 500k budget (and 100k deposit). I work FIFO so prefer to live near the airport, not too fussed on the socio economic class of the people I live with for now. Convenience is king at the moment. Im good at renoing, and dont mind living in a bad house provided its bones are good.

I see that the R Codes have had some changes which leads me to believe I should be buying larger plots with not so much importance on the house, with the view to developing later.

I have very little idea about developing, but willing and keen to learn more.

How can I best place myself so that I can benefit from the new R codes?

My idea was to buy a larger property (1000m block or thereabouts in bayswater, ashfield, bassendean etc) for about 500k (might be tough), and look to develop further or subdivide down the track.

Obviously I have very little capital (but a decent job earning low 6 figs), so developing now is not possible (I guess three townhouses would cost at least 450k all up plus council etc fees, so I wouldn't be able to afford it with a 400k debt).

Any thoughts on how I develop my strategy based on income/deposit/existing strategy?

Hi Hemitite
I am not an expert but am slowly starting to understand, also picked up info from Council and have had some help from a developer who has also provided me with some of his contacts. So my suggestion is just work it, the more research you do the better you will get at it and nothing like jumping in, that's one sure way of learning real fast.

What I do now is when I am interested in a particular property that I think may be suitable, I flick it over to an expert who is able to provide me with all the info I need to know to establish whether it will stack up, ie R code, easements, access.

I have just purchased in Perth where I will retain property and build at the rear.

All the best.

Cheers MTR

 

[INVSTOR]

Hi Hemitite
I am not an expert but am slowly starting to understand, also picked up info from Council and have had some help from a developer who has also provided some of his contacts.

What I do now is when I am interested in a particular property I flick it over to an expert who is able to provide me with all the info I need to know to establish whether it will stack up, ie R code, easements, access.

I have just purchased in Perth and this project will be to retain property and build at the rear.

Cheers MTR

How much and how quickly does it take to see if it stacks up? I have my eye on a property in Perth that I think I'd be able to retain property, I'm still researching...R codes, etc,. I know I better make my mind up pretty quickly! Out of curriosity, can you please PM where you bought.

 

[MTR]

Hi invstor
I can get the information straight away, once I have identified suitable property.

You asked how much does it stack up?? not sure how much to the $, but can say it is low risk.

The rent from the property (front) will pretty much break even, cover the loan repayments.
The rear when developed will give me $150K equity and approximately $8000 cashflow pa.

So with these numbers my intension is to buy at least 4 which fit this criteria, keep front property and build at rear.

I guess it will be easier to access loans and you can continue to rent front property while building at rear, perhaps negotiate rent during the building process.

Cheers, MTR

 

[hematite]

Thanks for all the help and encouragement guys. 'thatbum' I will send you a PM, along with aaronsice.

Thanks again. Ill keep looking for houses!

 

[INVSTOR]

Hi invstor
I can get the information straight away, once I have identified suitable property.

You asked how much does it stack up?? not sure how much to the $, but can say it is low risk.

The rent from the property (front) will pretty much break even, cover the loan repayments.
The rear when developed will give me $150K equity and approximately $8000 cashflow pa.

So with these numbers my intension is to buy at least 4 which fit this criteria, keep front property and build at rear.

I guess it will be easier to access loans and you can continue to rent front property while building at rear, perhaps negotiate rent during the building process.

Cheers, MTR

Sounds like a good plan MTR! Is it a building company you use who does a free feasability on the site you are interested in?

 

[MTR]

Hi Invstor,
Not a building company, will pm some details that may help.

Cheers, MTR

 

[hematite]

MTR, any chance you could also pass those details onto myself?

Many Thanks.

 

[INVSTOR]

Hi Invstor,
Not a building company, will pm some details that may help.

Cheers, MTR

Thanks MTR!

 

[redwing]

Thanks MTR!

Secrets

Now we're all curious

 

[diego]

Hi MTR,

I'm also looking at similar deals in Perth. Could you PM those details over?

Thanks in advanced,
D

 

[INVSTOR]

Hematite, it's still worth keeping your eye on Ashfield. They are putting in underground power which will be added onto the rates over the next four years. ($1000/yr extra) I could imagine some pensioners and low income families prefering to sell up then pay up so there may be some good buying opportunities.