I think the hurd are starting to buy in Perth - Peaking ?

[sanj]

I too have been considering Gosnells, and also Kelmscott *for development blocks.*

I can buy in the above areas for low to mid $300's and will be able to afford the serviceability. IP wont be too NG. I might even be able to turn it neutral by value adding.*

One option I'm thinking about is:

Buy a block that can be subdivided or potential to be rezoned.

Possible Strategy:

Short term add value goal is to do an immediate Reno:

$330 k property cost
$20 k stamp duty cost
$30 k full reno cost

Total loans $380 k

Medium term goal apply for DA - In *3 - 5 years time.

Medium to Long term goal - Subdivide and sell off back vacant lot, either putting the money into the offset account against the ip loan thus increasing my rental yield or I might even sell both plots of land.*

So there are two good opportunities to add value and also helps to increase the rental yield and depreciation too. The manufactured equity I can pull out in a few years time once my ip is neutral casflow. Its essential I create my own CG. Just as vital to me is to ensure i have good cashflow as I need to be able to afford the casflow. Don't forget ATM I'm on $59,000 salary.

The other idea I'm kicking around is buying a property that has potential to add a room.

isnt your issue at the moment that you have limited capital? how would you fund the deposit for purchase and then the immediate reno?

 

[Alex P Keaton]

isnt your issue at the moment that you have limited capital? how would you fund the deposit for purchase and then the immediate reno?

No, not true, I do have enough capital. Ppor lvr is 177/275 which will over my deposit, stamps, other costs and also a line of credit for the reno. I'll also have around $60 k in savings soon from the sale of my ip.

I qualify for $470 k loan. I don't want to spend more than high $300's for (everything) as I will move back into my ppor early next year. It is essential that the holding costs are affordable. for me. The closer to neutral the better and I'll also fix my rates for 3 years.

 

[redwing]

Hi Alex, yep there are lots of possibilities. During last 12 months we got 6 offers accepted and bought 5 IPs. All within City of Gosnells suburbs. All in my opinion are 5-10% lower than what they can achieve if they are to be sold. (Knowing the market helps)

* 1 bought before it hit the internet. The agent was trying a few investors before advertising. I had convinced them that we are investors. But in fact it was our first IP. (Networking helps)
* 1 bought within a day it hit Internet. Bought before any house open. (Moving fast helps)
* 1 bought in an auction (being prepared helps)
* 1 bought as a 2 bed house but it was originally a 3 bed one (solving a problem)
* 1 bought and one offer accepted after earlier offers failed because of finance (waiting helps as well)

All these properties needed atleast painting. All cf neutral of slightly positive at current interest rates. Hope these details helps you to find a good deal. Buying well helps if we don't have any equity. We sold our PPOR and accessed equity from 2 of the above purchases to fund the deposits and buying costs. We used our wages to renovate.

We are low income earners. For high income earners it is a different ball game I reckon. To invest on a low income, each purchase is important. Cashflow should be ok and instant equity is important to enable next purchase.

It is not so great as it sounds. Two of the purchases were not very suitable for our strategy. (Having a clear strategy is important). Currently we are trying to sell them and buy a PPOR.

Nice work Singo

In Perth and on a low income, did you have access to a nice chunk of equity to pick up 5 in a short space of time?

 

[Tonibell]

Possible Strategy:

Short term add value goal is to do an immediate Reno:

$330 k property cost
$20 k stamp duty cost
$30 k full reno cost

Total loans $380 k

Medium term goal apply for DA - In *3 - 5 years time.

Medium to Long term goal - Subdivide and sell off back vacant lot, either putting the money into the offset account against the ip loan thus increasing my rental yield or I might even sell both plots of land.

Sound like a good plan - don't know Perth at all to know how achievable it is.

A reno and a granny flat (in the right area and on the right block) can make these type of properties much easier to hold until the capital gains / development plans kick in.

 

[Alex P Keaton]

*

We are low income earners. For high income earners it is a different ball game I reckon. To invest on a low income, each purchase is important. Cashflow should be ok and instant equity is important to enable next purchase.

It is not so great as it sounds. Two of the purchases were not very suitable for our strategy. (Having a clear strategy is important). Currently we are trying to sell them and buy a PPOR.

Well done on your purchases. I'd love to hear more. Do you have a cash buffer? Wow 5 ips sounds like a big commitment.

Yes I agree CG and cashflow are as important as one another. There's no point having wonderful CG if you have a noose tied around your neck for years and years with holding cost setting you back in buying another due to serviceability issues! Lowincome people need that balance. I want to be in the position to invest or add value minimum 2 years down the track after I buy my ip. Preferably I want to keep my savings buffer in tact.*

Can I ask how much income r u on? Im currently on $60 k pa and will use some of my profit from the sale of my ip to study cert in fitness so I'll have 2 jobs. That'll help if I have another income stream. It's also something I love so it won't feel like a job to me.

 

[Singo]

Well done.
Am curious, did you buy any development sites.

.... I had a quick look but my concern is the end values are pretty low and even with a new product trying to achieve higher price may be difficult due to lower income/demographics. I would think there is a demand for 3x2 units/villas but whether I can achieve at least $400K+ may be the issue??

Anyone looked at this closely?? Then I always think about the soil in this area, clay,.... that could be the killer.

Only one of our purchases is subdividable. A house can be fitted in the backyard without demolishing the front one. But no plans to build anytime soon. May be sub divide and sell land. Hopefully during the next cycle, we will be looking for dev sites.

And yes, in a gosnells it is hard to sell an expensive property. Around 400k is achievable I reckon. But I am not sure as I didn't follow those numbers. But I have seen 3-4 unit sites being built. If the old house can be retained, money can be made.

 

[Singo]

I too have been considering Gosnells, and also Kelmscott *for development blocks.*

I can buy in the above areas for low to mid $300's and will be able to afford the serviceability. IP wont be too NG. I might even be able to turn it neutral by value adding.*

One option I'm thinking about is:

Buy a block that can be subdivided or potential to be rezoned.

Possible Strategy:

Short term add value goal is to do an immediate Reno:

$330 k property cost
$20 k stamp duty cost
$30 k full reno cost

Total loans $380 k

Medium term goal apply for DA - In *3 - 5 years time.

Medium to Long term goal - Subdivide and sell off back vacant lot, either putting the money into the offset account against the ip loan thus increasing my rental yield or I might even sell both plots of land.*

So there are two good opportunities to add value and also helps to increase the rental yield and depreciation too. The manufactured equity I can pull out in a few years time once my ip is neutral casflow. Its essential I create my own CG. Just as vital to me is to ensure i have good cashflow as I need to be able to afford the casflow. Don't forget ATM I'm on $59,000 salary.

The other idea I'm kicking around is buying a property that has potential to add a room.

In Gosnells right now, it will be very tough to find a sub dividable property for 330k. 360k-370k is more realistic. And if renovating in these areas, better plan a 20k renovation unless it is a 4x2. IMHO, 30k on a 3x1 is over capitalising here.

But if you keep looking, you definitely will find properties which can be value added. Avoid asbestos roofs; make sure the neighbourhood looks ok; make sure the bones and the layout of the house are ok.

 

[D.T.]

Only one of our purchases is subdividable. A house can be fitted in the backyard without demolishing the front one. But no plans to build anytime soon. May be sub divide and sell land. Hopefully during the next cycle, we will be looking for dev sites.

And yes, in a gosnells it is hard to sell an expensive property. Around 400k is achievable I reckon. But I am not sure as I didn't follow those numbers. But I have seen 3-4 unit sites being built. If the old house can be retained, money can be made.

I reckon youd have trouble finding something decent now in your price range?

 

[Singo]

Well done on your purchases. I'd love to hear more. Do you have a cash buffer? Wow 5 ips sounds like a big commitment.

Can I ask how much income r u on? Im currently on $60 k pa and will use some of my profit from the sale of my ip to study cert in fitness so I'll have 2 jobs. That'll help if I have another income stream. It's also something I love so it won't feel like a job to me.

As we are selling two, we will end up with 3 IPs only. And buy another which will become the PPOR. No cash buffers

My after tax income is 38.5k. And my partner takes home around 35k. She has been working full time during the last 18 months. We live on one income and invest the other. But we will be on one income in a few months. If our sales and purchases go smoothly, we will have LOC equivalent to her earnings (35k). That is going to be our buffer. We will mitigate risks by fixing the loans.

 

[Singo]

I reckon youd have trouble finding something decent now in your price range?

Yes, it is harder now but not impossible. Each time we thought we won't find another bargain, something did come. Actually we moved our price range. Till last December, we were looking to buy between 280k-300k. (Gosnells, maddington) But now 300k-330k is more realistic. That price range is for a 3x1 non sub dividable. If we have the equity and serviceability to buy one more, I wouldn't buy for more than 315k. If we pay more, it will limit the next move. But buying again won't be possible for us for at least an year.

 

[Singo]

Nice work Singo

In Perth and on a low income, did you have access to a nice chunk of equity to pick up 5 in a short space of time?

We bought our PPOR in 2012 (lucky we were able to borrow from relatives and friends to put a deposit) and made a sizeable CG. Used that equity to buy the 1st IP and renovated it and used that equity to buy 2nd IP. But 2nd IP price wouldn't go up. So we borrowed again to buy 3rd IP. Then sold PPOR to pay off debt and buy 4th IP. Used a LOC against 3rd IP to buy 5th. But then circumstances changed and we need a PPOR. So selling 3rd and 5th IPs to find PPOR deposit and buffer. Meanwhile we spent lots on renovations and used our wages for that. Some luck, some determination and some risk taking. I don't feel this is a big achievement. But even on low income it is possible.

 

[MIW]

I just hope I won't be getting back into the market at the peak of the market, I did this in 2009. I hope I'm not taking too much of a risk buying.

Are others concerned about this?

Not if you plan to hold forever, right?

 

[Mr. Fabulous]

I had no idea what a 'hurd' was, so I had to look it up.

"The GNU Hurd is the GNU project's replacement for the Unix kernel. It is a collection of servers that run on the Mach microkernel to implement file systems, network protocols, file access control, and other features that are implemented by the Unix kernel or similar kernels (such as Linux)."

Is Perth becoming the Silicon Valley of the Southern Hemisphere?

 

[westminster]

I had no idea what a 'hurd' was, so I had to look it up.

"The GNU Hurd is the GNU project's replacement for the Unix kernel. It is a collection of servers that run on the Mach microkernel to implement file systems, network protocols, file access control, and other features that are implemented by the Unix kernel or similar kernels (such as Linux)."

Is Perth becoming the Silicon Valley of the Southern Hemisphere?

Pretty sure Alex meant herd

 

[D.T.]

Pretty sure Alex meant herd

I'm sure we heard her right.

 

[Mr. Fabulous]

Pretty sure Alex meant herd

Yes, I know. The opportunity to have a dig when one misspells a four letter word we were taught in first grade was too tempting to pass up.

 

[sanj]

Yes, I know. The opportunity to have a dig when one misspells a four letter word we were taught in first grade was too tempting to pass up.

well she's certainly paided the price for that

 

[Mr. Fabulous]

Hey sanj, Cut Chemist was supposed to play here a few weeks ago and cancelled :/.

 

[sanj]

Hey sanj, Cut Chemist was supposed to play here a few weeks ago and cancelled :/.

seen him a few times, worth checking out. reeeeaaally looking forward to lauryn hill next month, one to tick off the bucket list.

 

[Alex P Keaton]

In Gosnells right now, it will be very tough to find a sub dividable property for 330k. 360k-370k is more realistic. And if renovating in these areas, better plan a 20k renovation unless it is a 4x2. IMHO, 30k on a 3x1 is over capitalising here.

But if you keep looking, you definitely will find properties which can be value added. Avoid asbestos roofs; make sure the neighbourhood looks ok; make sure the bones and the layout of the house are ok.

Ah ok... I thought I saw one asking $330 k but maybe that was a Kelmscot property. Also you never know, you might get lucky and be able to snag one under value.*

Yes I hear you shouldn't spend more than 10% of your purchase price for a Reno so anything lower than this *would be a bonus. I guess it depends on what the state of the property is in as to how much you need to spend and maybe you can cut corners here and there,

Hmmm for instance you might be able to spray paint *kitchen cupboards rather than buy new cupboards (that sort of thing) and reduce overall Reno cost. Would this effect the valuation? Would you still get a good valuation on the ip with this sort of short cut or would you be better off buying new cupboards. You wouldn't be able to depreciate it though, but if your main goal is to increase valuation so as to create some equity I guess it wouldn't matter.