Inner city character apartments - Perth

[jaycee]

hi guys,

Any thoughts on the older apartments in the CBD of Perth. Saw one today, old red brick building near Terrace Rd. I went to look at one at Terrace Rd cause it was about $240k but was late, so looket at a 1 bed on Hill St, which was advertised at $349k

1 bed with BIR, high ceilings, loung, kitchen and ensuite, floorboards. I really actually liked the character feel and could feel myself living there if need be, though if I were to renovate decorate for myslef, I would be careful to do it "properly" to enhace the character feel not make it feel ike something old. Probably wouldn't need much just what you would use might not be the cheap IKEA stuff that's all. Hmm did I mention I quite liked it ?

What do we really think of it from invetment potential though ? Agent suggested it rented for $380 and it comes with furniture too.

But I m not sure about the vacancy rate, for me, I still have a perception that inner city living is a bit of a novelty in Perth. But logic suggests it can't stay that way forever (if it in fact even is that way now) - or does it (?) So I guess if the novelty factor4 perection that I have is just a percetion, the issues concnering me would be rental vacny (to keep p with holding costs) and future growth..hmm, dont mind me, thinking out loud now.

 

[FormerLurker]

Depreciation

Looks like a decent return Jaycee but not exceptional and with an older "character" place I'm going to guess you will miss out on depreciation. Also one bedders can have a harder time selling in the future, which is something to bear in mind.What would your investment stratagy be ie. will you be holding for a medium long term timeframe?

I recently bought a place in Joondalup 2 Bed 2 Bath 5 years old so depreciatable for $370,000 that rents for $400/week but I looked at CBD and to be honest wasn't that impressed newer stuff seems to be to much $ to give a good yield and older stuff had a little voice saying you'll need to pay for refurb/reno/repairs soon. As a result I went for the above as it was close to shops, hospital, uni, transport etc. and has good tenancy history due to students/staff working in the Joondalup CBD.

And there we have it my 1st post

Chris

 

[jaycee]

Hi Chris,

Cheers. I'm thikning the same and probablywont look at the inner city market, esp 1 bedders, but thought I'd ask the quesion and see what other people htought about inner city Perth. At the moment, i think the lifestyle would leave too much for me to be desired, but that might not be everyone else's perception of now & the near future. I still see it as "immature"and therefore novelty factor in Perth.

at the end of tha day, Im more likely to end up with an old house on a big block or a near new villa again in some cheaper suburb where I hope some decent CG might follow

 

[FormerLurker]

Sound reasoning

That's why I went out to Joondalup - appeals to a wider market especially a growing one that I doubt the CBD will see.... retirees (was one of my reasons for buying where I did saw an older couple looking to downsize and thought that added another layer to the deal).

Was tempted by the older section of Joondalup for a stand alone house (seen some going for around 400k) but I'm to time short to stress on a reno investment even a minor cosmetic one.

Edit: Also in regards to Perth CBD alot is coming onto the market now/soon so I think the market will struggle to see any CG in the short term due to the flood of inventory that is likely to be moved (1 development is also very overseas investor centric so likely to be a flood of rentals which may affect returns).

 

[redwing]

Looks like a decent return Jaycee but not exceptional and with an older "character" place I'm going to guess you will miss out on depreciation. Also one bedders can have a harder time selling in the future, which is something to bear in mind.What would your investment stratagy be ie. will you be holding for a medium long term timeframe?

I recently bought a place in Joondalup 2 Bed 2 Bath 5 years old so depreciatable for $370,000 that rents for $400/week but I looked at CBD and to be honest wasn't that impressed newer stuff seems to be to much $ to give a good yield and older stuff had a little voice saying you'll need to pay for refurb/reno/repairs soon. As a result I went for the above as it was close to shops, hospital, uni, transport etc. and has good tenancy history due to students/staff working in the Joondalup CBD.

And there we have it my 1st post

Chris

Congrats on the 1st (and 2nd) Post Good to see another WA Investor onboard

 

[D.T.]

Formerlurker: what made you think of Joondalup vs inner east (not city) units such as burswood / rivervale / mtlawley / inglewood? I'm buying in these areas as I believe people who want to live in units are generally single people or kidless couples - most of whom work in the city.

I agree with your reasons for not buying in the city itself

 

[bene313]

Jaycee one issue with these apartments is finance. Often a lender's criteria will include inner city post codes which they consider higher risk (say 6000-6003 inclusive), and require a higher deposit of 20-30%.

Not to say you wont get finance at 90% - some non-bank lenders might do it for you. However due to the limited finance available, the market for these apartments may be restricted, thus, restricting capital growth.

Personally I like the art-deco inner apartments. Have looked at some in Highgate and Mt Lawley. Note that Highgate falls into that 6003 catagory, whereas Mt Lawley is 6050.

 

[FormerLurker]

Formerlurker: what made you think of Joondalup vs inner east (not city) units such as burswood / rivervale / mtlawley / inglewood? I'm buying in these areas as I believe people who want to live in units are generally single people or kidless couples - most of whom work in the city.

I agree with your reasons for not buying in the city itself

I looked at those as well and to be honest they are probably a better investment given the potential projects in the pipeline for the Burswood peninsula - however it takes time to find a good deal and I didn't have the time to dedicate to finding a good place (and as I said I'm not looking at places in need of a reno due to time issues). So really the answer is I see good potential in Joondalup given the range of services and facilities and it was a fairly easy and stress free buy which were the clinchers.

When I get some spare time I will definatly be looking in the inner east corridor though - and one day when they get around to doing something with the old East Perth power station I can see the area growing nicely. Definatly a place to get an older house with a nice land component for a medium to long hold.

 

[D.T.]

Jaycee one issue with these apartments is finance. Often a lender's criteria will include inner city post codes which they consider higher risk (say 6000-6003 inclusive), and require a higher deposit of 20-30%.

Not to say you wont get finance at 90% - some non-bank lenders might do it for you. However due to the limited finance available, the market for these apartments may be restricted, thus, restricting capital growth.

Personally I like the art-deco inner apartments. Have looked at some in Highgate and Mt Lawley. Note that Highgate falls into that 6003 catagory, whereas Mt Lawley is 6050.

Speaking of finance, someone wise once told me that units under 50sqm was an issue. Is this still the case (particularly for 90% lends)? Is it only for the 6000-6003 ones or anywhere? Does it depend on other stuff?

I have asked a good broker this already but he hasn't gotten back to me. Perhaps he has enough clients

Reason I ask is it seems majority of the units I've looked at in the 'inner east' suburbs are about 45ish.

 

[bene313]

Speaking of finance, someone wise once told me that units under 50sqm was an issue. Is this still the case (particularly for 90% lends)? Is it only for the 6000-6003 ones or anywhere? Does it depend on other stuff?

I have asked a good broker this already but he hasn't gotten back to me. Perhaps he has enough clients

Reason I ask is it seems majority of the units I've looked at in the 'inner east' suburbs are about 45ish.

As I understand some lenders use 40sqm, some use 50sqm.

Some other criteria goes along the lines of:
- no more than x floors in building
- no more than x number of units in building

Someone at a bank once told me they weigh up all these risk factors. So a 38sqm unit, in 6000 post code, in high-rise building, is more risky to the lender than say a 38sqm, low-rise, 6050 code. MBs would be better to advise you on this.

 

[gooram]

hi guys,

Any thoughts on the older apartments in the CBD of Perth. Saw one today, old red brick building near Terrace Rd. I went to look at one at Terrace Rd cause it was about $240k but was late, so looket at a 1 bed on Hill St, which was advertised at $349k

1 bed with BIR, high ceilings, loung, kitchen and ensuite, floorboards. I really actually liked the character feel and could feel myself living there if need be, though if I were to renovate decorate for myslef, I would be careful to do it "properly" to enhace the character feel not make it feel ike something old. Probably wouldn't need much just what you would use might not be the cheap IKEA stuff that's all. Hmm did I mention I quite liked it ?

What do we really think of it from invetment potential though ? Agent suggested it rented for $380 and it comes with furniture too.

But I m not sure about the vacancy rate, for me, I still have a perception that inner city living is a bit of a novelty in Perth. But logic suggests it can't stay that way forever (if it in fact even is that way now) - or does it (?) So I guess if the novelty factor4 perection that I have is just a percetion, the issues concnering me would be rental vacny (to keep p with holding costs) and future growth..hmm, dont mind me, thinking out loud now.

I love living in the city, but I'm East Perth rather than CBD. You may find the same size/age/style apartment in somewhere like Mt Lawley or Highgate would be more expensive given the amenities in those areas compared to the Esplanade.
The good thing about those ones on the espy is they are pretty rare, and surrounded by brand new off the production line apartments. So I think there'll always be demand for them. Whether or not you can charge top dollar depends on what's inside.
Gross rent return on my EP apt is about 5.5% (if it were rented of course) but this doesn't factor in strata fees, so remember these when doing your sums.
I reckon city living will take off, but perhaps only in certain areas around decent amenities, espy will benefit from any foreshore development for sure, East Perth by the riverside development and Northbridge by the link project. There will be flow on effects to other areas of the city of course.

I think also with the new small bar licenses, previously dead areas of the city will become rejuvenated.

 

[MTR]

I looked at those as well and to be honest they are probably a better investment given the potential projects in the pipeline for the Burswood peninsula - however it takes time to find a good deal and I didn't have the time to dedicate to finding a good place (and as I said I'm not looking at places in need of a reno due to time issues). So really the answer is I see good potential in Joondalup given the range of services and facilities and it was a fairly easy and stress free buy which were the clinchers.

When I get some spare time I will definatly be looking in the inner east corridor though - and one day when they get around to doing something with the old East Perth power station I can see the area growing nicely. Definatly a place to get an older house with a nice land component for a medium to long hold.

Here's a link, seems to be going on forever in a day.

http://www.epra.wa.gov.au/Projects/East-Perth-Power-Station/Investment-Opportunities/

 

[MTR]

Jaycee one issue with these apartments is finance. Often a lender's criteria will include inner city post codes which they consider higher risk (say 6000-6003 inclusive), and require a higher deposit of 20-30%.

Not to say you wont get finance at 90% - some non-bank lenders might do it for you. However due to the limited finance available, the market for these apartments may be restricted, thus, restricting capital growth.

Personally I like the art-deco inner apartments. Have looked at some in Highgate and Mt Lawley. Note that Highgate falls into that 6003 catagory, whereas Mt Lawley is 6050.

I also like art-deco apartments as they tend to be larger. There are some nice art deco apart on Walcott Steet, close to the hub of Mt Lawley, every time they hit the market they get snapped up quickly.

Cheers, MTR

 

[MTR]

hi guys,

Any thoughts on the older apartments in the CBD of Perth. Saw one today, old red brick building near Terrace Rd. I went to look at one at Terrace Rd cause it was about $240k but was late, so looket at a 1 bed on Hill St, which was advertised at $349k

1 bed with BIR, high ceilings, loung, kitchen and ensuite, floorboards. I really actually liked the character feel and could feel myself living there if need be, though if I were to renovate decorate for myslef, I would be careful to do it "properly" to enhace the character feel not make it feel ike something old. Probably wouldn't need much just what you would use might not be the cheap IKEA stuff that's all. Hmm did I mention I quite liked it ?

What do we really think of it from invetment potential though ? Agent suggested it rented for $380 and it comes with furniture too.

But I m not sure about the vacancy rate, for me, I still have a perception that inner city living is a bit of a novelty in Perth. But logic suggests it can't stay that way forever (if it in fact even is that way now) - or does it (?) So I guess if the novelty factor4 perection that I have is just a percetion, the issues concnering me would be rental vacny (to keep p with holding costs) and future growth..hmm, dont mind me, thinking out loud now.

A question for you, do they come with their own parking bay. Silly question perhaps, I think it is a must especially in Perth market even if it is in the city.

I know of one property which was heavily reduced due to this issue, everytime it hit the market very difficult to sell.

Cheers, MTR

 

[bene313]

I've had friends live in the city - none of which had car bays. The car bays probably command as much rent as some of the units/apartments themselves!

 

[jaycee]

MTR, why whould that be a silly questin ? After I saw the aprtment looked nice, it was the first question that came mind (I'd already walked throgh the common area). Ther are 19 apts in this block and I think about 12 bays (?) maybe less (?). The agent showed me they were less than 1/2 full which he suggestd happens most of the time , you also get a permit sticker for street parking for 1 car.

I've been looking at places each w/end even though right now I dont think I will buy, but things keep getting my attention. This apartment had charcter for me, but it wasn't super fantastic either, I'll keep looking and trying to learn along the way

What do the apts along Walcott Stt range in price ?
When I was renting, Irented nothing but units/apartments (and one villa) for 10 yrs, but from an investment point of view, they make me nervous (?)

 

[FormerLurker]

When I was renting, Irented nothing but units/apartments (and one villa) for 10 yrs, but from an investment point of view, they make me nervous (?)

Depends what your investment goal is - in my experiance units/villas usually offer better yields but worse capital gains, so like I said depends on your goal if your after cashflow/income their as good if not better than houses if your after capital gains their usually not as good.

All about the desired outcome I think.

 

[jaycee]

Nah the crap yield of villas / houses is ok if the groth will come

 

[MTR]

I've had friends live in the city - none of which had car bays. The car bays probably command as much rent as some of the units/apartments themselves!

Its not the rent that would be a concern, it's the resale.

 

[MTR]

MTR, why whould that be a silly questin ? After I saw the aprtment looked nice, it was the first question that came mind (I'd already walked throgh the common area). Ther are 19 apts in this block and I think about 12 bays (?) maybe less (?). The agent showed me they were less than 1/2 full which he suggestd happens most of the time , you also get a permit sticker for street parking for 1 car.

I've been looking at places each w/end even though right now I dont think I will buy, but things keep getting my attention. This apartment had charcter for me, but it wasn't super fantastic either, I'll keep looking and trying to learn along the way

What do the apts along Walcott Stt range in price ?
When I was renting, Irented nothing but units/apartments (and one villa) for 10 yrs, but from an investment point of view, they make me nervous (?)

Here it is

http://www.realestate.com.au/property-apartment-wa-mount+lawley-106538299