North Perth Example

[PerthNoob]

Hi guys, new to the forum and to property. Bit of a big ask but was hoping to get the local experts to give their thoughts on the following property as some sort of an example analysis on whether a property may be a good investment.

http://www.realestate.com.au/property-townhouse-wa-north+perth-116345979

I quite like the property personally as a place to live but not so sure on whether its a good investment. It seems to be rented out currently at $495pw and $595,000 still seems slightly overpriced? despite the price drop from the low $600k's after a bit over a month on the market. I think it sold for around $500,000 in 2012. Strata fees of around $1200pa. I think a green title property a bit further from the CBD would be a better investment decision? but am attracted to the possibility of moving in to this inner city townhouse after a few years.

Appreciate your thoughts!

 

[thatbum]

Mixing your investment criteria and personal preferences probably isn't a good idea.

It sounds like you're saying "I know this isn't a great IP but I kinda wanna live in it".

 

[westminster]

Simple due diligence - does the rental yield suck? Yes? Walk on

It doesn't mean that the price is over priced, it means that the type of house or area has poor yields. Some places do, doesn't mean that they are overpriced.

 

[impala67]

How long will you hold? Depending on you strategy, it may work for you being inner city, and with Perth's median tipped to rise significantly in longer term.

Not being a Perth investor (...yet) my own decision would be to weigh up:
- price increase V rental yield V hold costs V time held (10 years+ assuming)

If the predicted price increase in the hold timeframe is going to out perform other suburbs with a better yield then it well may be worth it. Are the BC fees typical for such properties there?

 

[Kent Cliffe]

Before you choose a property, choose a strategy.

You can't cover all bases and the compromises you make on one strategy (investing) will make you disappointed by the mediocre results on the conflicting strategy (home buying).

 

[heroine]

Im surprised no one has said capital gains will be hampered by the location on a busy street

 

[mrdobalina]

Albert st isn't a busy street.

 

[HotRod]

Hi guys, new to the forum and to property. Bit of a big ask but was hoping to get the local experts to give their thoughts on the following property as some sort of an example analysis on whether a property may be a good investment.

http://www.realestate.com.au/property-townhouse-wa-north+perth-116345979

I quite like the property personally as a place to live but not so sure on whether its a good investment. It seems to be rented out currently at $495pw and $595,000 still seems slightly overpriced? despite the price drop from the low $600k's after a bit over a month on the market. I think it sold for around $500,000 in 2012. Strata fees of around $1200pa. I think a green title property a bit further from the CBD would be a better investment decision? but am attracted to the possibility of moving in to this inner city townhouse after a few years.

Appreciate your thoughts!

You're paying 20% above that price?

Lower quartile increase has been 15% over that period.

I would not offer any more than $550K and would start at $480K.

But mixing strategies will just confuse you. If you want to buy and stay there, who cares how much you pay, as long as you like the place. If you want to buy and rent it look at the bottom line (purchase price and yields).

By the looks of things, N Perth would have been a good buy about 12-18 months ago.

 

[PerthNoob]

Thanks for all the replies!

Definitely agree with the sentiment of distinguishing between an investment and PPOR purchase given the differing criteria. However, I guess my thoughts were that if I was able to secure a property that satisfied most of the criteria for both, that would be ideal in terms of 1) the alternative would be to purchase a pure investment property now and then a few years down the track I would have to purchase a PPOR which may mean the need to sell the investment property which = hassle, and 2) even if the property doesn’t turn out to be a great investment, at least it can serve as a PPOR down the track.

Basically, I think I’m trying to find a property that meets my PPOR criteria that does not scream “bad investment”. So from that POV, I’m trying to ascertain how the North Perth townhouse stacks up as an investment property. I have no doubt there are better options, but if it’s a decent investment and not horrible, that would suit fine?

Are my thoughts totally flawed or not achievable? As Kent mentioned, I am compromising…but surely a property can be both a good PPOR and investment?

 

[PerthNoob]

Being new to property, I have only identified some factors to look at when assessing investment potential:
- yield (approaching 5% based on $500pw and $550,000): this seems to be about average?
- potential for capital gain: I guess this is a hard one? How does everyone feel about North Perth? Does the fact that the property is a townhouse affect this greatly? Adversely? versus green title?

Other main things to look at?

 

[PerthNoob]

HotRod, I agree, I looked at those figures and came to similar conclusions, though I probably felt $550,000 would be a decent price given the increase in prices since 2012? Oldlistings.com.au quotes $499,000 - $539,000 SOLD in March 2012 (also listed for similar in Nov 08). Given the 15 or so % change since then, I don’t think the owners would sell for less then the original purchase price at $480,000. I guess the question is where are prices headed in North Perth from here…who knows…

 

[sanj]

You're paying 20% above that price?

Lower quartile increase has been 15% over that period.

I would not offer any more than $550K and would start at $480K.

But mixing strategies will just confuse you. If you want to buy and stay there, who cares how much you pay, as long as you like the place. If you want to buy and rent it look at the bottom line (purchase price and yields).

By the looks of things, N Perth would have been a good buy about 12-18 months ago.

You would offer 480k fir a 3x1 in North Perth on 300sqm or so of land in the current market? Um good luck with that. I sold 2x1s in maylands for 469k a few months ago and they had a significantly smaller land component. Granted they were better presented than this house.

 

[Rumplestiltskin]

It is not a good price. If they are having trouble selling then it is likely that you will as well. You can get an older 2 X 1 villa in Joondanna or Tuart Hill for between $370,000- $400,000.
Throw airconditioning in it and you will get $400 a week easily.

Do you want to pay an extra $100,000 with an inferior yield for the sake of 5 mins?

 

[MTR]

HotRod, I agree, I looked at those figures and came to similar conclusions, though I probably felt $550,000 would be a decent price given the increase in prices since 2012? Oldlistings.com.au quotes $499,000 - $539,000 SOLD in March 2012 (also listed for similar in Nov 08). Given the 15 or so % change since then, I don?t think the owners would sell for less then the original purchase price at $480,000. I guess the question is where are prices headed in North Perth from here?who knows?

Future growth, no one can answer this , however one way of improving chances is to look at the location within North Perth and buy in the best pocket in the area, this property is not in the hub of North Perth. Is this why there was a reduction in price???

In saying this you really don't get much in North Perth today for $550,000.

 

[PerthNoob]

It is not a good price. If they are having trouble selling then it is likely that you will as well. You can get an older 2 X 1 villa in Joondanna or Tuart Hill for between $370,000- $400,000.
Throw airconditioning in it and you will get $400 a week easily.

Do you want to pay an extra $100,000 with an inferior yield for the sake of 5 mins?

Hmm...its been on the market about 5 weeks which isnt terribly long? Probably exacerbated by being overpriced (intially listed at low $600k). That's also less then a % difference in yield, and I would think a 3x1 townhouse and being in North Perth both compare more favourably then a 2x1 villa in Joondanna or Tuart Hill from a potential capital gains POV? Thoughts?

Future growth, no one can answer this , however one way of improving chances is to look at the location within North Perth and buy in the best pocket in the area, this property is not in the hub of North Perth. Is this why there was a reduction in price???

In saying this you really don't get much in North Perth today for $550,000.

Which area within North Perth is the best pocket? Yeh, this property is definitely entry level for North Perth, is that a good or bad thing?

Any other thoughts on this property MTR from an investment perspective? Any clear factors that make it a good/bad buy?

Thanks!!!

 

[MTR]

Pockets which surround Fitzgerald.

Best chances to improve growth perhaps is to also look at art deco units, smaller blocks, they are very much sort after, broaden your horizons to include other areas Mt Lawley, Mt Hawthorn etc....when these hit the market they fly out the door and because there are so few they are in high demand. Also there will be more choice as far as units/villas go in Mt Lawley. North Perth is very limited I believe and anything like the product you posted seems to lack quality.

Contact Stuart Weston, he sold an art deco unit last year one bedder, own courtyard, prime location, William St, even had its own lock up garage that could be rented out. This needed a reno no biggy as its a unit, typically had floorboards, high ceilings , fireplace. I was considering this one for my daughter but she moved overseas.

I think it sold for $420K, not sure what it would rent for, assume relatively high due to location. Also he is a very good agent to buy from, if you know what I mean

 

[gooram]

I think Albert st is a great spot. Granted it's not as sought after as areas closer to fitzgerald/hyde park, but it's still got plenty going for it.
The reserve on your doorstep, some decent eating options, only a short walk to Angove st cafes, great small bar nearby, Beatty Park. Can walk to both leederville and North Perth precints... the list goes on.

However, I'm not convinced about that particular place, however, when you have a limited budget you are always going to have to compromise, are you willing to trade on house quality for amenities? And at 550k, that's what you're looking at if you want to live in the area.

By the way, I don't think there's anything wrong with mixing PPOR and investment, you'll probably have to settle for capital gains as your primary requirement though, since as you say, yield isn't going to be great.

Get the best place you can afford and enjoy it!

 

[HotRod]

You would offer 480k fir a 3x1 in North Perth on 300sqm or so of land in the current market? Um good luck with that. I sold 2x1s in maylands for 469k a few months ago and they had a significantly smaller land component. Granted they were better presented than this house.

As a start, yes.

Then there's the ridiculous back and forth to arrive at your maximum price.

Would not be offering any more than $550ish.

 

[WesternRat]

It is not a good price. If they are having trouble selling then it is likely that you will as well. You can get an older 2 X 1 villa in Joondanna or Tuart Hill for between $370,000- $400,000.
Throw airconditioning in it and you will get $400 a week easily.

Do you want to pay an extra $100,000 with an inferior yield for the sake of 5 mins?

With changes to the State Budget yesterday, I imagine that Joondanna unit is going to start looking even more attractive for first home buyers seeking something under $430k...

 

[westminster]

I picked up a house in North Perth today. $595k on a 460sqm block with a 3 x 1 house which is basically a 4 x 2.

Good things about the deal:
- block is R60. So I can build 322 sqm of apartments on it. (4 x 3 bedrooms perhaps) (zoning not mentioned in ad)
- has a rear laneway for easy parking for apartments
- is rented out by the room for 800-900 per week ( high rent not mentioned in ad)

Downsides:
- on a busy main road. I'm not worried about that - it means public transport, shops/amenities close by etc.

At $1300/sqm I'm pretty happy to get a R60 block in North Perth.