perth market dead

[MTR]

In all honesty, people who bought sites in 2011 which were a) sold during the trough and b) multi unit sites sold as grouped dwelling sites due to lack of awareness, are indeed sitting on 40% profit when you take into account increase in resale prices VS what would have been expected when the sites were bought.

profitability on sites back then was pretty astounding, at least 30% was avaiklable on multiple sites and that is without taking into account the higher resale prices now.

feel free to disbelieve it, im just relaying what was there for everyone (who was looking) to see. my only regret is we didnt purchase more sites.

I am a believer... just damn annoyed that my strategy at the time was not developing but landbanking, I have seen the light. So average booms last around 2 years, with the exception of our last boom in Perth 2001-2006, but that was a mother.

 

[MTR]

Macroeconomically, resource based Texas and WA have a lot in common. Let's look back at some economic history: If you had bought a house in Houston at the peak of the boom back in 1980, you would have waited almost 25 years to get your money back.

The oil never ran out. Common sense did. People paid ridiculous prices for property in the 80s and quite a few bottom fishers got caught out mid cycle. A member of my family - we are bottom fishers - bought a house in 1986 and its barely broken even after all these years.

Yes, the Perth market is showing signs of life. But let's not forget that WA is a cyclical, resource based economy. The lowest quintile of Perth propertywill do well. But the median, after adjusting for inflation, will be stagnant for the next decade. Trees cannot grow into the sky. Real (ie. inflation adjusted) wages, especially in the mining sector, cannot keep growing, its impossible. Hence the limits on how high Perth prices can go.....

If you are buying in Perth and want capital gain, it would be wise to buy the cheapest of the cheap of what's available in property, preferably something with development potential. Cheap ugly ducklings on dual occ blocks in places like Gosnells, Kwinana etc will outperform shiny new houses on single residential blocks elsewhere.

Just saying. I don't claim a monopoly on wisdom but I'm pretty old and have lived through quite a few cycles.

Yes, will agree one strategy is to buy the lower end and I will add buy close to city and potential to develop, its a no brainer IMO.

I have experienced at least 3/4 property cycles, does not make me an expert, always learning.

I will buy in any market that is rising anywhere in Australia and this has saved my bacon. When one market is declining, jump into the next market that is rising. When you have many properties, lots of debt you want to be covering your a...e

Have no idea whether or how Texas compares to Perth and why it would matter??

It is important to look at what is happening on the ground and jump in if you can make money. I know plenty of people who follow economists, charts etc and over analysis and they always seem to miss the boat, when the market is rising they lack confidence and don't have the courage to buy and miss golden opportunties, however they then rush in and buy at peak, suddenly they are convinced that it is booming, and lose money, seen it happen many times.

So my point is if it looks like a duck, it walks like a duck then it probably is a duck.

MTR

 

[MTR]

MTR i hope you make 50% your one of the genuine people here unlike some think 40%-50%

My property hunting has began with a buyers agent for a 2m project.

target 20% + 3% contingency REAL expectations.

Will be very keen to see what your BA sources.

All the best

 

[one world]

I will buy in any market that is rising anywhere in Australia and this has saved my bacon. When one market is declining, jump into the next market that is rising. MTR

In the USA, they call what you do 'flipping.'

I'm curious about your history of flipping in Australia. What sort of % gains did you make and over what sort of time frame? I would be grateful if you could share.

 

[westminster]

For people with vision, energy and cash this may well be true.



I concur. Intelligent people with energy and a sense of thrift will make money in development.

However, given Perth's overall median price, those who buy single residential sites and expect them to double in a decade may get hurt. A $700,000 house in Bullcreek or Mandurah is unlikely to double anytime soon. Nice to live in. But not so nice as an investment. Heck, you can buy houses in Beverly Hills for less than what some of Perth's middle class houses sell for.

+1 on that.

Buying single 'expensive' places also ties up capital which I can use for better means.

I hope I have enough intelligence, energy and thrift to make it in the developing leagues

 

[one world]

I hope I have enough intelligence, energy and thrift to make it in the developing leagues

I am sure we all wish you well.
If I were younger and had more energy, I would be doing the same.

Dealing with tradies, banks, builders, realtors, not to mention tenants, takes a lot of patience and you are to be commended for making the effort.

Hope you make a killing.

 

[MTR]

In the USA, they call what you do 'flipping.'

I'm curious about your history of flipping in Australia. What sort of % gains did you make and over what sort of time frame? I would be grateful if you could share.

Hi wone world

Good question, not sure whether I can answer this.

Most investors I have met buy and hold.

As far as flipping or trading, really depends on the deal, the State and the strategy, and whether it is a rising market which helps. One of my properties purchased at $597,000 sold just after 12 months for CG purposes for $907,000. This was very simple putting together plans and permit for $20,000 and onselling to a builder.

Another property I purchased for $305,000, once again rising market no money spent sold 12 months later for $425,000. The deals vary but obviously you would not sell unless you were making a nice profit.

I use many strategies, sell to reduce debt, also hold properties and have a mix of cashflow cows that generate income. If I need to sell to raise cash for new deals etc. I just work out which needs to go.

The US property market is a different beast from OZ market and I would not want to compare, the cycles are totally different.

Cheers, MTR

 

[one world]

Flipping really depends on the deal, the State and the strategy, and whether it is a rising market which helps. One of my properties purchased at $597,000 sold just after 12 months for CG purposes for $907,000. This was very simple putting together plans and permit for $20,000 and onselling to a builder.

I use many strategies, I like to hold properties and have a mix of cashflow cows that generate income. If I need to sell to raise cash for new deals etc. I just do it and work out what needs to go.

The US property market is a different beast from OZ market and I would not want to compare, the cycles are totally different.

Cheers, MTR

Pretty damn good effort.

How long did it take to get the permits etc? Did you get these yourself or did you hire someone?

After stamp duty, taxes and all commissions, what was your % gain?

Good on you for making the effort. Makes me wish I was young again!

 

[Aaron Sice]

MTR i hope you make 50% your one of the genuine people here unlike some think 40%-50%

My property hunting has began with a buyers agent for a 2m project.

target 20% + 3% contingency REAL expectations.

i guess it depends where they start from, if you're making 50% overall (ie net project profit) i call BS flag, if you're making 50% on your margin then i would say you're being conservative.

 

[John_]

Just an example.

20% net of total project cost
3% extra stuff ups

and going at todays prices be it sale or rental not what it might be worth in 12-24 months.

I wouldn't touch or risk anything under 20% i have already been offered a project where its 8units and at the end you keep 3 complete owned but risks are big..

 

[MTR]

Just an example.

20% net of total project cost
3% extra stuff ups

and going at todays prices be it sale or rental not what it might be worth in 12-24 months.

I wouldn't touch or risk anything under 20% i have already been offered a project where its 8units and at the end you keep 3 complete owned but risks are big..

I think you are wise manage the risk, especially if you are new to the game. BA only sourcing the deal not managing the project.

You want to be in and out, smaller projects, less holding costs, you may want to read OC1 posts who is an experienced developer..

MTR

 

[John_]

I won't start on any construction unless 50% of the project is pre-sold, buying the land cash outright and funding everything on my own up until build stage then i will use banks funds with reserve of $200k of my own money.

Then the selected area has to be high rent demand if fail to sell the remainder of the project rent them all out and keep trying to sell them.

if i follow all these everything should be covered, minimize borrowing.

problem is smaller projects are hard to find and if i can do the smaller projects then so can a lot of other people reduces the return and availability

 

[one world]

I won't start on any construction unless 50% of the project is pre-sold, buying the land cash outright and funding everything on my own up until build stage then i will use banks funds with reserve of $200k of my own money.

Then the selected area has to be high rent demand if fail to sell the remainder of the project rent them all out and keep trying to sell them.

if i follow all these everything should be covered, minimize borrowing.

problem is smaller projects are hard to find and if i can do the smaller projects then so can a lot of other people reduces the return and availability

Thanks for sharing. You seem to have done well and must be commended for making the effort and wearing the risks that invariably go with property development.

Your strategy would work best during specific times in each economic cycle. Would you be so kind as to share with us the approximate in and out dates of what you have done over the years?

eg. entered Cannington late 2005, sold mid 2008. After all costs, commissions and taxes took home x% profit

Thanks in advance. This information would be really helpful to wannabe developers.

 

[John_]

Thanks for sharing. You seem to have done well and must be commended for making the effort and wearing the risks that invariably go with property development.

Your strategy would work best during specific times in each economic cycle. Would you be so kind as to share with us the approximate in and out dates of what you have done over the years?

eg. entered Cannington late 2005, sold mid 2008. After all costs, commissions and taxes took home x% profit

Thanks in advance. This information would be really helpful to wannabe developers.

I have never done a 8-10 unit project, most are either duplexes triplex , single houses.

most are also 12 month projects that i completed 2004 - 2006 a few then, then 2008 and sold in early 09, now i have a single house 300sqm house im building will be finished in may or june cost $210k to build land $260k sale price will be around 600s early but i plan to live in it as i will be getting married then sell it in a years time.

 

[one world]

I have never done a 8-10 unit project, most are either duplexes triplex , single houses.

most are also 12 month projects that i completed 2004 - 2006 a few then, then 2008 and sold in early 09, now i have a single house 300sqm house im building will be finished in may or june cost $210k to build land $260k sale price will be around 600s early but i plan to live in it as i will be getting married then sell it in a years time.

Thanks in advance for sharing. I think many newbies would ask this question:

If you had an unlimited budget which would be most profitable for you? Small scale stuff as you have been doing? Or maybe larger multi-unit developments?

 

[John_]

Thanks in advance for sharing. I think many newbies would ask this question:

If you had an unlimited budget which would be most profitable for you? Small scale stuff as you have been doing? Or maybe larger multi-unit developments?

If money was unlimited only large + adding a retail commercial section under the apartments

 

[WesternRat]

If money was unlimited, why would you bother with the stress? Just spend your hours on the beach instead.

 

[oc1]

If money was unlimited, why would you bother with the stress? Just spend your hours on the beach instead.

Ha! Love it!

 

[westminster]

hiya

having done a lot of browsing on this forum i signed up for my first post

many are writing how perth property market is strong with new buildings getting sold in days and OTP sales as well i believe the market in perth is dead and it is only select a few properties getting sold .

have been following some properties just for the sake of it to see if they are really moving or not here are some of the property links that are not selling, if the market is crush hot why are these properties like ghost towns no rent or sale?

thoughts would be nice!

http://www.realestate.com.au/property-house-wa-morley-113194191?listingType=buy

http://www.realestate.com.au/property-duplex+semi+detached-wa-morley-112969347

http://www.realestate.com.au/property-duplex+semi+detached-wa-morley-112923103 <-- one for developers?

http://www.realestate.com.au/property-house-wa-morley-112903903

http://www.realestate.com.au/property-house-wa-morley-112553131

http://www.realestate.com.au/property-villa-wa-morley-112311003

http://www.realestate.com.au/property-villa-wa-morley-112310939
http://www.realestate.com.au/property-villa-wa-morley-112310855


all this just in one area if you have a look at last 3 properties all 3 villas look like they are a ghost town

what is happening in perth have i missed something?

My 2 cents is that I don't think OTP sales are doing well. I think most people prefer to wait for a build to be complete.

I think the majority of the links are overpriced.

 

[one world]

If money was unlimited, why would you bother with the stress? Just spend your hours on the beach instead.

It is all about mindset. A true businessman always tries to make his money grow and never "retires" to a life of fast cars and days at the beach as a lottery winner would.

I think the majority of the links are overpriced.

Last month, I saw a 3 br home in Beverly Hills selling for less that what those links are listed for. Seriously. Yes, Beverly Hills in California.