Perth Property Market updates
- Thread starter Tano
- Start date
So where is the market now?
Apparently 2% decline, more stock on the market, oversupply????
Is anyone making it work regardless of strategy
I am sitting back, developing not stacking up, just sold 2 projects, however I am not sure whether my New project will stack up may have to hold, damn it.
More job losses a real concern, Fortecue yesterday
So what are you doing now in the Perth market
Mtr
I'm going to tender on a site next week.
Got a few low budget duplexes on the go for clients that are stacking up in the 25ish%
I have seen a few 30+% sites but they go quick.
Gee thanks lilman. Sounds like you are bypassing my services.
Wow,Are these 30%+ returns for grouped or multi?
Best im getting is `~22% profit (after holding costs from day 1 and selling fees)
Yeah margins are getting better, that will only improve. I'd recommend allowing for at least 5% less than current values if the plan is to sell upon completion.
I've been out of the market for sites for a while as margins have been a waste of time and capital, you'll start seeing 30%+ more commonly soon and a few 40% ones once people start getting jittery. That's when the fun starts and developments become worth it.
20% hardly seems worth it unless you're doing something simple and of significant enough size
I've been out of the market for sites for a while as margins have been a waste of time and capital, you'll start seeing 30%+ more commonly soon and a few 40% ones once people start getting jittery. That's when the fun starts and developments become worth it.
20% hardly seems worth it unless you're doing something simple and of significant enough size
just released for public comment - for future, long term CGA-style strategies, you would do well to read this and the entire reports.
http://www.planning.wa.gov.au/dop_pub_pdf/pp_summary.pdf
re: returns - my duplex deal in a little suburb looks like 20% return pessimistic (learning from sanj here). realistically it's 30% though, but it never pays to forward project.
http://www.planning.wa.gov.au/dop_pub_pdf/pp_summary.pdf
re: returns - my duplex deal in a little suburb looks like 20% return pessimistic (learning from sanj here). realistically it's 30% though, but it never pays to forward project.
I have not been in the game long enough to know how this part works. However, I assume if you are picking up the developments sites for a lower price then the end value of the product will also reduce??... or worse you can not sell at the end of the project.
I am being devils advocate here, so developing in current market is much higher risk, even if you purchase a development site that stacks up at the time of purchase....because we don't know how far the market will fall.
How do you reduce this risk??
My thoughts, buy in areas where there is strong demand for a particular product and not much stock.
Keep end product at around $500-600K, or as close to the median for the area?? This price point will have Larger pool of people when selling
Make sure that the development projects will be neutral or cash flow positive on completion, just in case you can not sell
Or find other markets that are rising and develop in these areas.
What do others think??
MTR
MTR - I like to pick up land and do create stuff with it.
I find if you are under median, you can sell well - but if you want to rent it out, you need to have a better product than median.
I find if you are under median, you can sell well - but if you want to rent it out, you need to have a better product than median.
I really enjoy that creative side to it as well
One of the wisest, most profound sentences I have read on this forum in quite awhile.
Mainly multis of around 6 units so not for everyone as it's commercial lend and longer timeframes with council etc
But got some corker creative projects that are cheap and quick with 25%ish gross.
Why do you want to sell Tano?
Consider holding rather than selling. The reason I say this is because if you hold you can use the equity that you have created to do another development and you have assets and income (rent) that are attractive to a bank AND you don?t have to hand over 30-50% of your profit to the ATO. If you use a LOC (Line of Credit) against the property for development #2 then you can access up to 80% of the equity which is a higher amount than if you sold after paying REA and ATO (profit and GST).
Just a thought for you to consider - you get income, you get capital growth, you get depreciation benefits and you get money for development #2. In my mind this is a win win.
At some stage you will probably want to sell some but if you can keep some to ride the waves of capital growth they will form a nice nest egg for your future.
That's good, also you have the skill set for this, stuff people don't see but you can, same as WM, good for you both
Yes CGT is a killer but selling some of the stock does offer some protection against long flat (or negative) growth periods. If rent is flat and prices are dipping then i wont have any development funds to start new projects. If the development is postively geared then this shouldnt make too much of a difference. Ideally i would like to keep 50-75% of each development
Interesting read:
http://www.planning.wa.gov.au/dop_pub_pdf/HIFG_April_2015.pdf
I hate paying tax but its just part of business, but if you structure correctly it will help reduce this.
I also think it is a good idea to sell some, keep some.
As mentioned, I have offloaded a couple of projects in Perth, for me it makes sense to take the money now that this market is flat with potentially no growth for x years.
The idea then is just to inject the funds into other projects/markets that are moving.
Still growing a property portfolio and at the same time reducing debt, increasing cashflow.
MTR
Reid Highway is being upgraded
Currently it's quicker for me to get off the Highway at Morley Drive and drive through the burbs and get back on at Malaga Drive, cuts 5 -10 minutes off my trip.
http://www.mediastatements.wa.gov.a...s.aspx?listName=StatementsBarnett&StatId=8958
https://www.mainroads.wa.gov.au/Bui...jects/ReidHwyWorks/Pages/ReidHwyErindale.aspx
Currently it's quicker for me to get off the Highway at Morley Drive and drive through the burbs and get back on at Malaga Drive, cuts 5 -10 minutes off my trip.
http://www.mediastatements.wa.gov.a...s.aspx?listName=StatementsBarnett&StatId=8958
https://www.mainroads.wa.gov.au/Bui...jects/ReidHwyWorks/Pages/ReidHwyErindale.aspx
Anybody see this http://www.abc.net.au/news/2015-05-...-as-new-homes-numbers-drop/6446902?section=wa Job losses in the housing sector as well.
^^^ this.
Step 1: find out what everyone else is building.
Step 2: don't build that
But really, of course research, research, research. I am speaking to property managers to find out what people are asking for but not able to find.
Also, say if I wanted to build an executive rental (whatever that is) I would speak to some people that specialise in the executive rental market to find out what I would have to build and if there is any demand for that product in my area.
What is executive rental, if anyone knows?
Oh, looks like location might be important, so I'm out. http://www.executiveproperties.com.au/welcome-to-perth-executive-properties/
