Positively geared property in Perth?

[Jamesw]

Hi all. I've recently purchased a cash flow negative property in Bedford, WA (my first IP). I will be paying 520k after stamp duty and renovations with weekly rental around $450 (self managed).

From reading some topics here, I agree that it'd be a good risk management strategy to have a combination of both positively geared and negatively geared properties in your portfolio.

I am now looking for a positively geared property as a second IP. Finding units and apartments that would be cash flow positive seems quite easy and there's quite a few around, but I would prefer to own a green title for the simplicity. I have friends who are making good money from IP's in Port Hedland and Karratha suburbs. But I just can't bring myself to take that type of risk.

Is there any Perth suburbs that I should be concentrating on when looking for positively geared green title properties? I've been looking at Midland areas and there seemed to be some cash flow neutral properties if managed well. Am I looking at the right area? The wife reckons we should be looking at suburbs along Great Eastern Hwy as rentals to FIFO workers. But I can't find anything close to cash flow positive there without at least 20% deposit.

Any input or suggestions would be greatly appreciated. I would like to spend in the vacinity of 250-450k if possible. Thanks.

 

[twodogs]

But I can't find anything close to cash flow positive there without at least 20% deposit.

.

Sorry, can't help with WA suggestions. But, I think the definition of positive cash flow is not connected to the amount of deposit. That deposit money be it sitting your savings account, waiting in a LOC or under the mattress comes at a cost. The property must produce income after outgoings greater than the cost of the money required to obtain it. That's my definition anyhow

Anyhow, good luck, strategy sounds good to me.

 

[JWR]

Not in Perth.

But look at Bunbury, Rockingham, Geraldton.

They may be neutral.

Better to look outside WA for some real good deals.

 

[Ergophobia]

I just picked up a 2x1 in Hami Hill for 325 which after a 5k reno will rent for 370/week.

I like the area between Murdoch and Freo for cheap houses and good yields.

With the hospital being built, uni in the area, Freo lifestyle and short drive to the city, things can only get better.

I reckon they will eventually bring rail, or light rail through spearwood, joining Freo back onto the mandurah line, so areas around that corridor could do well too.

 

[Jamesw]

Not in Perth.

But look at Bunbury, Rockingham, Geraldton.

They may be neutral.

Better to look outside WA for some real good deals.

Where would you suggest for the real good deals? I seem to believe capital cities are safer in this economy. Regional areas tend to be quite volatile. I would definitely have a preference for Perth suburbs as I prefer to self manage. I own my own business and have plenty of trade contacts who happen to be close friends (electricians, painters, carpenters, gardeners... don't know a good plumber yet). Is there really no good deals to be found in WA?

 

[JWR]

Not with the yields, growth prospects and PM fees you guys have

 

[Jamesw]

Yeh I know. PM fees are ridiculous here. Mostly around 13-15% when you add all the fees. After getting 3 quotes for my first IP. I decided to do it myself.
The temptation of buying elsewhere is there... But I prefer to see where my money is spent.

 

[Jake D]

Surely Bunbury and Rockingham are close enough to self manage when living in Perth. maybe not Gerro, though.

Also, prices in Bunbury are super low at the moment, either they're so low they can't possibly drop more, or even if they do, you wouldn't lose much money anyway and could just ride the drop out until values improve.

(Look at that sentence. I clearly don't have promising prospects as a writer.)

 

[JWR]

Hence the answer to the thread - not likely!

You should diversify out of WA anyway since you already have one (or more there) for land tax if nothing else.

 

[Deltaberry]

Look in Atlanta

 

[JWR]

Have u got properties there DB?

 

[Deltaberry]

No US properties. Haven't had time to go understand the market, and don't know enough Americans.

 

[JWR]

I think that whilst it looks lucrative - if the US dollar over time continues to weaken (like WB thinks) the profits will be diminished.

Worth a punt in some states though if you have a reasonable portfolio already and are willing to do the required research.

 

[INXS]

Just building a property in Eglington (coastal side of Marmion Ave) next to Alkimos. Total cost is around $360k. Rent appraisal is $430-450 a week. With 5% deposit it will be positively geared after taking in to account tax benefits.
The property will be 5 minutes drive from Butler Train Station (38 minute train trip to Perth city). I will be managing it myself.

 

[Jake D]

When will the Butler station be operational? Will it be hard to find tenants before this time?

 

[INXS]

Train station operational in 2014. They are building it now. rental demand is already high now in Butler and the surrounding area even before the train station is finished. New public high school opening 2012 is also going to have a huge impact on the area.

 

[Jamesw]

Hence the answer to the thread - not likely!

You should diversify out of WA anyway since you already have one (or more there) for land tax if nothing else.

Good point JWR, I'm just clueless about buying interstate to avoid the lucrative land tax calculations on multiple properties. As much as I'd like to give it a try, I can't get my head around flying to other states for the sole purpose of house hunting. I'm probably still too new in the property game to appreciate the value of looking outside my comfort zone.

 

[sanj]

Train station operational in 2014. They are building it now. rental demand is already high now in Butler and the surrounding area even before the train station is finished. New public high school opening 2012 is also going to have a huge impact on the area.

according to google maps it is 21.5km to joondalup though so it really is in the middle of nowhere/south yanchep, wouldnt people rather rent closer to joondalup for similar money?

 

[Jake D]

I agree Sanj. I think the appraisal is a bit ambitious.

 

[INXS]

according to google maps it is 21.5km to joondalup though so it really is in the middle of nowhere/south yanchep, wouldnt people rather rent closer to joondalup for similar money?

Sanj, it's all about a relaxed coastal lifestyle and being able to walk down the road to the beach. You can't do that in Joondalup. There are pubs, restaurants and cafes in the area. Coles is at Butler. Large shopping centre going in around railway station. All results in good rent returns and good CG prospects.