Rural property in Perth

T

tropic

I like to know if anyone has experience with rural property around Perth?
They are some rural lands around Rockingham 5 - 10 hectares.
I called the agent and he told me that I can put house on them and might be able to have a licence for a couple of ponnies too.
I thought it might be a good investment if I can lease it out.

What are advantages and disadvatages of owing a rural property?
Looking for the prices $600 - 750k for 5 hectare property it's not going to be rezoned anytime soon maybe not for another 30 years? But doesn't big land translate to big capital gain especially if they are not too far away from the freeway and "only" 50 kms from CBD?
The drawback, I don't think they have tap water.
 
Lack of mains water isn't a problem if the property has a bore, dam or just lots of tanks. If they have no houses on, sounds like they're recently divided and being sold at a premium as hobby farms.

How much will you be able to lease it for though?
 
Hi Tropic,

I know several people who have lived quite a while on that size property inland Rocko.

Points to consider

- there are some bands of very fertile soil that have been used for market gardens, although many now sold to landbankers. Probably able to pick up these zones by bigger sized trees and vegetation, closer to the hills if you were considering this sort of land use
-watch for flooding, rains over the last couple of weeks have flooded entire low-lying areas, if you planned to put a house there have a good look for flood zones first
- horse adjistment could be an option but paddocks need to be of a high standard. Local councils would provide info on how much stock you could carry, 5 sheep and two horses?
- factor in high maintenance costs, even removing dead vegetation from scrub is labour intensive and costly for fence repairs etc
- The price through that area, as with all of Perth, has risen quite a bit in the last few years, so may be static for a while. Having said, I know someone who is considering selling (can't decide, so leaves it on the market but doesn't accept offers!). Seems to get a steady stream of offers at market value.
-some areas through there can be subdevided now, south of the Baldivis roundabout, I think. Would be worth looking at the council plans yourself, as there may be landbankers needing to offload something that could work for you.

I don't know the area really well, so others probably have more to add.

Cheers

Tulip
 
Tulip, thank you very much for the reply.

Points to consider

- there are some bands of very fertile soil that have been used for market gardens, although many now sold to landbankers. Probably able to pick up these zones by bigger sized trees and vegetation, closer to the hills if you were considering this sort of land use
I don't know how fertile the lands are as they don't have any vegetation except grass

-watch for flooding, rains over the last couple of weeks have flooded entire low-lying areas, if you planned to put a house there have a good look for flood zones first
Some of them are quite low as they are quite wet/muddy in winter.


- horse adjistment could be an option but paddocks need to be of a high standard. Local councils would provide info on how much stock you could carry, 5 sheep and two horses?
That's pretty much it what we are thinking. A couple of ponnies since my daughter loves horse riding.


- factor in high maintenance costs, even removing dead vegetation from scrub is labour intensive and costly for fence repairs etc
My neighbour used to have a farm and he said it was a lot work and little fun. But theirs were in Denmark, a long way to drive.

- The price through that area, as with all of Perth, has risen quite a bit in the last few years, so may be static for a while. Having said, I know someone who is considering selling (can't decide, so leaves it on the market but doesn't accept offers!). Seems to get a steady stream of offers at market value.
I do wonder about this too and they are quite a few for sale in the area.

-some areas through there can be subdevided now, south of the Baldivis roundabout, I think. Would be worth looking at the council plans yourself, as there may be landbankers needing to offload something that could work for you
That is the area I am referring to. Around Mandijong road. They have many for sale signs arounnd there. I wonder why people pay 200k for a block in Baldivis while you can buy a 5 hectare rural land for 650k?
 
boomtown said:
I assume you know what you are getting into when you refer to getting a couple of ponies.
Click to expand...

Actually I don't know. I am more incline to lease out the property even if it means I have to be out of pocket everyone month from negative gearing.
I just don't know what I should watch for buying an acreage.
 
Tropic,

I think you would potentialy choose quite a different property if you wanted to lease it out compared to have it as a PPOR.

If you were leasing it out, you would be looking to minimise negative gearing (off the top of my head rent $350 per week for 750k property with standard house?). So you would want a specific plan for that property. My accountant said his best 10ha plan he had seen was for down south and had PPOR, truffles and olives, all written up in a business plan, as it was a compact business.

For leasing, I guess you would need a hands off property.

For PPOR, then you would be looking more for paddocks for your horse, location for work access etc.

We keep an eye on the ring around Perth (long term PPOR options) and at the moment have three areas that might suit us

Baldivis - nice pockets and close to beach, but concerned about Kwinana strip impact on air quality, water issues

GinGin - thought it was undervalued although has moved recently. Good water and soil

Giddiganup - hills location that seems a bit undervalued compared to some areas in the hills.

There are hobby farmer websites might be worth doing a search for to see factors to take into account that might work for you.

Cheers

Tulip
 
All I can say, is do not agist your property for other peoples horses.

I have had two bad experiences. The first was two horses to be agisted for a couple of months whilst a young guy moved interstate. Well it was set and forget for him. I never heard from him. I caught up with him at about the 7 month mark and he said his sister wanted one. He was going to arrange for them to be moved. No word again. I rang his mobile phone about 50 times and no answer or reply to my messages. At the 18 month mark a few of his friends heard I was going to investigate with the RSPCA, Stock Squad or Solicitor to see what I could do legally with these horses. Guess what, he shows up and wants me to buy them. I now own two horses I did not want or need for an all up price of = agistment fee. So I now own two horses, which cost me so much more than the paltry agistment fee. I have fed these horses when the drought was so bad that grass was limited. I have also wormed them, and had their feet trimmed numerous times in the 18 months.

Whilst this was on the go, we had another young lady's horse agisted at home. Always behind in the agistment payment and even once the horse was moved, still money owing. I am not really concerned about the agistment fee as this young lady always made sure her horse was wormed, rugged and feet were trimmed.

I do not like to see animals mistreated so am a softy. I now know the first two horses are at a good home (mine) being looked after and cared for.

Are you prepared to do what we have should it all go pear-shaped??

Kinga
 
I think you would potentialy choose quite a different property if you wanted to lease it out compared to have it as a PPOR.

The plan is to lease it out with an intention to turn it to a hobby farm or PPOR in the future.

If you were leasing it out, you would be looking to minimise negative gearing (off the top of my head rent $350 per week for 750k property with standard house?). So you would want a specific plan for that property. My accountant said his best 10ha plan he had seen was for down south and had PPOR, truffles and olives, all written up in a business plan, as it was a compact business.
Do you know an acountant or an expert in this area?
Business plan is what I have to do when I see a property that I like. For example, a friend of mine has done quite well with her property down South. She lease it out to a timber company for 7 + 7 years lease. They are growing blue gum but she still have access to use it for a holiday too. Not quite viable now because it has gone us 400%.

For leasing, I guess you would need a hands off property.

For PPOR, then you would be looking more for paddocks for your horse, location for work access etc.

We keep an eye on the ring around Perth (long term PPOR options) and at the moment have three areas that might suit us

Baldivis - nice pockets and close to beach, but concerned about Kwinana strip impact on air quality, water issues

GinGin - thought it was undervalued although has moved recently. Good water and soil

Giddiganup - hills location that seems a bit undervalued compared to some areas in the hills.

There are hobby farmer websites might be worth doing a search for to see factors to take into account that might work for you.

Baldivis and surrounding area is close to the freeway and in my opinion will give a very good capital gain. If I am lucky in the future in can be subdivided into 2 lots and get to keep 2-3 hectares.

Tulip, thanks again for the info.
 
Boods99,
I haven't consider Chittering but will have a look into it. Thanks.

Kinga,
What you are doing sounds like a lot of works. I am not planning to look after other people horses at all. If we have a couple of horses we most likely lease them first from a horse riding school around the area. But the plan is to have an acreage that I can lease out and hands off.
 
i also think GINGIN is a great buy - esp on the river - you can get a riverfront acreage for $500k.

i like north better than south though, but we holiday frequently at moore river so i get to see the evolution process.
 
Why it can be cheaper to get an acreage in Baldivis right next to the freeway then Gingin? I am not at all familiar with rural property, maybe something that I am missing?
 
tropic said:
What are advantages and disadvatages of owing a rural property?
Looking for the prices $600 - 750k for 5 hectare property it's not going to be rezoned anytime soon maybe not for another 30 years?
Click to expand...

Tropic, ..... The thing that hit me in the face reading your post was: land up to $750k, ... build a house plus all costs associated with council costs .. You won't see much change out of $1 million.

You mentioned that you won't mind it being negatively geared, .. well if you went ahead you would certainly get your wish. Look I'm really not trying to be a downer here just realistic ....

- with acreage it is never buy and forget, fencing, roads, tenants and many, many other ongoing costs
- rent return would be very low , .. Say $300pw on a $1 million loan ,, ouch
- huge negative gearing which you will have to make up the shortfall
- limited tenant base, ... not everyone wants to live on acreage
- your block may never get re-zoned
- acreage usually located some distance from infrastructure (schools, shops, employment,
hospital/doctors, transport etc)

If you are interested in future sub-division potential, .. why not look at duplex size blocks with older style houses on them. This is a form of land banking, but has lower holding costs due to immediate potential to place tenants and choose from a much larger tenant pool to rent the existing house to help cover holding costs. You don't have to develop them straight away, but when the demand is telling you it's time to develop.

The negative gearing imput from your pocket would be much lower and you have a chance even before you sub-divide to have it cash-flow neutral/positive over time.

Even if you purchase large land content properties up to the same value as your initial acreage, .. say 3 properties with sub-division/duplex potential (800m2 plus) you will have diversified your risk, have a greater rent return to service the loans and a much larger tenant pool to choose from and greater flexibility.

We have taken the second option here of landbanking for the future .... My wife and I have a several of our IP's that can be sub-divided. We have just had DA approval for dual occupancy on an IP in SE Qld, it is an 800m2 corner block that was to small for sub-division approval, but fine for dual occupancy (two houses on one title), If we decide to sell either one of them we will strata title the development.

Plus we recently bought a corner house/land next door to one of our existing IP's that now gives us combined 1200m2 of future development land right in the town/city centre. The council has already said we can build at least 6 unit/townhouses on the site. These are just a couple of options from the many IP's we own around the country.

The big difference choosing residential landbanking over acreage as I see it is that you can more easily diversify by choosing various locations, ... only buy what you can comfortably afford and grow your portfolio at your own pace with probably less shortfall outlay from your own pocket .... this all equates to a less stressful life.

I'm just recommending for you to research other options to how you are currently thinking Tropic, ...

Good luck

Martin
 
tropic said:
Actually I don't know. I am more incline to lease out the property even if it means I have to be out of pocket everyone month from negative gearing.
I just don't know what I should watch for buying an acreage.
Click to expand...

Buying the ponies is by far the cheapest part of the equation.

Feed, vet bills, farrier bills, saddles, bridles, blankets, fly masks, conditioning products, a trailer to tow the ponies, a 4x4 to tow the trailer, entry frees, riding gear, riding boots, dry cleaning bills for riding gear, fuel, hotel rooms, trainer fees, barn maintenance, manure spreader, tractor to pull the manure spreader....
 
So how DO you get acreage and make money from it?

Is it possible to get 10 acres 1 hr from Perth and make enough money from it (without it taking all your time) to cover the cost of land?

HOW?

Very interested.

TB
 
TheBacon said:
So how DO you get acreage and make money from it?

Is it possible to get 10 acres 1 hr from Perth and make enough money from it (without it taking all your time) to cover the cost of land?

HOW?

Very interested.

TB
Click to expand...

I don't believe it is possible from income.

The agricultural value of 10 acres an hour from Perth might only be 20 k. So if it's worth 500 k as real estate, it will never produce an income. Land priced as agricultural land and commercially sized as a farm to be efficient and professionally managed, might only return 5 to 6%. lease rates are less than that as there is less risk for the land owner, so say it might be 3% return. If that land is then worth 25 times it's agricultural value because it's real estate, then the return would be 25 times less.

Hobby farms are a growth asset. A very good growth asset too, but an extremely poor yield investment and always will be.

See ya's.
 
Really the reason why I like the idea of owning a rural property like the one that I saw is the size of the land ie 5 ha + and the proximity to the freeway.
I always think large land = large capital gain taking aside the holding cost.
Really I don't know how it will pan out in the future.

I wonder if it will provide me a very good retirement from big capital gain. If the potential is there then I'll figure out how to fund it eg: partnership with some, sell my managed funds (not a good time now) etc.

Maybe what Martin said is true. I'll be better off getting a duplex block on residential area that has a much better yield. Can be easily rented out. Add another when I can. Sort of small steps that achieve a big goal at the end.

I don't know? That big acreage is so tempting.
 
I have more questions about rural property:

- Why are they adverstised as eg 600K + 60K GST? Why they have GST component? I presume buyers still have to pay for stamp duty as well?

- Do we have books/website etc that explain about rural property and advise before buying one?

- I also notice the prices within a same suburb differ wildly for similar size properties. Why?
 
You must log in or register to reply here.

Similar threads

W
Cost of 2 lot subdivison in rural Victoria
Replies
5
Views
1K
MelbInvester
M
Carrot01
Demolish & build my investment property?
Replies
13
Views
3K
Carrot01
Carrot01
Q
Bassendean council WA, asking for zoning change
Replies
11
Views
4K
INVSTOR
I
R
My first property purchase plan!
Replies
13
Views
4K
Radicals
R
A
H/L near Perth CBD - Growth prospects
Replies
8
Views
2K
INVSTOR
I
Back
Top