Shoalwater WA

[MTR]

WM, You are reading my mind, I was going to post the same, entry level too high, if plans are not to develop straight away then the holding costs will kill the investor.

There are lower entry levels, less risk and then if you have to hold wont be such a biggy.

The other choice, Mt Lawley t/house, once again this is big $ for a townhouse, what's the rent? is it 2 or 3 bedroom, unless you can add value some way or the rent is almost covering holding costs I would not be too keen on this option?? What about a semi detached in need of a reno, very cute, very popular, perhaps if you could stretch your budget a little this would be ideal, renovate and flip it, bring some money back to the table and do it again.
BTW, townhouses on North Street are not ideal, traffic is bumper to bumper in the morning just in case you were considering this.



MTR

 

[venno]

WM, You are reading my mind, I was going to post the same, entry level too high, if plans are not to develop straight away then the holding costs will kill the investor.

There are lower entry levels, less risk and then if you have to hold wont be such a biggy.

The other choice, Mt Lawley t/house, once again this is big $ for a townhouse, what's the rent? is it 2 or 3 bedroom, unless you can add value some way or the rent is almost covering holding costs I would not be too keen on this option?? What about a semi detached in need of a reno, very cute, very popular, perhaps if you could stretch your budget a little this would be ideal, renovate and flip it, bring some money back to the table and do it again.
BTW, townhouses on North Street are not ideal, traffic is bumper to bumper in the morning just in case you were considering this.

MTR

Hi MTR

The Mt Lawley townhouse is in Wasley st and rental estimate is 600 to 650pw. It is a 3x2x2 modern build on 350m2 built at rear, price does seem hi for what it is but very close to cbd and a walk from fitzgerald st.

The shoalwater one is holdable with my income but I do like Myfs idea of putting a granny flat out back and boosting rent return during holding period, especially if 80k gets that accomplished from the capital perspective.

I'm still licking my wounds on missing out on a great townhouse in Mt Hawthorn that in negotiations the vendor wasn't budging much then a month later (when I was on site) they dropped the price to within my last offer and it went straight away. Agent didn't even call me to give me first option at new price

 

[venno]

On that note with my GF triplex plan I'm thinking that one should design the GF in such a way and position that you can add a master bedroom and ensuite later. Then your triplex would be better and the GF Can turn into a 3 x 2.

I like the idea, don't know how to go about getting that costed out though, even just to a ballpark figure.

 

[INVSTOR]

The return on the mount Lawley property doesn't look good. In Yokine I saw a 3x1 80's villa (modernised) sell for $420,000, rent $490.

 

[HiEquity]

I think it's worth clarifying in your own mind whether you are an investor or developer.

If you're a developer then run your costings, get quotes etc to do a full feasibility including all transaction costs and taxes and get in and out as quick as possible. This is essentially a form of active income as it requires a fair chunk of time and effort and is essentially just like any other job or business - you need to turn the properties over to make the development margin so the quicker you turn them over the more money you make, given a limited amount of capital to play with.

If you're an investor, then you look for that combination of high yield and high potential capital gains. Of those two variables the yield is the most predictable and allows you to hold while you wait for CGs when they come. This is relatively passive income that ticks along in the background while you go about your daily life.

Mixing up the two leads to poor decisions IME - particularly in opportunity cost. If you want to be a developer but don't know enough about it then learn what you need to know before you buy a development block - and then develop it ASAP and move onto the next! If you are attracted to the idea of putting your foot on a piece of real estate and waiting for its value to rise, then find something that pays a decent yield while you wait.

Where it may work is in the "build three, sell two and get one for (almost) free" concept because of the lower transaction costs to get access to that remaining unit. But even then I remain to be convinced that just buying a decent CIP and sitting on the better net cashflow isn't a better (and certainly easier) option.

Good luck!

 

[MTR]

Hi MTR

The Mt Lawley townhouse is in Wasley st and rental estimate is 600 to 650pw. It is a 3x2x2 modern build on 350m2 built at rear, price does seem hi for what it is but very close to cbd and a walk from fitzgerald st.

The shoalwater one is holdable with my income but I do like Myfs idea of putting a granny flat out back and boosting rent return during holding period, especially if 80k gets that accomplished from the capital perspective.

I'm still licking my wounds on missing out on a great townhouse in Mt Hawthorn that in negotiations the vendor wasn't budging much then a month later (when I was on site) they dropped the price to within my last offer and it went straight away. Agent didn't even call me to give me first option at new price

If you do not have the funds to develop straight away I would still look at the figures, the sale of the end product in this area. Also as suggested I would look at other areas ie Cloverdale, Rivervale you may be surprised to find that units/villas will sell for much higher price at similar entry level as Shoalwater, I know which one I would pick

As far as the townhouse goes IMO if it is a new townhouse behind period home its not necessarily a good way to go if the front house/renovations are not maintained it could effect the value of your property when you sell.

Curious, what did the Mt Hawthorn townhouse sell for??


MTR

 

[Aaron Sice]

Well you could get a similar R40 quad development block in nollamara for that price - so 10 or so kms from city. Of course not close to the beach.

Personally I don't think I'd be targeting that one - I'd be looking in the sub 500 range so that there is less holding less negative cashflow.

On that note with my GF triplex plan I'm thinking that one should design the GF in such a way and position that you can add a master bedroom and ensuite later. Then your triplex would be better and the GF Can turn into a 3 x 2.

why wouldn't you wait for a triplex R20 gem, subdivide and provide EACH one with a granny flat?

oh the possibilities!

 

[HiEquity]

why wouldn't you wait for a triplex R20 gem, subdivide and provide EACH one with a granny flat?

oh the possibilities!

Because all these new granny flats on the market are going to swamp the market with new supply of this product and put downward pressure on rents!

Great news for developers, pretty terrible for investors in this space... definitely a window of opportunity to make money before it shuts down.

 

[INVSTOR]

Because all these new granny flats on the market are going to swamp the market with new supply of this product and put downward pressure on rents!

Great news for developers, pretty terrible for investors in this space... definitely a window of opportunity to make money before it shuts down.

Yes, my thoughts too and with so much rezoning also I'd be choosing my investments carefully.

 

[MTR]

Downside with g/flat scenario is unfortunately they cost a packet to build around $90 - 100K and its very difficult to access equity from the build, dead money. The best g/flats are the ones that are already there

If the idea is to develop down the track, my concern would be impact on resale, a mix of g/flats and new units?? could look like "a dog's dinner".

 

[venno]

Curious, what did the Mt Hawthorn townhouse sell for??
MTR

They dropped the price to 849k so i assume it would have gone for just less than this, maybe around 840-845 which is around what I was offering.

 

[venno]

The return on the mount Lawley property doesn't look good. In Yokine I saw a 3x1 80's villa (modernised) sell for $420,000, rent $490.

Dam that is nice.

 

[INVSTOR]

Dam that is nice.

I purchased the villa next door 7 months ago for $375,000. I spent a few hundred $ on it and spent a couple of days cleaning it and it's renting for $480. I think there is still good deals around there.

 

[westminster]

I purchased the villa next door 7 months ago for $375,000. I spent a few hundred $ on it and spent a couple of days cleaning it and it's renting for $480. I think there is still good deals around there.

I think in the market under $700k you get good rental returns - in the $300-500k sweet spot you get pretty awesome returns. In the over $700k market it gets crapper and crapper

 

[HiEquity]

I think in the market under $700k you get good rental returns - in the $300-500k sweet spot you get pretty awesome returns. In the over $700k market it gets crapper and crapper

Awww, I dunno about that....

http://www.realcommercial.com.au/property-other-wa-rockingham-500509523

 

[John_]

10% return before even negotiating

 

[INVSTOR]

What are commercial property management fees like?

 

[westminster]

Awww, I dunno about that....

http://www.realcommercial.com.au/property-other-wa-rockingham-500509523

Noice - DH has some of those

 

[HiEquity]

What are commercial property management fees like?

I've seen a reasonable range but often sub 5% of gross rent. It's money for jam for the agents as all they do is send out invoices (which is all automated) and help negotiate some leases etc occasionally. But when the tenant is paying, there is little incentive for the landlord to do anything about the fees.

BTW, before people get too excited about the link I posted that income figure is gross, not net - if it was a net figure I probably would have bought it rather than posted it! Still a good comparison to what can be achieved in resi... but DYOR etc - I really have no idea whether that's a good property or not etc.

 

[MTR]

They dropped the price to 849k so i assume it would have gone for just less than this, maybe around 840-845 which is around what I was offering.

Keep looking.

Helped a friend purchase a property in North Perth (Auckland St) for $910,000 in December settled in January 2013 and has now been re-valued at $1,000,000, less than 6 months ($90,000 increase). No work on the property besides cleaning the yard.

In one of your previous posts you mentioned you were chasing growth, with the inner city areas the character homes are in huge demand. If you can afford $850,000 it would be worth securing one of these as this entry level is really moving.

Cheers MTR