someone pick this up - Camillo / Kelmscott / Westfield

[Aaron Sice]

i saw this and have got some figures done - see the attached word doc.
i lost the deal because my serviceability is shot thanks to paying rent + mortgage (and i'm close to the limit as it is) - i gave my family a shot but, well, who wants to take advice from the youngest in the family...?

http://www.realestate.com.au/cgi-bi...fmt=&header=&cc=&c=3526661&s=wa&tm=1220486804

4x1 on 870sqm R15/25 duplex block. block is an odd shape but i already have a 4x2 concept drawn. asking $335k which i think is a mistake but i would still offer $305k with a max of $315k. SD and fees on this will be about $15k.

front is heavily renovated - new kitch, bath, floors, patio. good depreciation for an older house.

cut front off, subdivide and rent for approx $340pw. on a $315k purchase, that's a 5.6% yield.

build on rear, i can have a 4x2 of this calibre built for $160k finished (carpet/blind/verticals/paint) with about $35k in sites and landscaping + associated fees for subdivision / DA / BA brings total to about $230k.

so you now have 2 homes - after front has fresh landscaping as per city of armadale's policy it could get $350pw easy. rear would get $350pw as well.

that's a combined spend of $550k (market value approx $650-$680k) and pulling $700pw rent across the two - or a 6.6% yield.

sell front home - should pull $300-$320k being a 4 bed home (4 bedders are getting rarer in this area every day) which leaves a brand new, 4x2 home on the rear worth approx $350k, but only owing $230k approx.

$230k value renting at $350pw = 7.9% yield.

then there's depreciation across a brand new home and i think you'll find this will put about $6k pa in you pocket after tax.

see attached pics and PDFs.

this, i believe, is a good deal and i'm still sore i missed out on it.

 

[GoAnna!]

That was a very generous post.

 

[Aaron Sice]

cheers - but it's a solid deal and all my DD was done. instant capital generation as well of about $120k

 

[Player]

Good on you for sharing BC.

I'm not that familiar with Perth aside from the beaches north of Freo and some riverside suburbs, however this looks like it has good amenity and infrastructure around, as you've pointed out. Good numbers too.

Blue Card, your forte is making sites work and I resonate with your style, especially with regard to holding costs and using on paper deductions optimally.

Can you approach the vendor for vendor financing or doing a JV with them or do a JV with your family/friends where you bring the skills and the deals and they are the finance partner(s).

I've read some of your more recent posts and the detailed attachments and it is a shame to have limit yourself from partaking in these deals due to your current financial situation.

Well done for sharing though. I read your posts with interest.

 

[<KS>]

It has a water easment behind where you want to build the second house.

= end of story as the council wont let you block a water easment

I went and checked it out - and there are MANY other holes in the deal. Like the bigger 4x2 house in the same street that sold very recently $15k cheaper than this ones asking price and the inflated $350/wk rent. Average rent in that area for this dwelling = $280-300/wk....inflated much? Oh - and the 300mm of limestone and concrete you would have to dig out of the back yard for earth works IF you got building permission.

<KS>

P.S - I already checked it out before you made this post - but keep thinking like you do mate - if for a few snags you would have had the right idea.

 

[Aaron Sice]

i was aware of the easement - but i thought it was a sewer easement not water - whcih means we can build up to 600mm off the sewer itself with piles - but that's where i placed the courtyard anways.

the salb would have to come up along with the shed, the limestone is crushed and will be good for the garage/driveway base.

my offer would have been $305k to a max of $315 - i was aware of the house just down the street. was a small 4x2 though - so not very comparable to the one i designed.

however, your rental apprasial throws this deal out the window - i would have thought a minimum of $320pw acheivable considering location and homes alone.

i will be watching that in the future. thanks.

 

[Aaron Sice]

Good on you for sharing BC.

I'm not that familiar with Perth aside from the beaches north of Freo and some riverside suburbs, however this looks like it has good amenity and infrastructure around, as you've pointed out. Good numbers too.

Blue Card, your forte is making sites work and I resonate with your style, especially with regard to holding costs and using on paper deductions optimally.

Can you approach the vendor for vendor financing or doing a JV with them or do a JV with your family/friends where you bring the skills and the deals and they are the finance partner(s).

I've read some of your more recent posts and the detailed attachments and it is a shame to have limit yourself from partaking in these deals due to your current financial situation.

Well done for sharing though. I read your posts with interest.

thanks - i have tried bringing "skills only" deals to the table before, but the general concensus is that "money talks" so a skills only deal sees no more than about a 30% stake in profits.

tried with the limited amount of family i have (that are half money savvy anyway) but family + money don't mix unless it's parents and kids.

 

[Celeste]

Hi all

I would think the rental amount would be near to $350.

I have 2 small 3x1 duplex's in Camillo and I am getting $280 each. PM just sent me a letter to up the rent $10 to $290.

I know a fella who has a few rentals in the area. He has one next to mine and one across the road he is getting around the $350 mark - self managed.They are 4 x 2 and to tell the truth not that flash, one has a pool.

Celeste

 

[Aaron Sice]

yeah cheers - i did my research with 4 bedders and they seem to get that much - the 3x1s etc all seem to be the $280-290pw mark.

glad i'm not going insane.

 

[<KS>]

Having 4 bedrooms does not automatically qualify you for a higher rent.

The 4x1 on this property is TINY. 2 of the 4 bedrooms barely get a single bed and chest of drawers in them. Half of the property is the kitchen and lounge - which has a pillar in the middle and no long walls - so that you have almost no where decent to put an entertainment unit over 5 feet wide.

The master bedroom is also extremely small. The existing tennant only has a double bed suite and he has to walk sideways between the bed and bedroom furniture in order to get into bed.

This greatly restricts who you can rent the property out to, because any family which needs room for adults in 2 bedrooms wont rent it.

I have spoken to the current tennant, he admits he deliberately inflated the rent in order to sell it to an investor.

Celeste: your friends places getting $350: If one has a pool it is already massive compared to the 400-480m2 block this will be after the S/D. And both have 2 bathrooms - so they are a different kettle of fish.

2 Bathrooms is normally the drawcard in a 4x2. This 4x1 is not even a semi-ensuite home...a big turn off for anyone who does not want to walk more than 10 feet to the toilet at 1am. The current tennant does not mind - because he is a single dad with a small daughter - they have 2 rooms each!

Keep in mind you can only do your idea based on the buyer living in it for 12 months+. Because no one will rent on a block in the process of being SD unless they get a HUGE rental discount (all heavy machinery + trades have to move past the front property to access the rear poposed block). If you live there yourself you need to be able to afford the mortgage payments of $2450/month along with $1000 in rates, $800 in water rates + bills....with no tax perks. This was the biggest turnoff for myself before I even investigated the water easment, as I dont want to live in Camillo - nothing personal I just like my current PPOR too much to leave

So remember, its not what you can rent it for now that counts. The only possible things making it attractive for over $300 rent atm is the big shed it has and the room to put the current tennants tractor and camper van. But these will both be gone when you SD.

<KS>

 

[TheAnalyst]

Having 4 bedrooms does not automatically qualify you for a higher rent.

The 4x1 on this property is TINY. 2 of the 4 bedrooms barely get a single bed and chest of drawers in them. Half of the property is the kitchen and lounge - which has a pillar in the middle and no long walls - so that you have almost no where decent to put an entertainment unit over 5 feet wide.

The master bedroom is also extremely small. The existing tennant only has a double bed suite and he has to walk sideways between the bed and bedroom furniture in order to get into bed.

This greatly restricts who you can rent the property out to, because any family which needs room for adults in 2 bedrooms wont rent it.

I have spoken to the current tennant, he admits he deliberately inflated the rent in order to sell it to an investor.

Celeste: your friends places getting $350: If one has a pool it is already massive compared to the 400-480m2 block this will be after the S/D. And both have 2 bathrooms - so they are a different kettle of fish.

2 Bathrooms is normally the drawcard in a 4x2. This 4x1 is not even a semi-ensuite home...a big turn off for anyone who does not want to walk more than 10 feet to the toilet at 1am. The current tennant does not mind - because he is a single dad with a small daughter - they have 2 rooms each!

Keep in mind you can only do your idea based on the buyer living in it for 12 months+. Because no one will rent on a block in the process of being SD unless they get a HUGE rental discount (all heavy machinery + trades have to move past the front property to access the rear poposed block). If you live there yourself you need to be able to afford the mortgage payments of $2450/month along with $1000 in rates, $800 in water rates + bills....with no tax perks. This was the biggest turnoff for myself before I even investigated the water easment, as I dont want to live in Camillo - nothing personal I just like my current PPOR too much to leave

So remember, its not what you can rent it for now that counts. The only possible things making it attractive for over $300 rent atm is the big shed it has and the room to put the current tennants tractor and camper van. But these will both be gone when you SD.

<KS>

Thank you for your investigation

 

[Aaron Sice]

ah i see - so you've looked at it very hard then! how did you manage to speak to the owner and get in on the fact they've inflated the rent payable?

 

[Aaron Sice]

Thank you for your investigation

.........?

 

[HiEquity]

Hi all

I would think the rental amount would be near to $350.

I have 2 small 3x1 duplex's in Camillo and I am getting $280 each. PM just sent me a letter to up the rent $10 to $290.

I know a fella who has a few rentals in the area. He has one next to mine and one across the road he is getting around the $350 mark - self managed.They are 4 x 2 and to tell the truth not that flash, one has a pool.

Celeste

Sounds like I need to talk to my PM. I have a "large" 10yo 4x2 + study in Rivervale in a nice location that is only getting $350pw after a recent increase and the PM swore and declared that was a realistic rent for the area. I would have thought Camillo would be somewhat below this...

I know there are others in Rivervale asking more but they have been sitting on the market awhile.

 

[Celeste]

Having 4 bedrooms does not automatically qualify you for a higher rent.

The 4x1 on this property is TINY. 2 of the 4 bedrooms barely get a single bed and chest of drawers in them. Half of the property is the kitchen and lounge - which has a pillar in the middle and no long walls - so that you have almost no where decent to put an entertainment unit over 5 feet wide.

How many have you looked at in the area - they're all tiny and those with more than three bedrooms have an extra room added in that aluminium veranda stuff - as do the 2 my friend owns. 1 has a smaller bathroom than the 1 bed apartments I have reno'ed.
A lot of them are ex or still homewest. one down the road looks like a 3x1 but is infact a 5bedder (this one I know is homeswest) and there are quite a few 2 x 1 houses not duplex's in the area

The master bedroom is also extremely small. The existing tennant only has a double bed suite and he has to walk sideways between the bed and bedroom furniture in order to get into bed.

This greatly restricts who you can rent the property out to, because any family which needs room for adults in 2 bedrooms wont rent it.

I have spoken to the current tennant, he admits he deliberately inflated the rent in order to sell it to an investor.

Celeste: your friends places getting $350: If one has a pool it is already massive compared to the 400-480m2 block this will be after the S/D. And both have 2 bathrooms - so they are a different kettle of fish.
sorry my mistake they are both 1 bothroom

2 Bathrooms is normally the drawcard in a 4x2. This 4x1 is not even a semi-ensuite home...a big turn off for anyone who does not want to walk more than 10 feet to the toilet at 1am. The current tennant does not mind - because he is a single dad with a small daughter - they have 2 rooms each!

Keep in mind you can only do your idea based on the buyer living in it for 12 months+. Because no one will rent on a block in the process of being SD unless they get a HUGE rental discount (all heavy machinery + trades have to move past the front property to access the rear poposed block). If you live there yourself you need to be able to afford the mortgage payments of $2450/month along with $1000 in rates, $800 in water rates + bills....with no tax perks. This was the biggest turnoff for myself before I even investigated the water easment, as I dont want to live in Camillo - nothing personal I just like my current PPOR too much to leave

So remember, its not what you can rent it for now that counts. The only possible things making it attractive for over $300 rent atm is the big shed it has and the room to put the current tennants tractor and camper van. But these will both be gone when you SD.

<KS>

Further to this all I can add is that the area ticks all the box's twice, good points

- the council have a beautifaction program happening - hense the name change from Westfield to Camillo.
- all close to the big impressive champion lakes development and the Saville Grove development.
- public transport everywhere - bus / train
- shops near by - supermarket / liquor store / chemist etc.
- There is quite a bit of upgrading to homes &/or knock down and rebuilds
- one of the last few areas you can buy between $300k - $ 350k. At the moment I would think the ceiling for house prices regardless of what they are is $400k until the beautification starts to be more noticable.
- The local shopping centre on westfield rd is up for a mammoth remodelling.
- A new huge Mitre 10 being built near by
- Ranford road is in the process of being widened to 2 lanes either way. So the time to get to freo or the city will be quicker.

etc etc etc..the list goes on........

If you are into buy and hold looks good to me.

 

[<KS>]

Obviously you know a lot about the area Celeste - but I have a few points to discuss

1) one of the last few areas you can buy between $300k - $ 350k

Nope. In Rockingham you can now buy a small 4x2 within 5k's of the beach and right next door to a train station and shopping centers etc etc for around 300k, but some how they only rent for $280 yet you insist you can charge $350/week for a small 4x1 in Camillio?

2) - the council have a beautifaction program happening - hense the name change from Westfield to Camillo.
- all close to the big impressive champion lakes development and the Saville Grove development.
- public transport everywhere - bus / train
- shops near by - supermarket / liquor store / chemist etc.
- There is quite a bit of upgrading to homes &/or knock down and rebuilds
- one of the last few areas you can buy between $300k - $ 350k. At the moment I would think the ceiling for house prices regardless of what they are is $400k until the beautification starts to be more noticable.
- The local shopping centre on westfield rd is up for a mammoth remodelling.
- A new huge Mitre 10 being built near by
- Ranford road is in the process of being widened to 2 lanes either way. So the time to get to freo or the city will be quicker.

Lots of other areas have this already, that are in better socio-economic zones such as Rockingham, Mandurah, Success and a few others - yet you can only charge $350/wk rent for a brand new large 4x2 in these areas...

===============

I am not saying you are wrong Celeste - I am just saying I dont know why anyone would pay such an exorbitant rent to live in such houses in an area in need of a lot of renovations.

If you are correct then I can only assume it is those people wishing to live close to friends and family that are looking to rent houses there and cannot afford the $150/week extra to buy one of these cheap houses. Because otherwise they would just rent somewhere else cheaper where they would get more value for their $350.

<KS>

 

[Aaron Sice]

I am not saying you are wrong Celeste - I am just saying I dont know why anyone would pay such an exorbitant rent to live in such houses in an area in need of a lot of renovations.

If you are correct then I can only assume it is those people wishing to live close to friends and family that are looking to rent houses there and cannot afford the $150/week extra to buy one of these cheap houses. Because otherwise they would just rent somewhere else cheaper where they would get more value for their $350.

<KS>

www.theherons.com.au

these units rent for $350 a week.

i designed them for a client of mine who develops in the area and was telling me yesterday that $350pw is very feasible for anything renovated with quality or anything new.

seems my DD was decent after all.

there are a lot of schools and infrastructure nearby - regardless of what people think, kelmscott is actually quite a nice family orientated area.

rockingham has an oversupply of new and large 4x2s - hence the rental price is the same as a similar home in Camillo because there aren't many new or quality renovated 4 bedders; most are old and untouched 3x1s.

and you still haven;t answered my question about how you got the owners to fess up that they were artificially inflating the rent to attract an investor.

 

[Celeste]

Hi Ks

If you are correct then I can only assume it is those people wishing to live close to friends and family that are looking to rent houses there and cannot afford the $150/week extra to buy one of these cheap houses. Because otherwise they would just rent somewhere else cheaper where they would get more value for their $350.


You are presuming their intelligent..............we would think that way......and they have a job and yes they need to be close to family and friends.

My 2 are rented to seperated mums with children.

1 is really good, good job house nice and clean. pays the rent on time etc.etc.

The other is 2c short. major problems when she 1st moved in, all sorted and fairly good now. Though she is mega untidy. only inside the house? outside looks good? She is on wlefare and they pay her rent. I organised it for her as she is basically a nice and tries but she not all there....

I also tried the rent to buy scheme here. basically they cannot afford a mortgage, they do not want to leave the area and they are bumb.

example, I had one couple come in not married with a baby. Now he has a decent job doing window tinting been there a while, she's stay at home with some welfare as the child has a handicap.

When they gave me all thier figures I felt they could get a mortgage and suggested I find them a broker see what they could work out..

The man said he had tried but the bank wouldn't give him a loan because he is paid cash..........When I quizzed him more he is employed in the normal manner he gets a pay slip/ holidays / super etc. They just pay him by cash as apposed to a chq or putting it in the bank...........

As I said dumb.........I can tell you lots of stories re: prospective tenants and purchasers along the same lines. I did not do a deal with these guys as I think she has not been truthful with social security (I don't think they know about him) and she was grubby and smelt. I would have sold out right to them but not rent to buy....

As in all areas of sales - and trust me finding a tenant for your property is selling them a service / goods. You need to know your target purchaser.

Perth in general: Perth people do not stray far from where they were born. They do not like to travel far from home for work. Boss's do not like to hire anyone that lives to far away) and note this little tidbit came from a personal agency, when I was lookking for a job and lived in brigadoon after moving from over from Melbourne. They do not like to drive far for anything....

Lots of other areas have this already, that are in better socio-economic zones such as Rockingham, Mandurah, Success and a few others - yet you can only charge $350/wk rent for a brand new large 4x2 in these areas...

I could go thru lots of reasons why these areas differ. But, alass I have not been interested in them and have done no research. But off the top of my head with limited knowledege.

Demand.......I live 20min from Perth south and the three suburbs you mentioned sound far away to me. Far from family / freinds / work. So, I would suggest your prospective tenants are limited to those in the surrounding areas or those relocating for work / retirement.

I purchased in mandurah 4 years ago and did some research. I do remember the mix of people living there leaned heavily to older people, kids gone. Retires. The forcast was for a change in demograhpics but I have not done anymore research so I do not know if this is happening. I do know that there is a shortage of cheaper end single accommodation.

The Majority of people will look in the area they were brought up and the surrounding suburbs. Near where they work etc. etc.

Anyway, that's my thoughts.

 

[<KS>]

www.theherons.com.au

and you still haven;t answered my question about how you got the owners to fess up that they were artificially inflating the rent to attract an investor.

In the sneakiest fashion....I went there and spoke to the tenant

I had an appointment with the REA but I was late and the tenant showed me through.

The tenant used to own the house and sold it to the current owners. They purchased it for $360k because he offered to pay $350/week 6 months in advance.

He told me straight out he could rent elsewhere for $300/week but took the rental hit on account he bought the property for about $180k and was laughing all the way to the bank. Paying 6 months up front was easy when he just sold it for a silly amount of cash.


Celeste:

Success is 20 mins from Perth
Rockingham is 30 mins on the train and has a population of 115,000 - not all oldies - it also has the perk of winning Western Australia's best beach award 2x in the last 10 years.

But yes, there is an oversupply of new 4x2's in the area - no doubt about it, as does Mandurah.

<KS>

 

[kph]

Success is 20 mins from Perth
Rockingham is 30 mins on the train and has a population of 115,000 - not all oldies - it also has the perk of winning Western Australia's best beach award 2x in the last 10 years.
<KS>

By what?
Helicopter??
How would you fare in 'normal' traffic or peak hour traffic ?

BTW smart tenant/ex owner.
How long ago did he sell ?

Maybe it was good rent when he sold, but that rent is now market rent.

kp