South Headland or Port Headland?
- Thread starter trish266
- Start date
I have heard that the largest RE agent in this area will not be selling OTP because there are no takers. I have mentioned before, now is not the time to be playing in this market, writing on the wall perhaps 2 years ago now.
Oversupply and developers/investors stuck with stock, only can go one way when this happens and that is south.
Yup.
That sets the bar.
Add the cost of a lot and you're still looking at a $850K price.
Rents still coming down though. Mine are coming back down to around 2008/09 rents.
That is frightening.
I know an investor who is holding development sites with small house of properties, rents just keep falling back, I think when purchases made was close to neutral not negative and no sign of growth in the near future.
One of the reasons I'm looking up in this area is being they are getting much cheaper and buyers can get better deals while the prices are going down.
I was looking for something brand new, fully furnished that I can hold for a long time.
Do people usually just get conditional approval for OTP and then get it valued just before completion?
I was looking for something brand new, fully furnished that I can hold for a long time.
Do people usually just get conditional approval for OTP and then get it valued just before completion?
The bank will value the property at the end of completion, if property prices are falling then there is a good chance the value will not come in at purchase price this means you have to cough up the extra money. Does not make a lot of sense, in effect you have a pretty good chance of losing money, not to mention there is an oversupply of properties for rent, this means vacancies, cash flow turns to negative very quickly.
Have you checked out how many properties are currently on the market for rent?
Have you checked out how many properties are currently on the market for sale?
You are focusing on cash flow but you are ignoring everything else, and this is how investors get burnt.
I currently have enough for 20% deposit + costs with not paying LMI.
What about properties that have guaranteed leases or rental returns for at least a year. Does this not help with the vacancy? Only concern it is to consider if the market will go back up after a year or two.
I've been looking at rentals and properties for sale in the around for about 3 months. Lots of old properties on the market but only a couple new or new near properties. A few OTP properties being built.
What about properties that have guaranteed leases or rental returns for at least a year. Does this not help with the vacancy? Only concern it is to consider if the market will go back up after a year or two.
I've been looking at rentals and properties for sale in the around for about 3 months. Lots of old properties on the market but only a couple new or new near properties. A few OTP properties being built.
Hi RD
Rental guarantees are there for a reason to entice buyers, when these guarantees are done and dusted, will they rent at the same price? This is also a strategy developers use when selling stuff which is hard to move.
OTP is a strategy that is typically used by investors when the market is very very hot, a rising market.
Last property boom in Perth from 2001-2006 plenty of investors made buckets of money using this strategy. At the end of the build the properties were rising so fast that they were worth as much as 30%+ more. However those that got caught with OTP stuff at the end of the boom cycle got burnt badly because values started to drop. No one knows how far they will drop, 20% deposit does not protect you from this current environment.
Developers who are currently building OTP stuff in these mining towns are stuck with stock and therefore they are trying to offload, the prices may seem very attractive for the return, but as I mentioned if prices continue to fall it is not an attractive proposition.
I would be focusing on rising markets to make money, not falling markets.
CHeers
MTR
How are values holding up?
some relevant commentary here:
http://www.news.com.au/finance/real...-goes-as-planned/story-fndbalka-1227071460994
http://www.news.com.au/finance/real...-goes-as-planned/story-fndbalka-1227071460994
