What do you think of Trinity, Alkimos WA?

[IPsearcher]

Hi all,

I am brand new to the world of investing and to this forum! I have heard great things about this website so have joined and hope you can help me out!

I am thinking of buying my very first IP in the Trinity estate in Alkimos WA.

Also, I attended a seminar and they said they can do everything for me - which is very handy as I live interstate.

Any thoughts/opinions?

Thanks.

 

[INXS]

If you are looking to buy land on the east side of Marmion Ave in the northern suburbs of Perth, Trinity is probably one of the better options. As I understand it Trinity is a private estate. (No Homeswest). Trinity is close enough to Butler to benefit from the rail expansion (2012) and the new district shopping centre to be built around the new railway station. As there are no houses built in Trinity yet I assume you are looking at a house and land package. Downside to that is it is cheaper to buy an established house in areas such as Butler at the moment than buy land and build. Therefore I don't think you could make much equity from building and may actually have a house worth less than what it has cost. Plus the fact you attended a seminar where they said they can do everything for you means to me that you will be paying a premium so in fact could have a property worth quite a bit less than what it costs you by the time it is built.

 

[Ausprop]

not a great place for an IP... these are more churn and burn IMO. better off buying a place in kenwick for example.

 

[INXS]

not a great place for an IP... these are more churn and burn IMO. better off buying a place in kenwick for example.

I think it comes back to the old argument whether it is better to buy closer to the city or in the outer suburbs for capital growth. Usually when new infrastructure is going in such as train stations and shopping centres this will have a positive impact on property values. That's why I think an IP purchase in the areas in and around Butler is not a bad idea. I just would not be buying new when you can buy older houses below replacement value.

 

[Ausprop]

hmmm... i would encourage people to look at price histories for places such as meadow springs, lakelands, seascapes, baldivis, singleton, yanchep

 

[INXS]

hmmm... i would encourage people to look at price histories for places such as meadow springs, lakelands, seascapes, baldivis, singleton, yanchep

You can't just look at the current situation. it's all part of the property cycle.
You have singled out areas hit particularly hard in the property slow down. These areas are the ones's that will outperform in the next cycle. I would say properties in these areas are great buying at the moment. Overall if you look at property over a couple of cycles I would anticpate % growth is about the same between inner and outer suburbs.

 

[INXS]

Some links in support of my views. I think it's fair to say Terry Ryder and Margaret Lomas are respected real estate experts.


http://www.theaustralian.com.au/new...ne-for-the-burbs/story-fn6njxlr-1226011334681

http://www.hotspotting.com.au/index.php?act=viewArticle&productId=564

 

[meconium]

not a great place for an IP... these are more churn and burn IMO. better off buying a place in kenwick for example.

I concur. More capital gain possibilities in Kenwick than in the distant outer suburbs.

 

[Rixter]

It may be a good idea (if you haven't already) to question anyone suggesting what and where to buy when they have a vested interest in the recommendation.

Being a Perth local, personally I would not purchase there due to distance how far it is out from Perth it is.

Since you are new to investing and even more so since you are buying in area that's unfamiliar to you I would strongly recommend you stick to the basic investment fundamentals of buying in as close to the centre of the metropolitan area satellite CBD as you can reasonably afford.

Areas with good infrastructures such as main arterial roads, public transport systems, high employment, major shopping centres, educational, medical, & recreational facilities.

Purchase a good quality dwelling, well located to the above fundamentals, and hold over the long term and you are assured to maximise your return and minimise your risks.

I hope this helps.

 

[INXS]

hmmm... i would encourage people to look at price histories for places such as meadow springs, lakelands, seascapes, baldivis, singleton, yanchep

Purchased home and land package in Butler in 2001 for 120k. Current Valuation (bank value) 2011 is 440k.

Has Kenwick or any inner city suburb had the same percentage growth in the last 10 years?.

 

[IPsearcher]

Thank you

Thanks everyone for your comments. They have be most helpful.

INXS - I read those newspaper articles and they did ease my mind! And that is quite good growth in Butler. I am aware that there are quite a few houses (established) in Butler for sale, but from what I’ve read and you've said, it's best to buy in an area BEFORE the infrastructure goes in coz that will nicely increase your prices.

Let's hope Trinity is not too far out! But as I read, people have been camping out over night to get land so that's a good sign that ppl want to be moving out there.

BTW is there an airfield or airport near by trinity?


thanks again everyone all for your help

 

[Ausprop]

Purchased home and land package in Butler in 2001 for 120k. Current Valuation (bank value) 2011 is 440k.

Has Kenwick or any inner city suburb had the same percentage growth in the last 10 years?.

at least i would say? i sold my house in floreat around 2001 for $480k and recently sold for $1.6m.

my yanchep house cost me $160k for block and $190k for houe in 2006, sold for $500k in 2007. now worth about $460-480k? negative growth over 4 years and IMO no outlook for growth. buildings are currently getting cheaper not dearer - it was builidng replacement cost as much as anythign that drove values up last bull run

 

[jaycee]

at least i would say? i sold my house in floreat around 2001 for $480k and recently sold for $1.6m.

my yanchep house cost me $160k for block and $190k for houe in 2006, sold for $500k in 2007. now worth about $460-480k? negative growth over 4 years and IMO no outlook for growth. buildings are currently getting cheaper not dearer - it was builidng replacement cost as much as anythign that drove values up last bull run

Osborne Park

1999, >$70k
2011, $300k

 

[INXS]

at least i would say? i sold my house in floreat around 2001 for $480k and recently sold for $1.6m.

This proves my point. The property in Butler went up 366% while the property in Floreat went up 334%.

If you bought 4 properties in Butler instead of the one Floreat property you would have made an extra $160,000 in capital gains. Also your rental yields would have been a whole lot healthier in Butler as well.

 

[jaycee]

This proves my point. The property in Butler went up 366% while the property in Floreat went up 334%.

If you bought 4 properties in Butler instead of the one Floreat property you would have made an extra $160,000 in capital gains. Also your rental yields would have been a whole lot healthier in Butler as well.

I see yours did 22% more.

But I wonder if that's totally representative all houses in the area, or if some houses in say your area could have gone up a bit less, or a bit more.. and the same for Ausprop's area or mine (?)

It's not as if Butler went up >50% or 100% more (?)

 

[INXS]

I see yours did 22% more.

But I wonder if that's totally representative all houses in the area, or if some houses in say your area could have gone up a bit less, or a bit more.. and the same for Ausprop's area or mine (?)

It's not as if Butler went up >50% or 100% more (?)

The whole point is the Butler property performed better than the Floreat property over a period of 10 years and would of had a lot better rental yields!!. The Butler property is a standard 4x2, typical for the area. To many people discard the investment potential of outer suburbs, blindly believing because a suburb is closer to the city it will perform better. I think more people are seeking the lifestlyle and environment that a coastal suburb (like Butler & Alkimos) can provide compared to a suburb like Kenwick. People don't need to go in to the city these days for work or entertainment. I believe this trend will increase only further in coming years.

 

[Ausprop]

But then if we repost the numbers for yanchep from 2007 vs say east vic park from 2007 I think it would be a very different scenario. you are probably looking at -20% vs +15% ?? that could be the difference between being wiped out financially vs having a nice win.

for me the outer suburbs are riskier due to volatility and the lower intrinsic value

 

[Kent Cliffe]

This is a graph I show a lot of my clients before we go out and look for a property for them:

http://imagebin.org/index.php?mode=image&id=142867

This is two suburbs land value indexed against the year on year capital growth. The Land Subdivision is one of Perth's "best" capital growth wise subdivisions. It is now an established area. These second is of a developed suburb about 10 min drive away (5 min closer to the city and 10 min closer to the coast).

When I run this model for multiple different suburbs and comparisons the same result keeps reoccurring. A developed suburb closer into the city will over the longer term appreciate better then new subdivisions and also fair better in moderate or "bad" markets.

The land subdivision I used was the best for capital growth I could find to show you all a fair comparison (if you pick others the difference is even greater). If history is correct the Land Subdivision will start to stagnate and the Developed suburb will continue to appreciate.

Please note, if I could do this on a $$$/per sqr mtr basis the difference would be even greater.

More proof that new land subdivisions are not always the “best” investment for capital growth.

 

[jaycee]

The whole point is the Butler property performed better than the Floreat property over a period of 10 years and would of had a lot better rental yields!!. The Butler property is a standard 4x2, typical for the area. To many people discard the investment potential of outer suburbs, blindly believing because a suburb is closer to the city it will perform better. I think more people are seeking the lifestlyle and environment that a coastal suburb (like Butler & Alkimos) can provide compared to a suburb like Kenwick. People don't need to go in to the city these days for work or entertainment. I believe this trend will increase only further in coming years.

Luck of the draw ?

Perhpas other examples will show Floreat to be aghead by >5%or Osb Park by 7.8% or some other suburb by a different %age..... You've only looked at 2 horuses and are drawing conclusions for the whole suburb so to speak...

Surely you can't take 1 indiviudal properoty comapre it to another individual proeprty and say that's how the whole araea performed for 1 decade ?

 

[INXS]

Outer suburbs continue to out-perform "prime" areas

Terry Ryder article below.


Outer suburbs continue to out-perform "prime" areas
By Terry Ryder, 16th October 2008

The common belief that expensive inner-city suburbs always out-perform cheaper outer-lying suburbs is the greatest myth in real estate.

There's no statistical basis to the claim that the "better suburbs" close to the city are the safest investments and are better at resisting downturns.

In fact, the figures prove it wrong. I call it The Myth of Prime Out-performance. It's a mantra for property professionals, who have repeated it so often it's come to be accepted as truth by many investors.

However, the myth of prime out-performance has become widespread throughout the real estate industry and subsequently deeply entrenched in investors' minds.

The key thing about the claim of superior performance by prime suburbs is those who make it never support it with figures. They have an attitude but they don't have an argument. The reason they don't back it up with data is that the facts contradict them.