where is the bargains in Perth

For ease of calculation lets say we buy a property for $250k, so in 10 years its now worth $500k. Now lets say we do that each year for the next 7-10 years. Now you can quit the rat race.

So in year 11 ( 10 years since your 1st Ip) you have 250K equity in IP1 you can draw out (up to 80%) Tax free to fund your lifestyle or invest with. In year 12 you do exactly the same but instead of drawing it from IP1 you draw it from IP2. In year 13 you do the same to IP3, in year 14 to IP4, etc etc etc. You systmatically go right through your portfolio year by year until you have redrawn from each property up to year 20.

Rixter, does this mean you don't use IP1's equity as guarantor for future properties as you work your way up?
 
- If calculating rental yield for my PPoR as an IP, do I use property purchase price (3 years ago), current value, or amount oweing?

If you are looking purely at the cashflow equation, you would calculate rental yield on what you paid for the property and what you owe now.

This is because you already own it.

If were looking to buy, then you would calculate the yield on the purchase price when you buy it.
 
I've been reading threads for a while now and this one should get an award - I have learnt heaps in this conversation!

Thanks guys

I bought my first IP ( a 4x3 DLUG) in Mandurah last year, mainly because the vendor dropped the price by 50k which brought it back to a reasonable price - not great but near the ocean. I really like Mandurah, people tell me its one of the fastest growing, there are tons of apartments being built, it's got rail now.... Would I be crazy to buy number 2 IP in the same area?
 
if you can justify it by it fitting into your investment criteria, then why not?

i like IPs within 400m of a train station (to take advantage of the "Network City" zoning that for some reason no-one knows anything about) and close to amen's + schools.

oil's on the up and up - public transport will again be a hot topic soon enough. mandurah has a rail link + beach + estuary + tourism + mixed demographic. sounds okay to me....
 
Mandurah is 70km from Perth and currently getting smashed.

A like the place a lot, but you need rocks in your head to rent property out there. I can understand people buying to live, but renting?
 
Cant say much about units, houses or rental yields. Im looking to buy for myself, so it has been more a case of researching areas for growth and lifestyle. Based on the research I have done, there is a lot of infrastructure coming in the northern suburbs in the next few years.



Further north is Quinns Rocks. You can pick up a 4x2 for under 370k now, which is cheaper than buying land and building in the same area. Jindilee is set for some large private developments and thats right next door. The train line is being extended to Butler which is right on the doorstep. You have Mindarie next door which has the marina too, yet no beach. Its also along the coastal belt so the land component could see an increase over time. Only downside is that its 35km to Perth CBD which is far out by Perth standards.

There is older Quinns and new Quinns where a lot of new homes have been built. But it seems to be slap bang in the middle of developments in areas surrounding it.

DeanoC,
Agreed about Ocean Reef etc...however, have to pull you up about Mindarie not having a beach...we got one, Claytons, just off Alexandria View.

Boods:)
 
would be interested to hear more about your thoughts on this. why would you be crazy renting?

Why would you rent a home 70kms away from the CBD? There is very little work in Mandurah and surrounding areas. Most commute to Perth. Its a 55min train ride into the city from zone 6 which is hardly cheap. Unless you are working in Mandurah or close by there would be no real reason to rent there. Limited public transport, little industry, large supply of housing there and in surrounding areas, holiday homes that I think many are going to go on the market with the downturn.

You going to get the odd nutcase who will rent out there, but I would not be surprised to see vacancy rates increase in Mandurah over the next few months. Better value closer to the city. The lifestyle it offers is available closer to the city and I think most people know this.

Last quarter has seen an 8.5% hit to median price and rental yields average about 3.5% which is not great when the median is a bit under 375k I think.

Nice area to live in, just dont know if its a great area to invest in at the moment.
 
fair enough. Was curious as I am thinking of... wait for it... selling! probably won't tho, hung in there this long. FYI my tenants include or have included 2 FIFO workers, an undertaker, a navy guy and an old ditty that unfortunately had to move onto a home. I asked one of the FIFO workers if they wanted to buy the place but alas they are not in a financial position to do so. The mercedes in the drive may explain it but I guess you can afford one when your living accommodation costs comes to a grand total of $275pw including gardening etc.

Tenant demand is actually quite strong down there. I am looking at capital values but at the current sales rates they are below replacement value, plus the patch I am in is just being rezoned to R60.
 
accommodation costs comes to a grand total of $275pw including gardening etc.

Tenant demand is actually quite strong down there.

:eek:

Ausprop I have trouble reconciling these two statements. Wouldn't you expect rental demand to be reflected in rent prices? Take the case of Karratha, for example... ;)
 
No because it needs to be a % yield. so Mandurah at 5% is pretty good for WA, whereas Karratha at 9% is a different kettle of fish. indeed Karratha as a whole is a basket case on many different points, but the 9% reflects risk, higher depreciation, higher operating costs etc
 
oUT Of curiosity how much is the property worth Ausprop?

Haven't you said before you always sell your properties before the area's boom???

I was thinking it's a good time to buy into Mandurah, good value.
 
Mandurah is 70km from Perth and currently getting smashed.

A like the place a lot, but you need rocks in your head to rent property out there. I can understand people buying to live, but renting?

people from bunbury who work in mandurah?

people whoe work in collie or harvey or bunbury but want a more beachie and convenient lifestyle?

the fact it's a satellite city now?

what about the families?

not everyone can afford to buy.
 
No because it needs to be a % yield. so Mandurah at 5% is pretty good for WA, whereas Karratha at 9% is a different kettle of fish. indeed Karratha as a whole is a basket case on many different points, but the 9% reflects risk, higher depreciation, higher operating costs etc

Fair enough - so Karratha at 12% with excellent depreciation should be a good deal then? I hope so... :rolleyes:
 
yes i believe in karratha. most people have no comprehension of what it costs to build a house there or the size of the industry and what the future plans are there.

but yes I tend to sell too early. I sold a 4x2 in karratha for $425k and a block for $160k. shoot me.

a lot of people from Alcoa in mandurah, also Boddington I think??? I agree that the 70kms from Perth thing is not particulalry relevant as it is a satelite town with its own industry.

the properties cost me $200k each, when finished were worth $400k, now worth $300k. yield 5%.
 
So i have been using replacement costs as a guide in Mandurah - obviously I am looking in places where there is still development happening. Is that the right way to think? And if I see a place below replacement .....

I did wonder about building an IP (not specifically in Mandurah) but that seems lot a lot of effort and I'm not sure it pays off - a friend has just done this but don't know the $ involved and he is a bit vague on the outcome. Is it worth it?
 
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