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Before purchasing, speak to a local town planner. The medium density design guide lines come into force in September (with some restrictions) you will need to tread very carefully. Basic rule of thumb, to build a single story 3 x 2 home you will need a lot of 300-320m2. If the lot is smaller than this you will have to build 2 story. Whilst this will work in high socio economic suburbs, eg Doubleview or Wembley, it won’t work in suburbs such as Girraween or Balga.
there are a lot of titled sub 250m2 lots for sale (especially in the city of Joondalup/Swan) that you cannot build on profitably.
Dan Patton – Developed 0424 975 902 is your man.
I’m guessing its wheat farming land?
Given the size of the lots I’m not sure on the cost or what conditions you would have to meet. You will need to consider road access if the new lot is accessible off a gazetted road.
There is a saying. Yield keeps you in the game, capital growth gets you out of it.
Whilst the Initial yield on a 200k purchase may sound good, by the time you take into account land tax, council rates, typically higher vacancy rate, difficulty in getting quality property management and, the difficulty of finding reliable and affordable trades , that high yield can disappear.
Start with the end in mind and work backwards.
I
You will also need to consider that in todays environment that there is a limited pool of banks willing to lend in this space. As a result, it comes with a high interest rate (I’ve seen 1 bank at 6%) and a much higher loan to value ratio.
Hi There,
Sales agents are people too. A lot of people tend to treat them worse than they deserve. If they open home is busy the agent may be too busy hustling to talk. Try a follow up call on a Tuesday or Wednesday. Then go meet them at one of their stale listings when it is open. Be nice, friendly and treat them well. you will be surprised what you can get away with. Relationships take time. This is not a game of one night stands but serious relationships built up over time.
Above all real estate is a game of patience above all things.
Hi Alison,
If you are looking to purchase a commercial property, you can expect to encounter significant problems financing you building purchase. Due to Covid 19, I have seen banks decline a few commercial deals, despite good serviceability. Added to this you have an unproven business with no financials. Borrowing will be very difficult.
If you have cash, there is going to be some sensational buying opportunities in 6 months time. For example I have my eye on a light commercial property that is listed for $900k, which I am confident I can get for the high 300’s in a few more months time. The location is sensational, the building isn’t.
On the positive there is about to be a lot of commercial leasing opportunities come up, with some great rents and incentives.
I hope this helps
I would go back to the selling agent and advise that if you cannot get an inspection, you won’t be settling. With settlement this close you can guarantee that the seller is well advanced in their moving on plans. If they still refuse, I would definatley terminate the deal. The only qualifier I would put on it is if you got it at an outstanding price, such that you have a significant buffer.
I would also seek legal advice from your solicitor to confirm that you can terminate the deal, and what pain and suffering you may endure post termination, eg bad credit score, counter suing, paying finance fees to your broker etc.
Regards
David Hall
It looks like they have just become insolvent. I think that sums up what they are like.
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This reply was modified 5 years, 1 month ago by
David Hall.
Don’t
You are looking purchasing in a falling market, where there is a lot more supply currently under construction. A lot of the pre-sales for these new builds are going to fall over, causing more downward pressure on apartment prices.
Being patient will lower your purchase price and increase your yield.
There is better to be had in other markets at the moment.
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This reply was modified 5 years, 3 months ago by David Hall.
Hi David,
One thing to consider, prior to establishing your SMSF is the cost of your money, depending on what it is that you plan to do your interest rate will be higher 1-1.5% as will your deposit. Talk to your broker about what to expect before you establish.
There are two leading indicators that I am looking for.
1) Rental market. This is the first and leading indicator of what is happening in a market.
Is the number of properties for rent rising or falling? Are rents increasing or decreasing?
A tightening rental market is the first indicator of house price growth to come, an loosening rental market is a sign of price drops to come. Perth is a classic example. The rental market headed south 6-9 months before the sales market followed suit. The rental market is now recovering. Housing will follow, but it is always behind the rental market.2) Stock on market. Increasing number of houses for sale = falling prices. A decrease of stock = rising prices. Stock staying the same = flat prices in line with CPI.
For example, Perth currently has 14,500 properties for sale, which is an over supplied market, hence our recent poor performance (there is a reason why it is called a buyers market!). 13,000 is a balanced market. Prices will generally increase inline with CPI. 11,500 properties for sale is a sellers market. Expect prices to rise above inflation, with strong competition for good properties. Sub 10,000 is an out of control market, with poor quality properties selling for a premium.
Hello Lauren,
I am very active in the Perth market. It has definitely come off the bottom. We have gone from a peak of 17,000 properties for sale (Buyers market) 18 months ago to a balanced market of 13,100 properties for sale (balanced market). Over the last 4 weeks this number has come up to the low 14,000’s as the spring listings hit the market. 6 months ago I was the only offer, now the majority of the offers I am making are competing.
For example, I picked up a demolish and duplex property on Friday. I have an established relationship with the selling agent. She had not priced the property for the duplex potential, as she was unaware of a recent change to the zoning rules. It was advertised on Monday. I rang on Tuesday to arrange for an inspection prior to the first open on Saturday, with a view to getting it before the first open. Initially the owners wanted to wait until the weekends open, and wouldn’t let me through. On Friday at 4:00pm the selling agent rang to advise that she had received a cash, site unseen offer. I was able to inspect with my client at 5:00pm and get a slightly better cash offer accepted prior to the first open.
If it had gone to the open home, there is no doubt in my mind it would have gone for $20,000 – $30,000 more. The best bit is, I’ve got a seller lease back for 6 months, pending credit checks.
The rental market is also beginning to recover, with the number of properties for rent dropping by 80-150 every week. If this continues we will be back into a balanced rental market in 8-12 months time. Once the rental market is balanced, this will put upward pressure on the housing market as tenants decide to buy rather than rent.
Finally the WA jobs market is recovering. 3 new iron ore mines are committed to construction (BHP, RIO and FMG) in order for these miners to maintain current production levels. Todd energy may also be about to push go on a new iron ore development. Lithium is starting to take off and gold is doing well. Jobs are the fuel of house price growth.
I hope this helps
There are two major lithium producers in WA The Galaxy mine in Mount Caitlin and Greenbushes, with another 3-4 mines either under consideration or construction in the state. The single biggest investment is in Kwinana with the 400$m lithium refinery that is currently under construction. Lithium is not a rare metal, and is usually taken from salt.
Both of the above towns are very small in size. To do well, you are looking for a constrained land supply. This is what caused both Hedland and Karratha to do well. You don’t have this situation in either of these towns. In Green bushes there is a myriad of surrounding towns to commute from.
Go back to fundamentals. You are taking the buy and hope approach. Look to manufacture wealth in a well located property. This way you can take a cut of equity from the manufacture and if you have purchased in a good area, you will also get capital growth as well.
You cannot use and or Nominee in WA without attracting stamp duty. The only exemption allowed is within a family eg change from father to a son or from a husband to a wife. This is however at the discretion of the commissioner and should not be relied upon.
Hi Ben,
I’ve done it extensively in my own portfolio and some of my clients have been comfortable doing it. Under WA law (it may be different where you are) there are two risks to consider;
The first is that the seller is upside down and the bank will not let them settle, you have improved the property and the bank will keep it with out paying you out. This can be common in a falling market.
The other is that the vendor pass away between the offer being accepted and the contract going unconditional. This voids the contract.A good selling agent will make you sign a condition that you will not make any additional claims once you have possession and will generally try to dissuade the seller from accepting. You would also be wise to insure the property. If you cause a problem and the house were to burn down you will still have to settle.
I have recently collected 3 months rent on one property before settlement (messy divorce where they were playing point scoring) and my previous best was two weeks rent collected before settlement. Both of these properties were renovated before tenanting.
I hope this helps
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This reply was modified 5 years, 1 month ago by
