Hi all. We live in Perth and joined Steve’s $250K club late last year and have been trying to find the deals to reach the $250K profit in 18 months – a very tall order but worth going for. Our strategy is very simple for short term deals. Do a reno and sell, subdivide and reno and sell the house and the land separate, or demolish and subdivide and sell two blocks.
We have spent many many hours looking for deals in various suburbs, inspecting, doing the numbers, working out the likely sale price and then realising that the needed buy price is too far below the asking price. Yes we have put in a few offers and been nicely rejected. I know the market is hot in some areas, but we are finding very few people will to negotiate or drop their prices. We have applied the 33% rule without success.
We would appreciate any feedback from anybody in the Perth market trying to do similar deals. Is it near impossible at the moment or are we doing something wrong. I often think the Perth market is just different to the rest of Australia. All comments welcome.
It doesn't sound like it is too much different to the rest of the country. We are doing it a little tougher. Melbourne is the worst for finding decent deals! Keep trying. Try targeting a few other areas next to the ones you are shopping in, maybe the poor cousin suburbs. Yeah you don't want to live there but others will. Good luck, we are all in the same boat trying to find decent deals.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Mehi Gh, we are the same in cairns, which has had one of the highest employment rate rates in the country at 13% and while there are people talking of great things to come inn ? years? vendors still seem to want astronomical prices for property- so we are hearing you there- bit maybe its something we need to get used too?
GH, I live in Perth and have two investments here. I think you'll find that we're not too different from other areas of the country BUT for the fact that our economy is doing pretty well and we traditionally, don't drop prices too much. A discussion I had years ago with a real estate salesman was around what would happen if our 'bubble' burst (which of course, it did). I asked would Perth people be prepared to drop their prices and take losses … his response was that it doesn't happen here … generally speaking, Perth people would rather hang onto a property than take a loss, then sell it when the prices come up again. With a fairly strong economy, most of us would ask why should we drop our prices a lot when someone will eventually buy it for close to what we want.
Keep on trying, I'm sure there are good deals to be had … you just need to find the needle in the haystack!
GH – I can’t offer advice on Perth spefically but like everyone has said we are all in the same boat. I am in Sydney and the prices seem ridiculous here. There is a profit to be made…but you need a fair amount of cash to do it in Sydney. Perth is different from the rest of the Australian property marketing, but then every city is different from the market as a whole. Sydney is different, Melbourne is different, etc etc. If deals were everywhere then they would be snapped up quickly (investors are smart these days). So good deals are hard to find, but keep on the lookout….they do exist.
Just something to be aware of, subdividing takes time. I was looking at a property that I wanted to subdivide and sell off the land and keep the house (or sell both), but I found out that subdividing can take up to 9-12months to go through council and can cost around $20,000 to have it done. This put a hole in my plan (as I was after a quicker turn-around). So if you only have 18 months then be aware that subdivisions can take a while.
Ryan McLean | On Property
http://onproperty.com.au
Email MeHi GH,
I am in pretty much the same situation – a member of Steve's $250k club, live in Perth and currently researching developments sites.
I do believe there are quite a few decent sites out there – suburbs like Armadale, Maddington and some suburbs around Kwinana all seem to have big sub-dividable blocks at a reasonable price.
What tools are you using for your research? Because I use and am directly involved with a search tool called Real Estate Investar that is great for doing more detailed searches than your standard real estate website where you can tailor your research to the investment strategy you use.
For example, I can perform a search for properties within 30kms of postcode 6000 with a minimum block size of 750sqm and including keywords in the listing description such as 'subdivide', 'renovate', 'add value', etc etc and this would take no longer than 10 minutes to return a short list of properties that match my requirements.
If you are interested in more information on this, please don't hesitate to contact me as per details below.
Thanks
CorieWe haven't got into development as yet (we tend to buy units, renovate, furnish, then hold) but in my RE travels I've noticed both Balga and Osborne Park look like good candidates for capital growth – relatively close to the CBD, larger blocks with old houses still available, etc. If I could convince the husband, that's what we'd be doing, but he's a bit more risk averse than I am
Hi Petrona
I am just looking into subdivision and possibly developing in Balga at the moment. I wonder if you have any thoughts on a block we have – R40 zone 724sqm and not a corner block. Do you think it has some potential? I just read above that it takes anywhere from 9-12 months for subdividing. That is a long time – I have crunched a few numbers but since the above people have done the 250k club research (sadly the seats were full when I tried to join!) perhaps they/you could help out on a few more pointers??
Many thanks
MarieMarie,'
Dont be fooled by the 250k club. I am personally a member but in all honesty I think it was just some clever marketing to sell double passes to the 3 day conference. And dont get me wrong I think Steve is awsome and would pay the money to go to his conference without a second thought but being in the 250k club does not mean we have access to more info than others. I think it is designed to motivate individuals who join the club
I will gladly give you all the material and content that comes with being a 250k club member and you can make up your mind. One thing that I cant give you that came with the material is 2 tickets to the 2010 mega conference. But honestly if you want it you are welcome to borrow it.But getting back to your original question is that there is definitely potential in your block. Does it have a house on it at the moment? If so then you can apply for the DA and continue to collect the rent. if not, well you are just continuing to pay the costs associated with holding it anyway. Even if it does take 12 months and you make 80-100k then I think it is worth the time and effort.
I am currently looking for a site to subdivide/develop so if you would like to talk more then fell free to contact me any time on the details below or just reply to this thread.Man, I remember driving to Balga and looking at houses when we were over there. People thought we were nuts, "it's the worst area" etc. You could buy a house for $60k. I'll bet every one who owns there is laughing now. Just shows what time can do to a suburb.
Nice block there for 380k and I'd love to know how much they want for the 8 unit site on RE.com!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeHi Marie,
thanks for your reply. We are currently looking at a triplex block in Armadale. Our problem is the GST component if we develop and sell the 3 units. Someone has advised that we would have to pay GST but I'm also getting conflicting views – even from my accountant. It doesn't seem right if I'm not a commercial developer as the GST cost would kill the project. I will probably post on the main forum.Regards,
GHGH wrote:Hi Marie,
thanks for your reply. We are currently looking at a triplex block in Armadale. Our problem is the GST component if we develop and sell the 3 units. Someone has advised that we would have to pay GST but I'm also getting conflicting views – even from my accountant. It doesn't seem right if I'm not a commercial developer as the GST cost would kill the project. I will probably post on the main forum.Regards,
GHyes, capital gains tax
you are exempt if you are selling your personal homehttp://www.ato.gov.au/individuals/content.asp?doc=/content/36878.htm
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