Hi Experts!
West Perth unit prices have come down excessively since 2013.
I have seen many apartments come down 5-20% over the past couple years.
Commercial units in this business hub (essentially part of the CBA) have a current vacancy of 20% which is an indication on the area.
I am currently looking at a property that was sold for $400k in 2012 and the agent believes I could pick it up for $350k or even less.
I have gone through the strata plans and AGM minutes etc.
Rental currently at $400 a week (current tenant wants to stay in till January next year) which we both think is high so I would think this could come down to $350 per week.
Any thoughts on West Perth, units, current climate that should influence my decision on putting the offer in?
Hi there Marc,
I am a Perth based buyers agent specialising in investment property. Prior to purchasing Any investment property, you need to ask yourself the following three questions.
1) What is the supply side of similar property like? Have a look at the number of similar properties currently on the market, and look at what upcoming similar developments are up an coming. Over supply = falling values. Shortage = increasing values.
2) what is the land value of the purchase price? Land goes up in value, buildings depreciate in value. I will not purchase anything less than 65% land value, with preference for 75% or more land value.
3) What can you do to take the property to a higher and better use? eg subdivision, rent by the room, renovation. If you cannot do this, you do not want the property. You will be waiting for the market to lift your value, rather than forcing its value to rise. Success comes from active investing where you are not waiting for the market to lift your investment.
When you have answered the above, I believe that you will have the correct answer.
The condition of the Perth market very much depends where you are. Some suburbs are still going strong, eg Bayswater and Maylands, and others are in serious stress eg Baldivis, CBD apartment market and Clarkson. Some great stock is going first weekend with 5 offers and other great stock is sitting for months.
For the patient, there are some very good properties out there. For example, one deal I am still working on (we have been negotiating for 8 weeks) will return all initial capital + 50k and give my client a free house that can be subdivided in 2-2.5 years time, whilst retaining the house.
I trust this helps. If you have questions, my number is 0421 192 229, or just PM me.
David Hall
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