I am after some advice please regarding purchasing and renting out of property in Kalgoorlie Western Australia. I am a teacher and live in a Government house. I believe I have the option to purchase this property at about 20% below the market price.
However this property is a fibro home that was built in the 1950’s or there about, and would need some work on it to bring it up to rentable standards.
I have checked to see what type of rent I could charge for a 3 bedroom house, and I could buy and rent the property creating a positively geared cashflow.
The question is: is this a good idea to undertake such a proposition in a mining town with a capital growth of 5% due to the gold price, and with a fibro house which is pre 1985?
Can someone assist me with some advice please.
Many thanks
David Osborne
As you are from Kal, you’re aware that it is a boom or bust town. When prices of gold & nickle are high, rentals shoot through the roof & vice versa. Generally, fibro houses are very expensive to work on. It is also very difficult to get tradesman who wants to work on them. Older houses generally have more maintenance problems with plumbing & electrical work. You’re better off to try locate a more modern property.
My own view is that Kal could be a promising place for cashflow positive property with yields of 9% common. Prices are low, average wages are high and there are many renters.
You can get a small 2 or 3br brick/iron unit near town for $70 – 100k. Rent would be approx $120 – $180pw.
Have just been there myself and the vacancy rate is currently low (approx 2.5%). I also sat in a real estate agents office for a while and there were people coming in looking for rental property.
Do your due diligence first, but after you’ve done this, I recommend you talk to Alistair Lavender at Fyson Strachan & Co in Hannan St who should be able to help with finding a place. Tell him I sent you!
One other agent I spoke to said I’d not be able to get a place within my budget. What he really meant was he had nothing listed himself – the local weekly property guide had several properties that met my requirements.
Peter
The margin you have built in to this property (20%) would seem to be an attraction straight away. I would imagine the repairs you talk about would have to be of a basic nature – otherwise our government wouldn’t let you live in it…..or would they?
If the repairs required are substantial you may end up with lots of depreciation to get rid of, and your cash positive out the window.
As you are from Kal, you’re aware that it is a boom or bust town. When prices of gold & nickle are high, rentals shoot through the roof & vice versa. Generally, fibro houses are very expensive to work on. It is also very difficult to get tradesman who wants to work on them. Older houses generally have more maintenance problems with plumbing & electrical work. You’re better off to try locate a more modern property.[:)Thanks for your reply I really appreciate the feedback and advice.
Many thanks
David Osborne[
]
My own view is that Kal could be a promising place for cashflow positive property with yields of 9% common. Prices are low, average wages are high and there are many renters.You can get a small 2 or 3br brick/iron unit near town for $70 – 100k. Rent would be approx $120 – $180pw.
Have just been there myself and the vacancy rate is currently low (approx 2.5%). I also sat in a real estate agents office for a while and there were people coming in looking for rental property.
Do your due diligence first, but after you’ve done this, I recommend you talk to Alistair Lavender at Fyson Strachan & Co in Hannan St who should be able to help with finding a place. Tell him I sent you!
One other agent I spoke to said I’d not be able to get a place within my budget. What he really meant was he had nothing listed himself – the local weekly property guide had several properties that met my requirements.
Peter
[
] Thanks Peter for the advice, it is very informed, and I will be following it as soon as I have finished my e-mails.Many thanks
David Osborne
The margin you have built in to this property (20%) would seem to be an attraction straight away. I would imagine the repairs you talk about would have to be of a basic nature – otherwise our government wouldn’t let you live in it…..or would they?
If the repairs required are substantial you may end up with lots of depreciation to get rid of, and your cash positive out the window.[
] The government would let you live in a house in need of reasonable repairs. What you have said about the costs of repairs is what was going through my mind in regards to the advantages and disadvantages of purchasing this property. Thank you very much for your input, you have assisted me in making up my mind in regards to the strategy I should follow.Ie not purchase this property.Many thanks
David Osborne
As you are from Kal, you’re aware that it is a boom or bust town. When prices of gold & nickle are high, rentals shoot through the roof & vice versa. Generally, fibro houses are very expensive to work on. It is also very difficult to get tradesman who wants to work on them. Older houses generally have more maintenance problems with plumbing & electrical work. You’re better off to try locate a more modern property.[
]Thankyou very much for your feedback. You have assisted me decide on my investment strategy greatly.Many thanks
David OsborneOh and another thing, buy a brick veneer + iron place rather than double brick + tile.
There have been subsidence/cracking problems in some areas (speak to the council’s building dept) and the council people & engineers recommend brick veneer. Also there are parts of some streets in West Lamington area that are best avoided due to this.
Ring the council – the building dept is very helpful. I opted for a building inspection by an enginneer (Duncan Jack of GHD in Egan St). It was expensive ($500) but I believe it was worth it as this is my first IP and I watched it being done and learned some things that will be useful for future purchases.
Adeline is the housing commission area, but they are redeveloping it. Lamington/Hannans is supposed to be the best area, but is less convenient to town. I decided on central Kal (10 min or less walk from town).
Before I went to Kal I zeroed in on a particular (long but quiet) street as being most desirable from looking at street maps got off the web and from the tourist bureau.
I won’t tell you which street, but if you look at the map long enough, it will become apparent. This was in neither the poshest or poorest part of town, but was the best for walking accessibility to town and uni without having to cross railway bridges, busy streets, etc. Data from past sales showed it was affordable. A site visit confirmed it was OK, and I ended up finding a suitable place there.
I got some long-term pricing info from the WA Valuer Generals ($
. This was based on a 1940s fibro house. It showed very stagnant prices over 10 years (apart from a mini boom a while ago) as well as a long-term tendencey for rents to decline. This is despite the population growth being steady (but not spectacular).The declining rent was a concern, but I asked myself would the average tenant want to live in a 1940s house. I decided they wouldn’t (especially if more modern places are available) and decided to disregard this information as I was getting a newer place. Time will tell if I am wrong on this count.
Peter
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. This was based on a 1940s fibro house. It showed very stagnant prices over 10 years (apart from a mini boom a while ago) as well as a long-term tendencey for rents to decline. This is despite the population growth being steady (but not spectacular).The topic ‘Kalgoorlie rentals’ is closed to new replies.
