Who has purchased in Esperance

Hi Marisa,

My partner and I have bought 3 IP’s in Esperance at the bottom end of the price range mid last year and can share our opinions/experiences.

The suburb we bought in is not all that flash but there is an effort by Department of Housing and Works to remove the old Asbestos houses and pretty up the streets.

We figure that to replace a 3 x 1 in Esperance would cost between $215K to $245K depending on the construction. The 3 little cheapies we bought were under $80k with a rent return of about $155pw average. The logic we have followed is that these houses are well below replacement costs and that when demand increases so will values. (I have posted a similar thread on the other forum and found the replies not very favourable in this line of logic, in fact Esperance was shouted down as an over priced hick town). This is our first time in buying multiple properties and have thought it through well enough to have a go.

The research we did over the course of 2004 revealed that the cheap suburb had doubled in the mid 1990’s due to a large amount of public and private works at that time. Since then it has been nominated as one of the worst performing suburbs in WA, may be time for another bump? (again this logic is under scrutiny). The vacancy rate for residential housing is currently 0.1% to 0.3% with rent increases every 6 to 12 months CPI indexed.

The Ravensthorpe Nickel Operation (RNO) is valued at $1.2billion and is still in the construction stage, and will be in full swing in early 2006. BHP has sent a flyer around to all REA’s seeking new houses for their key staff in Esperance, as the Gallop Gov and BHP have singed a letter of understanding that the RNO would NOT be a fly in, fly out so as to keep the $$$$$$$ local.

The residential market has enjoyed a price increase over the last few months as with most coastal towns. The local REA’s believe it is a stand alone increase and not related to the RNO. The talk in town suggests that prices are yet to be influenced by the RNO, and expects an increase late this year into early next year.

Hope this is some help in making a decision.

JPD

Hi Marisa,

I should also add that there are only 3 REA’s offices in Esperance, with about 2 PM’s in each. We use Throp Reality and find that they are OK to average and like all PM’s in WA charge the going rate (over charge what they are worth). It appears that every time a small problem occurs they want the landlord to sort it out and don’t earn their $$ or respect from tenant or landlord. This seems to happen everywhere, not just Esperance.

Received an Email from the PM the other day asking me for direction on a tenant that has requested replacement fly screens and a barrier door. We bought this IP with the tenant attached. During all our inspections of perspective IP’s we photograph and carry out a detailed inspection report, which need to meet set standards before putting in an offer. This has proven invaluable for further reference, as the photos and report show that the screens and barrier door on this particular property were in excellent condition four months ago. Have Emailed the pics and report to PM, one of the photos shows myself and the REA inspecting the windows and screens in September before we put in an offer.

We self manage 2 IP’s in the City where we live and have found that the PM’s are more work that the tenants. I guess they are surrounded by REA’s and their tactics rub off. It would be a wounder surprise to experience a PM that is actually professional in their approach to property management.

We have used PM’s for about 15yrs now and lost count of the individual PM’s that have managed for us. In that time we have not found one that has keep to their contract or shown any ethics and most times the breach of contract has occurred in the first six months.

I apologise for side tracking your thread.

JPD