Hi,
We are finally in a position where we can afford to buy another property (we have a house we rent out in Yanchep) but I am not sure what the wisest choice is. I have my final three ideas below after a lot of research. Can anybody help me out with the wisest choice? I am still new to investing as our property we rent out was our home before we moved north. Our main aim is to maximise tax benefits now. Later down the track (5-10years) we would like to be able to sell a property to pay for renovations on our Yanchep property .
1. I have been researching the Kewdale/Cloverdale area. It is relatively close to the city and you can still purchase a house on a large block for around the $400K mark. My idea is to rent it out now until we are in a position to demolish and develop two or three units on the site.
2. Mandurah has had a huge boom in the last few years however you can still purchase property around $300K and rent it out. My idea is that with public transport going through shortly there will be more and more people who will find Mandurah appealing for its lifestyle and access to the city. I think there is still growth there in certain suburbs even though the market has slowed. Again have also been looking at larger size blocks to maybe subdivide.
3. The property market in Karratha is booming and rentals are sky high. Property is expensive but the return is great. We were looking at loaning more money to get a higher return although I am a little nervous about loaning over half a mill.
Can anybody give me any advice? Much appreciated.
NicoleK
The reality is that if you want to buy a property in WA you will be borrowing over $500k. There are a lot who say the resourse boom is over, but if you work in the north west you will already know from the ammount of projects planned up there that there are years left in it.
Karratha is still a good place to have property. Just try to get a hotel room there. The largest temporary acconmodation village was recently bought by Woodside for $25million, just to ensure worker's accomodation for the expansion to the LNG plant.
Perth property is taking a breather, as to get the median price past Sydney is a huge psycological hurdle, but there is still a lot of confidence in the market.
Hi NicoleK, I like all of your idea's.
Option 1) You need to consider cashflow/finance/ tax implications if you are to develop. I think it will have excellent Cap Growth.
Option 2) you can purchase a ready made product with minimum effort
Option 3) I haven't researched – You need to be aware that when mining finishes you may be left with a product that no-one wants so it may be a good idea considering you don't want to hold forever anyway
LindaHi Nicole,
I live in Perth and WA is the last place I'd be looking to invest. It is fine for the very long term but why invest in WA when there's better places to put your money?
I'm buying an investment property in Brisbane in the next few weeks. Melbourne is another option, perhaps Adelaide as another (closer) option. Do lots of research: websites, books etc. API magazine is a great resource. Lots of suggestions on where to buy and data to check.
Best of luck!
Mark
To state the obvious, capital growth is what your'e after , not income as I imagine the reason you are up north is for the big coin.
Infact the extra coin is probably the reason for your ability to purchase again, and subsequent desire for tax benefits (minimisation).
So forget the northwest option, as you will be paying huge money for a modest home, albeit returning insane rents.
This is a better option for people with an income focus.
So take a "fundamental approach" and stick to looking in areas with substantial redevelopment potential and subsequent high capital growth prospects.
Obviously the location and land content will be the critical element of your success, so don't worry too much about the house or the likely returns. As long as the property is serviceable and you can derive a reasonable rent , then capital growth will be almost a certainty and take care of itself.
That said, anything within 10km of the Perth CBD, close to swan or canning rivers or the beach has got to be a good bet.
Any land with at least duplex or triplex potential is a good thing. Beyond this you will find the yields will diminish excessively with substantially higher land values. Future redevelopment will also require huge dollars, perhaps beyond your means.
If development is not your thing, then stick to the same areas above and buy with a view to obtaining "good value".
Simply put, search for property which is undervalued relative to others in these areas or has high land value relative to the purchase price. This property will likely have good land content which will ensure good capital growth.
I'd also seriously consider interstate, as there really is better value outside W.A at the moment.
Affordability is a key factor for growth potential and this is a real problem for Perth residents.
Happy hunting !Mike
Thanks to everybody who has commented. I will take all of your comments on board. I have never looked at the interstate market, to be honest I thought it would be a bit of a ‘hassle’ but we have friends and family in Brisbane and Melbourne so I will look further into this. It may mean a trip east each year too which is never a bad thing! NicoleK
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