Hi,
I would like to have some advice on what can be done or have I done the right thing or not?
I have just bought a unit/small house in Perth Northern Suburb of Madeley, the unit was built in 2008 on 228sqm block. There are around 20 units in that strata. The current strat fees are low around 160 per quarter.
My borrowing power was $430K and I bought this unit on 400K.
I have checked previous sale price of similar unit and have found out the price has constantly stayed 400K in last 4-5years. I am wondering if this unit of mine will appreciate or depreciate in value over few years time?
I was also thinking of renting it out after 2-3years staying in it.
I would appreciate some advice.
Many Thanks,
Neetish
Hi Neetish
Most capital city markets have been relatively flat over the last couple of years. This could be attributed to a period of high growth post GFC that had most capital city markets experiencing double digit growth within a short period of time.
I'd look at what, if any, growth drivers there are in the area. Is there anything that suggests that unit values within the area will increase in the future? There's a good book by Margaret Lomas called 20 must ask questions that will give you an idea of the type of things to look for in an area.
If you're planning on renting it out in a few years – does this mean you'll be purchasing another PPOR? If so, you may need to look at your current loan to see if it's set-up correctly.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
$160 per quarter for strata is dirt cheap. What is the net yield on the property?
Regards
Shahin
TheFinanceShop | Elite Property Finance
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I think it's a PPOR.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie and Shahin,
Shahin, how / where can I check the net yield of the property, sorry but I still a beginner in this market.
Jamie, yes thats right, I'll try and purchase another property after I have made some equity in this one?
I have check the old listings, and have noticed that the most of the prices for larger properties near by in last couple of years have been going down.
Let me know if you require more information.
Thanks,
Thanks Jamie and Shahin,
Shahin, how / where can I check the net yield of the property, sorry but I still a beginner in this market.
Jamie, yes thats right, I'll try and purchase another property after I have made some equity in this one?
I have check the old listings, and have noticed that the most of the prices for larger properties near by in last couple of years have been going down.
Let me know if you require more information.
Thanks,
No worries.
If you suspect that you may own another PPOR in the future then I'd avoid paying down the principle on your current PPOR loan – as this debt will become deductible once it becomes an IP.
Instead, I'd set up an offset against the loan and change it to interest only – park your spare savings and extra repayments in the offset.
This article I wrote explains the concept in more details.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
What are the current outgoings i.e. strata, water bills, loan interest and what is the proposed rental return? If your strata is only $160 then the yield should be good. If the yield is decent then this is a good thing. This helps with CG but there are other factors such as supply and demand for the area that comes into play with CG.
I was thinking whether you could add value to the property via a reno but it was built in 08 so there is not much you can do other than hope for decent organic CG.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Shahin,
It says its water rates are approx. 200 per quarter and starta rates are 160 per quarter, Interest I believe is around 400 per week.
The unit is opposite to Amstel Park reserve (kind of forest), but just behind it there is a new children(general) park getting built plus it is in proximity of the local primary school as well, major shopping Centre is 4mins (1.5km) far.
What I am worried about is given the lower land size (228sqm), is it a trend that villa and units tend to depreciate and not appreciate?
As my research shows that property built in 08 has same price tag till now. However, larger properties near it have slightly fallen.
Thanks
np
Is this a villa or unit? Either way 228sqm is massive for a villa or unit.
Going back to your question – there is no black and white rule. It will ultimately come down to supply and demand of the area, are there any plans to drive people in or out of the suburb, etc?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Well it is a unit, but the seller had described it as a house. Well the suburb is one of the richest suburb as you would not find any house below 550K however, these are established in last 7-8 years. so they are fairly new.
Thanks,
Neetish
A 228sqm is gargantuan – is this normal for the suburb?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi Shahin,
Well this is normal for most of the villas and units here in Western Australia.
And the suburb has not many units as most of them are expensive houses?
Cheers,
np
Is the 228sqm including courtyard or is the actual interior floorspace?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
The 228sqm sounds like the entire block size.
We've got a 3 bedroom unit/villa that sits on a 300m2 block.
It's usually big enough for a front garden and a bit of a courtyard out the back.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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