Advise needed; Perth

Discussion in 'What to buy' started by AnasWestie, 29th Jan, 2021.

Join Australia's most dynamic and respected property investment community
  1. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    Gidday Investors,
    I need your advise regarding a property in Thornlie WA
    Its a corner block potential R30 zoning, 961sqm
    They are asking for 489k I feel that the property is overpriced considering that the house is pretty old and the value is only in the land.
    480k + 20k Stamp duty + 50k subdivison/Demo that is 550 without the other hidden fees. Lots with title in Thornlie between 180k - 280k

    What would you pay?
    Your advice is appreciated.
     
    Last edited by a moderator: 6th Jun, 2021
  2. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,788
    Location:
    Perth, WA
    Yes it's "overpriced" considering its development potential, which is true of 99% of advertised properties with development potential.
     
  3. spoon

    spoon Well-Known Member

    Joined:
    17th Nov, 2016
    Posts:
    1,762
    Location:
    Time-dependent
    "Potential" is an interesting word. It can be next year but can be next decade or never. :rolleyes:
     
    Ketsle likes this.
  4. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    Hey Bum,
    Thank you for your input, I am here to learn from more experienced investors. I am an East Coast lad, visited Perth and fell in love with the slow based, friendly vibe.

    What would you pay for this property? What do you think would be a reasonable offer?

    Regards
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,098
    Location:
    Sydney or NSW or Australia
    Will 930m2 yield three sites under R30?
    What will services/subdivision cost per site?
    What's left for you if you can sell each for $180-200k?

    Is two x duplex sites viable? ie 2 x 480m2 sites with a duplex on each?

    What else could you do?
     
  6. Zeehan

    Zeehan Well-Known Member

    Joined:
    22nd Aug, 2015
    Posts:
    161
    Location:
    Australia
    As you are not really familiar with Perth, or Thornlie, and as a resident of Perth for 70 years just moved interstate, my advice for you would be “go west young man”.
     
    Last edited by a moderator: 6th Jun, 2021
  7. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,874
    Location:
    Australia
    So here's the thing about 'over-priced', it's relative to something. One of the critical mistakes that can be made in markets like this is that people are constantly and only looking at data from 2-3 months ago (or even a few weeks ago!) and not taking into account the realistic situation on the ground.

    We would never, ever suggest engaging in FOMO and becoming exuberant on the basis of frustration or emotion. However, this is different to genuinely recognising that if you are only looking at historical data in a fast moving market, you are likely going to miss out a few times until you've caught up as to what is actually happening on the ground, and will likely end up paying more than what you should have paid a few offers/properties ago.

    In my younger days when I was just unofficially helping people with buying I got caught in this one time and missed out on a great property because it was the first weekend I'd been out searching for this particular brief (for my Dad actually). I simply didn't have my finger on the pulse as to what was happening on the ground. I learnt pretty quickly on that occasion! It was the first weekend I'd been out searching and it was a bitter pill because had that particular property been the first open on my second weekend of searching I would have approached it differently and likely secured it.

    My overall point is that whilst you should never over pay due to emotion or frustration, increasing your price on the basis of being realistic about prices setting new records in a given market is still basing your decision on rationale and not necessarily over paying.

    Prices can quite literally increase on a weekly basis in some cases and vendor's expectations (often rightly so) will increase during a campaign. At the moment it's not uncommon for us to appraise a property above what the agent is guiding because we just know what it's going to sell for so there's no point in wasting anyone's time. As one example there was a property late last year guiding $2.1 - 2.2m and we appraised it at $2.4m. This put it outside the clients' budget so we didn't pursue, but it sold for $2.42m just prior to auction with a last minute flurried bidding war between 2 buyers over 24 hours, ending more than $200k above the high end of the initial guide.

    Another good thread that somewhat deals with a similar line of thinking (with some of my further thoughts) can be found here.

    I hope that helps a little.

    - Andrew
     
    Last edited: 29th Jan, 2021
    jaybean likes this.
  8. Propin

    Propin Well-Known Member

    Joined:
    7th Mar, 2016
    Posts:
    3,618
    Location:
    Perth
    Ate you looking to buy here to live in the future?
     
  9. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    That is a good option too.
    I am not sure if the Perth Market is the kind of market that attracts Duplexes as 90% of dwellings in Thornlie are Houses.

    I would definitely consider a duplex if I find out that it is viable option.

    Any idea regarding the cost of subdivision, is it per lot or the cost is congregated together usually?
     
  10. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    Thank you for your advice.
    Wherebouts in the West do you recommend?
    What is your insight about Thornlie?
    Thank you
     
    Last edited by a moderator: 6th Jun, 2021
  11. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    Totally agree with you however, Perth's property market proved to be radically volatile where it can hit rock bottom and then fluctuate, I am reluctant to spend 480k + 20k SDuty + 50K+ on subdivision only to see the property market decrease again after the diminish of the Government incentives!
    There were similar size property that were sold 3 months ago for only 320k!!
     
    Last edited by a moderator: 6th Jun, 2021
  12. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    At the moment I am looking to buy to invest, however I will move there in the near future, but possibly after I subdivide and build.
    What are your suggestios?
     
  13. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,858
    Location:
    Perth
    Reverse engineer it.
    What does end product sell for?
    Then work out what you need to pay for the block for 2 or 3 units.

    If you buy it as a PPOR renovate it. Will you have over capitalised?
     
    Last edited: 29th Jan, 2021
    Westminster likes this.
  14. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    I am confused. The site is a triplex (3 house) site so if you did a duplex (2 houses) then that would be closer to what most dwellings are in Thornlie?

    You need to be across all the options for the block and the costings if you want to be able to work out it's profitability and how much it is worth to you.
     
    Scott No Mates likes this.
  15. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,098
    Location:
    Sydney or NSW or Australia
    I suggested 2 pairs of duplexes ie 4 dwellings not 2 - you want highest and best use not useless and costly.
     
    PeterCr likes this.
  16. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    ah sorry I read too fast.
    The site is not capable of that with it's density. It is at most a 3 house site unless it had a special purpose dwelling (aged/dependant, granny flat or single bedroom dwelling) which may give a further density bonus.
     
  17. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    Your input is always beneficial thanks mate
     
  18. AnasWestie

    AnasWestie Well-Known Member

    Joined:
    29th Jan, 2021
    Posts:
    87
    Location:
    Perth
    I am looking to rent out for now and then potentially live in it in future