WA Buying in Lockridge Perth

Hi Experts

What do you think of buying in Lockridge for potential duplex or triplex development? Any particular issues there, such as plane noise etc?

Cheers.

 

Got any numbers crunched? I can't remember seeing sites around there where the numbers stacked up.

 

I went to Lockridge High (represent?). It was a fairly dodgy area then but has cleaned up quite a bit since.

I dont remember there being any plane noise - though routes have probably changed since then.

Like thatbum says though, I doubt the numbers stack up unless you're willing to hold on quite a while first for the land values to catch up?

 

Lockridge was one of the great performers in 2013/14 due to rezoning, land prices jumped significantly.

My guess now is that if you worked out the end values of what you would be developing, units/villas it possibly would not stack up due to current market conditions, and also because the end product value would be relatively low, because of the area/suburb. Bit like a Koondoola.
Show us the numbers, be interesting to see and perhaps I have it all wrong

MTR

 

okay quick and rough estimates, and please correct if I am wrong, I am totally new into this.

old rubbish house on 780 sq meter = $370,000
Demolition, earth works, utilities, surveyor, WAPC etc = $70,000
Three units of 3x2 turnkey = $600,000
Contingency = $60,000
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Total = $1.1m
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Sell each unit for 400k (???), Possibly profit of 100k? but the GST on the sales would eat into a big chunk of that....

Please comment and/or correct where I am wrong.

 

If you don't know what they are likely to sell for, then you haven't done enough DD.

If I had to take a stab, I don't think you'd get anywhere close to 400k, since 3x2 villas are selling for less than that in better suburbs.

You have some problems anyway because you should be aiming for 20% profit generally, and even on your rough numbers it seems to be nearly nothing after taking into account GST.

 

Thanks @thatbum for the valuable feedback.

How about buying the old house with big block now, living there and maybe developing in next 3 to 5 years. Do you see capital growth returning to this area in next couple of years?

 

Holding costs?

 

Then your strategy has changed into 'buy and hold', also known as 'buy and pray'. I think you need to take your time, keep reading these forums, and properly come up with a strategy.

If its still going to be developing, its really development 101 that you do not develop if the numbers don't add up. Waiting a few years doesn't make a deal any better.

 

Good point @MTR

 

Build costs too low? I know someone building 3 villas 3x2 similar size lot closer to 700k

Are there comparable sales in this area

 

Lol, actually I am doing this research for a friend who is renting and would like to buy something which he could live in right now and develop later when the market improves.

 

Buy and pray .... I love that

Don't do it if there is no money in the deal

 

Try Beechboro

Close to city
Decent homes
Low entry level
Look for corner lot retain original home and build new on 2 separate blocks/frontages

 

But I have got a feeling some time it is the only way to make money.

For example if there a rumour or proposal of new train station or a train line in a particular area, you might want to buy and pray that rumours/proposals eventuate. But if you actually wait until the plans are finalized and work starts, then you as a potential developer won't make money because the price will jump the moment sellers know the new train line is a done deal. E.g. do you think blocks near Forrestfield will sell for same amount as they were selling before the airport link was finalised?

 

What is Lockridge to other suburb in other states?
It is the closest to cbd with cheapest price tag

 

Heidelberg West. Previously, cheap, dodgy, housing commission slum. Now undergoing gentrification. HW is quite a few years ahead of Lockridge though

 

I purchased a property in lockridge late 2015 ex housing commission on large block 780sqm. In may 2016 received a letter that it is now r40. Had it revalued just recently and it has gone up 20%. However this is the fact that I purchased well under the market value.

I did a small cosmetic reno and installed an alarm system and have had great tenants since the beginning. I went for beechborro over lockridge due to better transport links, parks, upcoming projects, zoning changes and closer to the city.

Yes the name has a stigma, but I have never been concerned with WA stigmas as Balga was the start of my my IP journey in 2002 and I have never looked back.

Hope that helps

 

Yes your school has changed its name now to "Kiara College". Just like Mirrabooka SHS is about to change to "Dianella College".