WA Our experience buying in Perth, WA

Hi PropertyChatters!

My partner and I have purchased an investment property in Perth after noticing some growth in the Western Australian market. Our previous investments were in NSW and QLD. We had wanted to diversify and saw good growth potential in WA, especially as their market had been stagnant for some time.

Historically, Perth property prices were driven by mining booms. These prices peaked in 2015 before rebalancing. The numbers show Perth prices have increased ~7% YoY. We expect Perth will likely set a new peak median house value over the next few years (this is our prediction only) with the increase in mining demand and migration from the East coast.




We researched the Wanneroo area and ended up purchasing a 4-bedroom house in a suburb called Darch.



Fig 1. Darch Suburb Profile (Source RP Data)

Reasons for buying in Darch:

· Location – 17kms north of CBD, 20min drive to the beach

· Increasing suburb population size

· Young families

· Lots of good schools and local parks

· Good local amenities and shops

· 85%+ owner occupiers (this group of buyers will drive property prices)

· Most homes in the area were well-maintained and of newer build

· Affordable price point, median $555K

· Prices have been flat for a few years which suggests potential for growth

· 5%+ rental yields

Here are the numbers for the property purchased:

· $540K purchase price

· 4 bed, 2 bath, 2 car

· $560 rent per week

· 5.4% rental yield (cashflow positive after all expenses + tax depreciation benefits)



Fig 2. Darch Property

Learnings

1. Always inspect the property and get a Build & Pest report. We generally do this in person, and when we can’t, we get someone we trust to inspect on our behalf.

2. Drive around the local neighborhood to validate your findings about the suburb. We were so impressed by how neat and tidy the gardens and homes were. It usually reflects a high proportion of owner-occupiers who take pride in their homes!

3. Take advantage of differing regulations with borderless investing. In WA, the contract of sale is subject to Finance, and Building and pest. This protects the buyer and can be used to our advantage because we can withdraw from the contract should either condition not be met.

4. Find out why the vendor is selling. Sometimes price isn’t the vendor’s highest priority – it could be settlement timeframe or another condition that could allow you to negotiate on price.

5. Having your finances ready early in the process lets you be in a stronger position to negotiate harder. As they like to say, “Finance first, property second”.

6. If there are repairs required, try to negotiate this in the price. Repair quotes can be used as evidence during negotiation. We found a few broken items that we were able to get the seller to cover.

7. Get a good property manager. They provide on-the-ground information and demand for houses in the area. In the first open inspection we had over 17 groups and it rented out in the first week! We even had a lady come up to us directly and offer $50 extra rent on the advertised price!

Hope this has helped provide some insights into buying interstate in Perth, WA

 

Welcome to WA!

 

Well Done
you have been generous sharing your research!
Hope you find and keep some good tenants, and a good PM,
best of all keep posting!

 

Thanks for sharing your thoughts and analysis, but honestly, a generic house in Darch?

I reckon you could have done better for $540k, even with current prices as they are.

 

15km from Perth with a dodgy ruler. It's 10km Tuart Hill Macca. More like 20/25km from CBD

 

@Jyh888 congratulations.

While 5%+ yields are getting a bit harder to get these days, you could have picked up a property less than 7k from the city and still have good yields and pays for itself with CG prospects to boot.

If you are in the market for another one, drop by the Perth threads

 

Congratulations @Jyh888

You are generous to share the learnings and congratulations on your purchase.

Regards

 

Thanks John. Still planning to invest more in Perth so will take a look.

 

Yes always better opportunities out there, it has been challenging finding stock. Everything sells very quickly so we were able to get this pre-market.

 

Darch is incredibly popular. Main thing is buying on a rise....

 

Thanks for sharing! think you’ve done well! 15-20 minute drive to the beach and you’ve got a low maintenance family home on a decent size block.

 

Thanks @Propin . Good to hear from a Perth-sider

 

I think they are called Perthies, sound like perverts lol

 

Well done.
I'm also east side and decided to buy in perth based on the numbers that made sense even before COVID hit back in march 2020.when COVID ramped up I delayed my purchase thinking I'd get a better deal. Late 2020 proved australia was starting to go mad so I jumped in using a BA in perth. Great decision. Got a 4x2x2 in noranda subdividable for $525'000
My thinking is even with the current uptick the perth market is still far away from the insane prices overhere on the east coast.

 

Amazing, great buy!

 

You could easily be looking at paying over $600,000 perhaps as much as $650,000, dependent on size of land, zoning and location


Great work..... timing is everything......

 

Great write up, thanks for sharing.
What tool did you use for the suburb analysis, in the second screenshot?

Can you expand on this a little?
> 85%+ owner occupiers (this group of buyers will drive property prices)

 

Darch WA 6065, Suburb Profile & Property Market Trends | Domain


reiwa.com - Suburb profile for Darch

 

The source of the data is usually from RP Data, Corelogic - you can google these.

One metric I like to look at for capital growth potential is owner occupier appeal and proportion of owner occupiers vs renters because home owners drive the property values.

 

Congrats on your purchase Jyh888. As buyer's agents in Perth we are constantly updating our research in an attempt to find suburbs that will outperform the market moving forward - something we have a great track record of doing. If you would like to have a chat prior to buying here again, let me know. Happy to assist with some free general direction, as this profile of property, in that location is not what we would have guided you to. All the best