Hi All, New to the forum. Looking at purchasing my first investment property in Perth. I’ve identified a couple of blocks about 14km south of the CBD that are possibly to be rezoned R40. Both have existing dwellings that are 3x2’s with nothing particularly attractive about them apart from good location re schools/shops/transport. Both are over 700sqm, and with rezoning, potentially subdivisible in the future. Any thoughts on whether these would be a good investment option with less yield but potential capital growth, as opposed to a 4x2 outside the rezone areas with better rental yield and owner/occupier appeal? Any advice appreciated!
Sounds like South Lake. Anyway there's certainly not enough information to make a call either way. Buying something with development potential - even if you're not planning on developing - adds a layer of complexity to the DD and analysis required, so its very much a site by site basis whether a purchase is good If you do decide to go for something with development potential, make sure you are good enough at understanding that potential so you don't overpay.
Adding to Thatbum's comments, I think buying in Perth now is also the holding costs if you are not sub-dividing immediately. If the house is rentable, how much you can get vs. outlays? If not in a rentable condition, but you are not immediately subdividing, how much you need to spend on reno to bring it up to rentable condition? Be aware of the possible deletion of negative gearing is looming after next election. That's my 2 cents worth...
The million dollar question is how long till the zoning comes through? The yield question is only very temporary if zoning comes through now and you build a second dwelling, for eg.
A lot of places that are marketed as proposed rezoning may already have an uplift in them which will eat into your future capital growth. As mentioned you want a block that has the potential rezoning but not pay for it. You need to be able to know which is the good ones, know if you want to do the subdivision or just for it to go up in value and sell it as is. If you just want it to go up in value then you really need to make sure you're not paying too much for it now.