WA Perth Development Sites

This happened to me before and i didnt learn my lesson. Proposed R40 rezoning and when the draft tps was revised and gazetted i was told i needed a min of 1300sqm. When i asked why such a high limit if no lots are over 1300sqm the response was they expect neighbours to buy each other out and amalgamate. What a d*head response.

 

2 or 3 months the policy will go for public comment. Make yourself heard. If enough people complain they may listen.

 

Nothing stopping you from writing to the Minister now. Get it on his radar. If enough people write it could influence his decision.

 

Hey guys I'm getting seriously concerned about how much money I could lose from my first property purchase here. I paid $430k loan of $449k. If I was to sell today for $400k(might be lucky to get that), I would be making a loss of $30k in price difference + $19k in purchase costs + $11k in selling costs = $60k. Do I cut my losses are now or wait a few months to see what happens with the market?

 

Property is a long term game. You should only be considering selling in your senario if it is preventing you making money in other markets. If you can't continue to hold for the timeframe then you may have to cut your losses. If it is causing you sleepless nights and stress because you believe the market will tank then it might be worth looking down that route for your healths sake as it is only money.

If you look around on this site you won't find to many of us looking to sell because of this down turn which we all know is part of the game. I have actually just re valued, refinanced and pulled out a lot of equity so that i have it sitting for when oportunities arise when ever that way be. And have just had another revalued yesterday which came in higher than a year ago so its not all bad.

If you can hang in there for the long term then I would suggest you look further into doing that rather than getting caught up in all the media hype and making a rash decision you may regret later on.

 

Thanks for the response. I can't stop thinking about how much I could potentially lose. $60k at minimum right now as it stands is my whole life savings that would be used to to cover the shortfall. I can't get it out of my head and think I'm going into a state of depression. It's not that I can't afford to keep the property but in the end if I'm going to lose more money then it might be better to cut my losses now. I am 100% not getting caught up in the media, only looking at what's for sale and what properties sold for in the area.

 

A loss is only a loss until you actually make it. Does that make sense? If you don't sell then yes the value may go down but you aren't actually making a loss.

Go to your basics. What was your strategy for the block - I know this has been thrown in disarray a bit - but is there hope in your strategy or alternative strategies that are available for the site? The suburb hasn't changed, the house hasn't changed, future plans for the suburb (infrastructure) haven't changed.

When you made the decision to purchase it, what was your risk mitigation. Was it a deal that you would only buy if the zoning went through perfectly and the market never moved? I'm hoping not. Normally with my purchases I try and buy something that has a back up plan and then not focus on the market too much except for end values of the strategy.

 

I agree with the others, hang on in there if you can, I know for a fact there will be quite a few objecting to the proposed changes so they may not even happen. In the medium term the new train station should lift values in the area and the market will turn around eventually.
Instead of focusing on the potential loss, can you shift your thinking to a longer term view? Sit tight and use the time to increase your knowledge and formulate a long term strategy.

 

I know what you are talking about. I paid near the top of the market for my first IP. It increased in price quickly at first and I was elated! Then the market cooled and the price dropped back to close to what I paid for it. I felt disappointed. A couple of years later, the market picked up again and the property almost doubled in price. Then it dropped right back again. Markets can be that volatile. What I needed to realise that I had not made any money or lost any money. That only happens when you sell. The good news is that it is on the market and the price has almost doubled in 8 years.

You will only lose money if you sell. The Perth market will pick up again. However you are looking at more likely 18 months to see prices stabilising or increasing. Think about a 10 year play. Where will be prices be in 10 years time? Property investing is not for the impatient.

 

Thanks for all of your responses guys. I understand everything of what you are saying, I just can't get it out of my head. I regret purchasing this property and probably any investment property so much... It was so easy to make the purchase but it's so hard to sit here and think of the worse... I am so torn.

 

If you like, pm me the address and ill run some valuations and numbers and have a look and i will give you some feedback to give you some idea if it is as worse as you are thinking. Put your mind at ease hopefuly.

This is the main reason I have shyed away from potential rezoning. Not so much the timeframes, but you do not know what the council will allow in their tps and until you know this you have know idea of what sort of dollars you can turn over.

I almost bought in ashfield in 2012 trying to get in on the rezoning before values rose. Numerous offers got knocked backed. Ended up buying a development ready site elswhere. In that time have developed it, turned the cashflow around and released the dollars in equity for the next project. If an offer in Ashfield had of come through, then I say I would be still waiting for the rezoning, negative cashflow, no value add and possibly only 50k in equity due to market movement. Far less than what I have achieved in the same timeframe.

If time is on your side, it can be a good strategy to sit and wait for the potential rezoning, but the risks are there.

The other thing in your favour is forrestfield is a popular family suburb due to the large blocks and lower entry level with less social problems. I know this because I looked in to this in 2012/13 when the rezoning rumours were out and was going to look for a ppor and develop later down the track. Numerous offers were knocked back so moved on from the area as it was starting to get to hot. This will work in your favour to help hold the value.

Chin up!.

 

Thanks mate. The address is 46 Salix Way. Will be discussing with family tonight hopefully that helps as I have been bottling it up.

 

I dont fully subscribe to theory that you only lose if you sell. I do get the point, eg is it just a paper loss if not crystalised but ultimately we all have finite capital, a property that has dropped in value is one we then cant refinance to do other things with or we might find our overall LVRs getting too high and being hamstrung from that POV too

So while a loss not being crystalised certainly has it's advantages the opportunity cost from both financial/access to capital and time pov can be a significant one.

 

Just same background for you guys on my position if it matters. I'm 22 and have saved $60k+ which is huge feat for me personally. I purchased the property using my parents property as guarantee which makes me feel even worse as they have worked so hard to make their property unencumbered before this. I'm out of pocket ~$200/month with this property + rates and repairs etc. If I cut my losses I would most likely have just enough cash to cover the shortfall of costs and sale price. I make ~$50k/yr gross so would the capital loss offset my tax for the FY? I still live with my parents and can easily save $2k a month.
The easy thing would be to hold onto the property and just keep it ticking over, not watching what the market does. But wouldn't that be just blocking out reality?
The hard thing to do would be to cop the loss now.
But I think the hardest thing would be if I held onto it and it went down to like $350k and I was looking at a $110k+ loss. I could also say it would be hardest if I sold now and it went up to $500k( even though I just don't see this especially with the draft policy)...

 

Well I have attached an APM valuation for you which are normaly quite conservative. They have always been lower than my bank valuations.

It is showing 426k with a confidence score of 1 which is great. And the amount of comparables is good for the accuracy of the report.Without seeing the inside I would put the value at 430-440k based on all the comparables so not all bad mate.

Is it currently R20 zoning?

 

Thanks for going to the effort mate I appreciate it. Note that the photos that are on that report are old and it's definitely not in that condition anymore, a fair bit worse.
http://i.gyazo.com/b802031375dbbe29f9bf8a8f93d59b78.png
http://i.gyazo.com/ea6c620008cbd9c51b9db63153852232.png
http://i.gyazo.com/404f02eae703de7d1a17d3ac3c3702ca.png
http://i.gyazo.com/43e223fe56a369be871153d6b80594a9.png
http://i.gyazo.com/df984ed961c9bbdc64d5b847e12fa56a.png

I would say it's mostly comparable to this property after I put new carpets, painted, tidied up etc.
7 Larch Place Forrestfield WA 6058 - House for Sale #121211886 - realestate.com.au

Edit: yes currently zoned r20

 

i would suggest a 2x2 granny flat in a "strategic" location on the property for the minute - then if subdivision happens you have future-proofed your development.

if zoning is finalised, add a room to the GF, a double carport and you're away....

 

I understand what you are saying but the opportunity cost would have to be fairly high to crystalise a $60k loss on a first IP purchase.

 

What do you mean opportunity cost? Granny Flat is out of the question at the moment... Still so torn... With the draft plans now how much do you think prices for 700sqm 3x1 like mine the area will fall back?

 

I also agree with this and certainly there are times when it is necessary to get out of a deal and have that loss. I'm not certain this is one of them until we have more information about strategy etc etc.
There is a fine line between buyers remorse and needing to get out of a deal as it will sink you.