WA Perth - IP $350-$400k - where to buy and what?

Hi everyone. Glad I found this chat.

Which Perth suburbs and what types of investment property (house, unit, apartment) in the price range of $350-$400k should I consider? Aiming for the stable long term rental income and possible capital gain in the future. TIA.

 

Hey Tony, welcome to the forums!

Without understanding your long terms goals...generally, we'd go house over unit over apartment. Do a search on RE.com.au to shortlist some areas in your budget.

Do you need a certain rental return?

 

Thanks, Jess.
As the property would be mortgaged it would be nice to have it not massively negative geared. Hoping for the positive gearing.

 

Are you a local? Which areas do you know well? I would start learning those areas first and then expand your search from there.

 

Hope is not a strategy You need to decide what the asset needs to deliver, not make your strategy fit the asset.

 

Hi Tia
I generally prefer houses, unless it's a small complex of apartments (less then 15)
some really good areas around Perth within that budget that are sitting nicely for future growth and are currently getting good yields.

 

I think I'm the first to the party in suggesting, focus on a house over a unit it's pretty hard to give you an exact answer without knowing more about your investment strategy. BUT, my advice would be:

• Jump on the REIWA map: http://maps.reiwa.com.au/#/marketView?location=-31.95285360,115.85733890&zoom=11
• Find the closest areas into the city with a median price within 5%-10% of your budget (under and over).
• Go to: SQM Research - Property - Residential Vacancy Rates - Perth
• Type in ALL the suburbs you have identified and work out which suburbs had an OKAY vacancy rate through 2016 - 2018 (when the rental market in Perth was bad)
• Knock out the suburbs which had a higher vacancy rate in the period and shortlist the suburbs that had a lower vacancy - this screen will give you a more steady rental area.
• Start creating a shortlist of properties in the 5 - 8 suburbs you shortlisted.
• Focus on properties 1990s and older, with land areas over 700m2 where the house is a little tired.
• Extra Pro Tip: Go to google and type in "{suburb} WA rezoning" - this will help you identify any areas with rezoning upside.
  
• Within each of these suburbs understand the micro markets (school catchments, rat race roads, etc)
• Go to AT LEAST 20+ home opens and see what each one sells for to benchmark value in the area.
• Then after this 4 - 8 weeks' process, start making offers on properties subject to build pest electrical. Make sure you miss out on the first couple (because if you get the first one, you have possibly paid too much)

There is a bit MORE than this, but these steps will get you 80% of the way there.

 

IMHO: No apartments. Stick to houses and villa/townhouses (with no/low strata fees). Closer to the city the better. Aim for 4%+ yields. Now that you have a list of houses that meet that criteria, do home inspections and see what you think.

If you look at what land is selling for in the current mark you'll be very surprised. So buy something with as much land as your budget will allow but still staying true to to the above constraints. Good luck.