WA Perth Region Time to Buy ?

In this market, 4% is not that hard to find in blue chip suburbs. That will actually cover most if not all of the mortgage expenses.

In outer suburbs, 5%+ is not that hard to find sometimes pushing to 6%+. Rental vacancies can be higher.

I personally would stick to inner city blue chip suburbs which also come with good CG potential.

 

Thanks for the explanation Tigress

Is this gross yield? It does seem low especially when I'm used to looking at 5%+ yield deals at SEQ. I'm also curious how could people afford to hold a Perth portfolio at such low yield in the past, when interest rates were at 7% or higher?

Cheers,
David

 

How do you figure 4% covers most if not all the mortgage expenses?
Holding costs are around 30%, so 4% gross yield is around 2.8% net yield, which leaves you significantly short of current investment property loans rates.

 

I should have clarified. Mortgage expense is interest and bank fees. Not principal, council rates, insurance etc. Also depends on LVR. 90% is 4.44% yield, 80% is 5% so on.

For IPs with 80% and above borrowing, interest is the biggest expense. Depending on LVR, interest rate(PI or IO), PM fees, the rental yield will cover most if not all of that interest expense.

Which leaves council, water, insurance etc. Thank you Negative Gearing.

 

I met a few guys from seemingly well off families (attended top non-government schools, families had yachts, businesses, etc) around 23 years ago who told me their parents, friends parents and relatives invested in property and kept rents low so they didn’t have to pay tax. I think my interest rate was close to 10% then. The cheap properties in Perth were so cheap back then though!! I didn’t follow Property in Perth until a few years later Eg - 20 years ago when I was looking at 3bed homes in Ashfield opposite the swan river 1200sqm block would be advertised for $250,000. Would sell for more than $1mill now.

 

Yes it's gross.
Our current average yield and vacancy rates are not good because it's bottomish of the market. SEQ will be better yield as it's in a better market position.
When the Perth market picks up we'll see improved yields and lower vacancy rates

 

As my PPOR search continues I find myself in situations like this....this property came up in my search that is set at <600k....no price on the ad of course, quick search I find it sold for 675k in 2014 ( peak ) so am thinking probably looking at low 600 mark....call agent, currently multiple offers over 700k.....market is on the move I am quite sure of that
Happiness on Holbeck

Now if someone can just find me an un renovated one of these for 500k i'll be a happy woman

 

If you assessed the value of that property based on "no price on the ad of course, quick search I find it sold for 675k in 2014 ( peak ) so am thinking probably looking at low 600 mark.." then you'll have this issue time and again. Also fair value doesn't always stand true when the place looks like FHBs are gonna be eyeing for it.

Keep at it, you'll find something you like. Unless an absolute bargain avoid places that look pristine and all done up or else you'll be paying for someone's else profit margin.

 

Exactly! This is what has happened, people like pretty and shiny....I personally dont think this property is worth over 700k offers but hey things are only worth what someone will pay for them and people are wanting to pay it
Its getting hard to find properties that haven't been renovated, have tried getting an "in" with agents so as to hear about properties before they officially go on market but that has not been overly fruitful either....almost feel cheeky enough to go door knocking haha or making my own flyers like the REA do