WA What do you think about this as an IP?

Hi All,

Thought to run this past those who are from Perth but anyone who cares to comment:

135 Coode Street, South Perth, WA 6151

I am interested in this as an IP. Ticks a few boxes, close to CBD, 5km (?), decent block size, close to the river/ferry, golf course, zoo. Walking distance to Angelo Street, close to good private schools and the public school zone is not bad. Accessible to freeway both north and south bound.

The -ve are: an old home albeit well-maintained (from photos), Not cheap as land value. Future maintenance costs as an 1926 house, no subdivision potential (for now anyway), may be difficult to find tenant liking this type of rental property hence low rental incomes, and the still very depressed Perth market.

I don't have any specific preference, but I lived in South Perth before and thought it was a good and convenient suburb to be in. Also, I am starting shopping. What's everyone's view? Thanks.

 

I don’t see what the strategy would be here apart from buy and hold (pray)? I think for that sort of budget you could do better in terms of strategy and the type of property that would fit that strategy.

Your “positives” list could apply to any number of properties in the greater area - it doesn’t mean they are all good IPs remember.

 

Thanks Thatbum. It would be a buy and hold strategy. Kind of going into a blue chip suburb although I understand there are other blue chip suburbs too. My wish is to landbank a few properties if the bank permits. Seeing the northern part of South Perth is already plagued by apartments, and Como in the south is mostly subdivided, I bet on a good block of land might be precious in future, of course might be a very distant future. What would you suggest as alternatives? Love to hear more.

 

I rent very close to coode street.It looks bit overpriced.Have a look at comparable sales.Usually this price range can get you water views.

 

Look in VicPark ofcourse. Most undervalued inner ring suburb with ongoing gentrification

 

Thanks Radioactive. I saw some of the recent transactions at around mid-700 to 850/900k. Of course one cannot compare apple to apple. Those transactions were a couple of years ago. Has the Perth market has really picked up that much? Or it was wishful thinking on the part of the vendor? Not sure. I agree if I can pick it up at 850-900k, it might worth considering. Anyway... thanks for the input.

 

Thanks John, but Vic Park is a different kind of suburb. Agreed ongoing gentrification is a key factor. What about Kensington? Too stale? Even Vic Park is getting expensive from a $/sqm perspective.

 

As an outsiders POV - what else can you get for your $4-500k? Personally I'd rather two solid and dependable units with increased income and greater risk spread as $900k for one IP seems rather steep - especially in a volatile and mining dependent market such as Perth.

I read - a long time ago - to buy basic properties that always rent well to average people. Wish I'd followed that advice more as the two average 1970's, stock standard, brick and cement, walk up units I did buy at the time have turned out to be some of my best investments - never vacant - no maintenance - increased in value 50% over 9 years with nothing done to them.

Buy something that people move "up to" when times are good and "move down to" when times are bad

** holy crumbs - just looking at realestate.com and there are A LOT of units for sale for under $400k. Are you sure this is the right time to be buying in the Perth market?

 

Am I missing something? Its listed "from $1.275m" right? You think they would discount it that much?

Or are you saying its actually only worth around 900k?

 

Well, if it really sold for that much, than I take it as a good sign that Perth market has really recovered, or someone just wanted this property so bad that paying the requested price for it. I personally think it should be sub-$1M. But then it is only me. As some other had replied, with the requested amount, one can do better in other areas. But then I do see there are a lot of building work going on and more sales are sold, at least those I believe are good either for an IP or PPOR, but then that's only me, so that's why I need wisdom from here

 

Thanks Lizzie, good points. I have tried units/apartments before. I am a "land" person and so far the common wisdom is (although not always true) that land appreciate and buildings depreciate. So, if I can make ends meet, I am thinking during this depressed Perth market, I accumulate some good quality lands, with a rentable house, to make ends meet. Although like other PCers said I might have to wait and pray, but then most CG games are such. I agree units are good CF vehicles, particularly older boutique units, in more established suburbs close to the CBD. But given the apartment scene in Perth, I am not sure I should touch them as yet. The other options are investing interstate, but might have to wait for a while if Sydney or Melbourne are the targets. No sure...

 

It's probably not worth it's listing price but it will take a lot of time before it would get lower than it's asking price by that significant sum and quite likely never as the seller would probably pull the listing.
By researching suburbs and getting to know comparables you are more likely to find listings that are good value, rather than find things that are poor value and require Seller attitudinal adjustment.
I would add it to your list of listings to watch but concentrate on more likely targets.

 

Different yes. I call it Mt. Lawley of the south but without the price tag. Look at prices for the surrounding suburbs. Kensington, Lathlain (which has nothing going for it) - heck even East Vic Park.

Vic Park is a small inner city suburb with very limited stock and not overly high density zoning. Look at all inner city suburbs and you'll see why I say Vic Park is value for money with great fundamentals.

 

Fair enough - I like land too ... but do wonder at a $1mil property being a good "buy and hold". Do your sums on the income side too.

We have owned $1mil+ rental properties (our PPOR we rented out for 18 months) - maximum rent was $700/wk so a return of 3.5% gross ... compare that to units we own that are worth $350,000 and renting for $340/wk so a return of 5%+ gross.

Might not sound like much - but delve further. Can buy 3 units for $1mil+ for a total annual return of $53k ... versus ... one $1mil property for total annual return of $36,400.

** doesn't need to be units - plenty of properties around $500k where you could buy two

A major mistake investors fall into is buying a home "they would love to live in" ... instead of what rents well. Looking at the house you have linked - I think this might be your mindset - you would love to live there. And rentals with a pool can be a nightmare - you would probably have to provide a pool cleaning service to ensure it is maintained (and extra $200/mth cost).

As said before - you need to buy what people will move up to when times are good (from share accommodation/1 bedroom unit etc) and - most importantly - what people will move down to when times are tough.

Plenty of townhouses and villas (for a slice of land) in that sub half mil price range - in inner suburbs - and even a few houses:

29 Martin Avenue, Rivervale, WA 6103 (cash left over to develop)
95 Sunbury Road, Victoria Park, WA 6100 (rent 450-500/wk)
3 & 5 Gladstone Road, Rivervale, WA 6103 (buy both and carve out a third block)

 

For a more reasonably priced site with upsides like the ability to carve off a rear block with current zoning I'd be looking at something like this
89 THIRD AVENUE, Mount Lawley, WA 6050
#usualdisclaimer #donenofeaso #caveatemptor

 

I like proximity to schools but this is too close. Looks like HPA as well? My gut says a bit pricey for numbers to stackup. #donenofeaso

 

Good point, thanks Westminster...

 

Thank you Lizzie, good suggestions. Shall consider...