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Property Newsletter – April 2017
April 7, 2017 | 
Author What are the holding costs of an investment property?
When it comes to property investing, most of the focus is put on the cost to buy the asset. However, there are also ongoing expenses that investors need to be aware of.
If you can’t meet these ongoing costs, then you’ll likely be forced to sell the investment property and end up in a worse situation than when you started. Therefore, it’s essential to know that you can afford the associated holding costs.
But what are some of the typical holding costs of an investment property?
Property management fees. A good professional property management firm will proactively manage your portfolio and deal with any issues that may arise. The cost and level of service will differ between companies so it’s important to complete research and find a company that provides add-value recommendations and annual reviews to optimise your properties’ returns. While this is a holding cost, it’s important to note that property management fees are tax deductible.
Strata fees. Apartments, villas and townhouses will often require investors to pay strata fees, which are the responsibility of the landlord, not the tenant. These fees are used to maintain common areas of the property (i.e. lifts, gymnasiums or garden maintenance). The more additional features there are within a complex, the higher the strata fees will generally be.
Maintenance costs. It’s advised to set aside some buffer funds for annual maintenance jobs, particularly if your investment property is an older house, but could also be required for a villa or townhouse. The buffer funds can be used for any unexpected costs such as replacing rusting gutters, the lopping of overgrown trees or to lay new carpet or for a fresh coat of paint.
Mortgage repayments. Mortgage repayments are generally the biggest holding cost for an investor. However, it doesn’t have to be a drain on your hip pocket. For example, for investors on tighter budgets it would be better to target properties with higher rental yields to help cover more of the mortgage. On the other hand, investors with bigger budgets don’t have to be as concerned with finding a property with high rental yields. As a general rule of thumb, properties with higher rental yields will record lower capital growth, and vice versa. Therefore, investors also need to consider why they’re buying an investment property – for rental income or for capital growth?
Insurance. There are a number of different insurances that investors can buy to help protect themselves, their assets and to minimise risk. These include income protection insurance, landlord protection insurance and life insurance, among others. In the event that you fall ill, lose your job or your property is damaged, these types of insurances will help cover financial loss and keep your investment journey on track.
By factoring in the associated holding costs of an investment property, you’ll minimise the risk of financial difficulties in the future after acquiring your property.
4 factors for choosing a builder for your next property development
To secure the most competitive contract for your next residential property development, thorough due diligence of potential builders is essential. Here are 4 factors that need to be considered to help you make the right decision.
The quality, timeliness, cost and overall service provided by residential builders varies dramatically from company to company, which is why adequate due diligence is important.
To help select the best builder for your project, here are 4 factors that need to be considered.
Don’t necessarily choose the cheapest builder.
While it might be tempting to choose the builder with the cheapest quote, it’s important to consider the quality of their work. By choosing a builder with low specifications, it may cost you more in the long run, as errors may need to be rectified or low-quality building specifications may lead to poor finishes
Consider the type of projects the builder specialises in.
Builders won’t be specialists in all construction types, so it’s important to choose a builder with recent experience in the type of project you’re completing, whether it be a group of villas, apartments, or a triplex. For example, if your development is a group of 2-storey townhouses, engage builders with plenty of prior and recent experience with these types of projects.
What clauses are in the contract?
While price is important, part of the negotiation will need to cover contractual conditions. Does the builder want to include any favourable conditions for themselves, such as inclement weather provisions that provide them with more time to complete the build in the advent of extreme weather? On the other hand, will they allow you to include clauses for penalties in the event that they don’t complete the build on time, or any other special conditions?
What is the financial standing of the builder?
Make sure the builder has a strong financial standing to ensure they’re likely to remain operating in the near and long-term. If the builder goes broke halfway through your build, you’ll have to appoint another builder, which can be very difficult and will lead to delays and extra costs. There are also implications if the builder closes after the project is complete, as your building warranty could become void and defaults may not be able to be rectified. To gain a good understanding of the builder’s finances visit some of their worksites and speak to their trades to see if they are paid on time. You can also ask the company for their latest tax invoice or order independent reports about builder’s finances and risk profiles.
By failing to complete adequate due diligence on builders, you increase the risk of ending up with a poorly built product as well as increase the chances of time and cost blowouts.
So it’s easy to see why it’s highly beneficial to complete thorough research and choose your builder wisely.
Suburb bursting with historic charm
Guildford was one of three towns established during the founding of Perth’s Swan River Colony in 1829.
The historic suburb, known for its colonial architecture, is located in the City of Swan approximately 13 kilometres north-east of the Perth CBD.
It is bound by the Swan River in the west and north, and Helena River in the South.
Its population of 1,882 has a median age of 42 years with 32% identifying as professionals, which is significantly higher than the state average of 19.9%. 14% identify as clerical and administrative workers and 14% as managers.
Housing in the area is predominantly low-density residential with commercial along the main thoroughfare, James Street.
About 83% of stock is classified as houses, 11% as semi-detached or townhouses and 5% as flats, units or apartments.
About a quarter of stock is being rented (26%) and 72% of properties are either owned outright or being purchased.
The median house price for the area is $650,000.
Neighbouring suburbs include Bassendean to the west, South Guildford to the south and Woodbridge to the east.
There is good schooling in the area including Guildford Grammar School and Guildford Primary School.
Features of the suburb include Fish Market Reserve, Stirling Square and Guildford Hotel, while nearby amenities include the Swan Valley, Perth Airport and Midland Gate Shopping Centre.
It also features good public transport with the Midland train line cutting through the suburb offering two stations, as well as bus routes along James Street and Great Eastern Highway.
Deals and Don’ts – Morley, Edgewater, Spearwood
Here we take a look at just some of the different properties on the market and explain why they’re either deals (that represent a good investment) or don’ts (that should be carefully avoided by investors).
Deals
Morley
Purchase price: $520,000 Purchase date: January 2017 Block size: 359sqm Specification: 3 bedroom, 2 bathroom duplex built in 2012, zoned R20/25.
Deal: This property represents a deal as it offers a high specification finish and strong cash flow with a 4.23% rental yield. The duplex is just 9 kilometres from the CBD and has a good 359sqm land holding for a relatively new asset.
Edgewater
Purchase price: $480,000 Purchase date: January 2017 Block size: 723sqm Specification: 4 bedroom, 2 bathroom house built in 1982, zoned R20/40.
Deal: This property represents a deal given its strong development potential, being zoned R20/40 and situated on a corner block, which would allow for an enhanced development design. The dwelling is also in a highly rentable condition with 4 bedrooms and multiple bathrooms suited to families, and delivering an estimated rental yield of 4.55%.
Spearwood
Purchase price: $478,000 Purchase date: January 2017 Block size: 693sqm Specification: 3 bedroom, 1 bathroom house built in 1972, zoned R30/40.
Deal: This property represents a deal given its location opposite a park and high development potential, being zoned R30/40. While the fitout is basic the property would offer estimated rental yields of 3.21% and represents a good land holding.
Don’ts
Wembley
For sale price: $240,000 Specification: 2 bedroom, 1 bathroom apartment
Don’t: This property doesn’t represent a good investment because it is located on a busy road in a large 126-unit complex. The complex is dated and poorly presented with little chance of revitalisation due to the strata-ownership style. State housing is prevalent in the area due to the affordable nature of the property types surrounding. Currently 5 properties are for sale in the complex, showing continual supply being added. The property was on the market for sale for 151 days in 2016, and has been re-marketed in 2017 being on the market for over 60 days without sale.
6 top reasons to consider residential development syndicates
Residential development syndicates are often touted as highly lucrative, but are there other reasons sophisticated investors are choosing this investment type?
Many investors will, at some stage in their journey, consider developing a property on their own. But is direct development always the best strategy, or can joining a development syndicate be a more appropriate option?
Here are 6 top reasons to consider residential development syndicates as part of your investment strategy:
Access to larger, higher-quality investments
Development syndicates will often be multimillion dollar projects that the large majority of individual investors simply couldn’t fund by themselves. Even for high-net-worth individuals, who could bank-roll such projects, the risk of putting all their funds into one project is simply too high. Development syndicates allow investors to access these larger, higher-returning investments that are otherwise out of reach for many.
Lower capital investment
Instead of undertaking your own development or buying an investment property, which would cost potentially $1 million-plus, residential development syndicates generally require a minimum investment of between $50,000-$100,000, making the capital outlay significantly lower.
Greater diversification of assets
As the capital outlay is lower, investors are able to spread their funds across multiple investments. This could be in several residential development syndicates or incorporating commercial syndicates or direct commercial or residential property investment into their portfolio as well. By holding a greater diversification of assets, investors are effectively mitigating their risks.
Shorter-term investments
Residential development syndicates often provide investment terms of 2-3 years, providing returns in a much shorter timeframe compared to direct residential investment.
Managed by professionals
Provided you engage a company with a good track record, residential development syndicates will be managed by a team of professionals who can utilise their expertise to secure the best results for the project. They will take care of researching and negotiating the acquisition of a development site to planning approvals and ensuring the designs are targeted to the right target market. For individual investors wanting to undertake a development, it can be extremely time consuming and difficult to manage all this on their own, which is why residential development syndicates can be a better option.
Less stress than completing your own development
Residential development syndicates are managed by a professional team, meaning investors only have to provide the funds and wait for the returns at the end of the project. The syndicator will complete all the work, from finding and acquiring the site, to assisting with project designs and approvals as well as construction and sales of the project. Good syndicators will provide investors with regular updates regarding the progress of the project.
Residential development syndicates can offer unique opportunities to investors, but that doesn’t mean they are suited to everyone. It is recommended to speak to an advisor to determine how these residential development syndicates fit into your investment strategy.
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Finance Newsletter – April 2017
What’s going on with interest rates?
With the current changing market conditions how do you know if you have the best rate available for your home and investment loans?
You may have noticed a Difference between home loan and investment loan rates? You might be able to save thousands per year in interest by reassessing your current loans. It costs nothing to find out.
If your interest rate is over 3.79% variable then you may be able to save by changing loans and or banks. I have access to a major bank that is currently offering customers a 3.79% variable rate (3.83% comparison rate) .This NOT a honeymoon rate, discount is for the life of the loan. Conditions apply – owner occupied homes only, principal and interest payments, minimum loan $150 000, 80% LVR maximum – No application fee, monthly or annual fees. If you are interested in saving thousands per year call Mercia finance to see if we can show you how to benefit from a better rate. We can also show you some great fixed rates and investment loan discounts. An example of what the above may mean to you – an average mortgage of $450 000 at the average big bank discounted rate of 4.4% = an annual interest saving of $3 105 per year. I may cost you little or nothing to get this rate for your mortgage – find out today.
Investors will have read that most banks are increasing the rate on investment loans. This includes current investment loans. If you are a property investor check your rates and find out if these increases apply to you. If you are not sure, ask Mercia finance for an obligation free loan check. Some institutions are not increasing the rates for investors. So this is a good time to make sure you have the best loan for your circumstances.
If you have questions regarding any type of loan, call Dan Goodridge on 04144 233 40. Our service is free of charge to you the borrower and we have access to all the major lenders in WA. Call us anytime. After hours is OK.
Tax Newsletter – April 2017
Ride-sharing drivers must register for GST
In a recent decision, the Federal Court has held that the UberX service supplied by Uber’s drivers constitutes the supply of “taxi travel” for the purposes of GST. The ATO has now advised that people who work as drivers providing ride-sharing (or ride-sourcing) services must:
- keep records;
- have an Australian Business Number (ABN);
- register for GST;
- pay GST on the full fare they receive from passengers;
- lodge activity statements; and
- include income from ride-sharing services in their tax returns.
If you work as a ride-sharing driver, you are also entitled to claim income tax deductions and GST credits on expenses apportioned to the services you have supplied.
TIP: You must register for GST if you earn any income by driving for a ride-sharing service. The usual $75,000 GST registration threshold does not apply for these activities.
Tax offset for spouse super contributions: changes from 1 July 2017
The ATO has reminded taxpayers that that the assessable income threshold for claiming a tax offset for contributions made to a spouse’s eligible superannuation fund will increase to $40,000 from 1 July 2017 (the current threshold is $13,800). The current 18% tax offset of up to $540 will remain in place. However, a taxpayer will not be entitled to the tax offset when their spouse who receives the contribution has exceeded the non-concessional contributions cap for the relevant year or has a total superannuation balance equal to or more than the general transfer balance cap immediately before the start of the financial year when the contribution was made. The general transfer balance cap is $1.6 million for the 2017–2018 year.
The offset will still reduce for spouse incomes above $37,000 and completely phase out at incomes above $40,000.
TIP: Contact us for more information about making the most of super contributions for you and your spouse.
ATO targets restaurants and cafés, hair and beauty businesses in cash economy crackdown
The ATO will visit more than 400 businesses across Perth and Canberra in April as part of a campaign to help small businesses stay on top of their tax affairs. The primary focus is on businesses operating in the cash and hidden economies. ATO officers will be visiting restaurants and cafés, hair and beauty and other small businesses in these cities to make sure their registration details are up to date. These businesses represent the greatest areas of risk and highest numbers of reports to the ATO from across the country, and the visits are part of the ATO’s ongoing program of compliance work.
Super reforms: $1.6 million transfer balance cap and death benefit pensions
Where a taxpayer has amounts remaining in superannuation when they die, their death creates a compulsory cashing requirement for the superannuation provider. This means the superannuation provider must cash the superannuation interests to the deceased person’s beneficiaries as soon as possible. The ATO has released a Draft Law Companion Guideline to explain the treatment of superannuation death benefit income streams under the $1.6 million pension transfer balance cap that will apply from 1 July 2017.
The Draft Guideline provides that where a deceased member’s superannuation interest is cashed to a dependant beneficiary in the form of a death benefit income stream, a credit will arise in the dependant beneficiary’s transfer balance account. The amount and timing of the transfer balance credit will depend on whether the recipient is a reversionary or non-reversionary beneficiary.
Tip: To reduce an excess transfer balance, you may be able to fully or partially convert a death benefit or super income stream into a super lump sum. Contact us if you would like to know more.
No deduction for carried-forward company losses
The Administrative Appeals Tribunal (AAT) has ruled that a company was not entitled to deductions for carried-forward losses of over $25 million that it incurred in the 1990 to 1995 income years. The AAT found that the company did not satisfy the “continuity of ownership” and “same business” tests that applied in relation to the 1996 to 2003 income years, when it sought to recoup the losses. In relation to the continuity of ownership test, the AAT found that the interests the relevant shareholders held during the loss years were different from their interests recoupment years. The AAT noted that the taxpayer company was obligated to keep appropriate records, even though 25 years had passed since the first claimed loss year (1990). The Tribunal also found that the company had clearly not met the requirements of the “same business” test for the different years in question.
TIP: This decision illustrates the need for companies to keep appropriate ownership records year-by-year to support any future carried-forward loss claims.
Overseas income not exempt from Australian income tax
The Administrative Appeals Tribunal (AAT) has agreed with the ATO’s decision that income a tapayer earned when working for the United States Army was not exempt from Australian income tax. The taxpayer, who was a mechanic and electrician, played a critical role in plant construction in Afghanistan.
While the project the taxpayer worked on met the legal definition of an “eligible project”, the AAT decided that the exemption he had claimed under s 23AF of the Income Tax Assessment Act 1936 did not apply because the project was not one that the Trade Minister had approved in writing, and there was no evidence that the Trade Minister considered it “in the national interest”.
GST on low-value imported goods
A Bill introduced into Parliament in February proposes to make Australian goods and services tax (GST) payable on supplies of items worth less than A$1,000 (known as “low value goods”) that consumers import into Australia with the assistance of the vendor who sells the items. For example, GST would apply when you buy items worth less than $1,000 online from an overseas store and the seller arranges to post them to you in Australia.
Under the proposed measures, sellers, operators of electronic distribution platforms or redeliverers (such as parcel-forwarding services) would be responsible for paying GST on these types of transactions. The GST could also be imposed on the end consumer by reverse charge if they claim to be a business (so the overseas supplier charges no GST) but in fact use the goods for private purposes. If the Bill is passed, the measures would come into force on 1 July 2017.
TIP: The ATO has also released a Draft Law Companion Guideline that discusses how to calculate the GST payable on a supply of low-value goods, the rules to prevent double taxation of goods and how the rules interact with other rules for supplies connected with Australia.
Alternative assessments not tentative: Federal Court
The Federal Court has found that a company’s tax assessments were not tentative or provisional, and therefore were valid.
For the 2011 to 2014 income years, the Commissioner of Taxation had notified the taxpayer, which was the trustee of a discretionary trust, that it was liable to pay tax assessed in two different amounts calculated by two different methods. The Commissioner explained to the taxpayer in writing how the two assessments applied.
The taxpayer argued that the assessments were tentative because, for each year, they imposed two separate and different income tax liabilities on its single trustee capacity. The Court denied this claim, agreeing with the ATO that a trustee’s liability to pay income tax is of a “representative character” and the relevant tax law provisions allow for a trustee’s liability to multiple assessments regarding different beneficiaries’ entitlements to a share of the net trust income. Accordingly, in effect the Court found that the primary and alternative assessments were comparable to assessments issued to two or more taxpayers in relation to the same income in the same income year, and were not liable to be set aside as tentative or provisional.
Finance Newsletter – March 2017
Some interest rates drop while others are going up?
Do you have the best rate available for your home and investment loans?
You may have noticed a Difference between home loan and investment loan rates? You might be able to save thousands per year in interest by reassessing your current loans. It costs nothing to find out.
If your interest rate is over 3.79% variable then you may be able to save by changing loans and or banks. I have access to a major bank that is currently offering customers a 3.79% variable rate (3.83% comparison rate) .This NOT a honeymoon rate; discount is for the life of the loan. Conditions apply – owner occupied homes only, principal and interest payments, minimum loan $150 000, 80% LVR maximum – No application fee, monthly or annual fees. If you are interested in saving thousands per year call Mercia finance to see if we can show you how to benefit from a better rate. We can also show you some great fixed rates and investment loan discounts. An example of what the above may mean to you – an average mortgage of $450 000 at the average big bank discounted rate of 4.4% = an annual interest saving of $3 105 per year. I may cost you little or nothing to get this rate for your mortgage – find out today.
Investors will have read that most banks are increasing the rate on investment loans. This includes current investment loans. If you are a property investor check your rates and find out if these increases apply to you. If you are not sure, ask Mercia finance for an obligation free loan check. Some institutions are not increasing the rates for investors. So this is a good time to make sure you have the best loan for your circumstances.
If you have questions regarding any type of loan, call Dan Goodridge on 04144 233 40. Our service is free of charge to you the borrower and we have access to all the major lenders in WA. Call us anytime. After hours is OK.
Property Newsletter – March Newsletter
Can you profit from flipping property?
Judging from all the property “reno” shows on TV, property flipping seems like easy money. But can you actually make a profit from flipping property?
The short answer is yes, you can make money from flipping property. However, it’s not as easy as it’s made out to be on reality TV, and there are a number of issues investors need to be aware of.
Firstly, the risk is much higher when flipping property.
If you’re considering flipping property, you need to be able to stick to a budget, and have a good understanding of costings.
For example, if you allocate $20,000 to renovate a property, do you know how much it will cost to repaint the interior or update the kitchen cabinetry? What about installing new blinds or replacing rusted gutters?
Unfortunately, if you don’t get the numbers right you could be facing a cost blowout, which will impact your bottom line.
You’ll likely have to choose which areas to spend the money as well – so would you receive a better rate of return by upgrading the façade, or should you focus on spending money in the alfresco area instead?
Once you start renovating you might discover more issues that need to be rectified or repaired, which could also lead to cost overruns.
There is also the risk that market conditions could change. If you acquire a property to flip in an upcycle, the market may have turned by the time you’ve finished the renovations and advertised the property for sale. This could create significant financial trouble as you may be forced to sell at a loss.
There are also the high imposts you have to consider when buying and selling property, such as stamp duty, capital gains tax and selling agents fees, which all eat into your margin.
While there are the risks with budget blowouts and market conditions changing, the fact of the matter is that flipping property is extremely time consuming, having to source quotes, choose fixtures and finishes and liaising with trades etc.
Unfortunately, most of us don’t have the time required to flip property because we have our careers to focus on.
That’s why, for the very large majority of investors, flipping property isn’t a good option.
It’s a better idea to buy high-quality properties that will grow in value over time and hold them for the long-term.
This way investors can still grow their wealth through property, but have the time to focus on their careers and enjoy their weekends off.
For more information on the buy-and-hold strategy, download Momentum Wealth’s new podcast series, The Property Investing Masterclass, which explores the fundamentals of residential and commercial property investing that every investor should know, regardless of age or experience.
Should I engage a builder or a designer for project plans?
Many builders offer in-house project design services, but is this the best option, or should investors engage an architect or designer for plans?
While it might seem more convenient to use one company to complete your design plans and build your development, the truth is it could cost you more in the long run.
Generally it’s best to engage an architect or building designer to draw your project plans, rather than going to a builder direct.
By utilising an architect or a designer, you will own the copyright to the plans, allowing you to tender the project to several builders to secure the most competitive bid (i.e. best price and contract conditions).
On the other hand, if you engage a builder to complete the plans, typically they will own the designs – therefore you can’t compare quotes from other builders.
If you decide to not build with that company, then you’ll be forced to pay thousands of dollars to buy the plans, or worse still, the builder may not sell them to you, meaning you’ll have to start from scratch.
When searching for a designer, make sure they have an understanding of your budget and experience with similar types of projects to yours (i.e. a duplex, multi-storey townhouses, apartment complex etc).
Just because the plans for a project have been drawn, doesn’t necessarily mean the project can be built.
There may be limitations to what’s possible, either technically or financially, so it’s important to engage a designer with experience with similar projects so they can produce designs that are practical and within your budget.
For more information on property development, download Momentum Wealth’s new podcast series, The Property Investing Masterclass, which explores the fundamentals of residential and commercial property investing that every investor should know, regardless of age or experience.
What’s the difference between survey strata and built strata?
Strata titles are common in Western Australia, particularly for specific types of dwelling stock, such as villas and apartments. But what’s the difference between survey strata and built strata?
Strata titles allow buyers to gain ownership of part of a property but share ownership of other areas of that complex.
Property types that are often strata titled include duplexes, villas, townhouses and apartments, and you’ll often hear that they’re either survey strata or built strata.
Quite simply, survey strata is surveyed by a licensed land surveyor and the land boundaries are shown as survey marks on the survey-strata plan – this does not define any buildings.
Built strata is the original form of the strata scheme and typically comes in 2 forms – those established prior to June 30, 1985, and those established after.
Prior to this date, built strata lots could only be within a building (i.e. ownership was only for everything inside the dwelling). However after this date, part of the lot could also be the land outside the building and may also include the building structure. (i.e. the exterior of the building including external walls)
As an investor considering buying a strata-titled property, it’s crucial to read and understand the strata plan.
The strata plan provides lot ownership information and relevant by-laws that set out what you can and can’t do with the property, as well as what you technically own.
For example, when buying a built-strata unit, do you own the associated car park and/or courtyard? The answer to this will have implications on insurance, maintenance (i.e. who’s responsible for these areas) and permission to alter exterior surfaces of buildings etc.
By-laws will vary from complex to complex but could include:
- Lot owners can’t amend the exterior of the property (e.g. solar panels, Foxtel dishes, roller shutters, tinting windows etc)
- Floor tiling is not allowed
- Pools and spas in common areas only allowed for those 16 years or older
- Lot owners may not reallocate their car bays
- No clotheslines on balconies
These are just a few of some of the possible by-laws set out in a strata plan.
Before buying a property it’s best to always refer to the strata plan yourself.
For more information on property management, subscribe to Momentum Wealth’s new podcast series, The Property Investing Masterclass, which explores the fundamentals of residential and commercial property investing that every investor should know, regardless of age or experience.
Major mall upgrade to boost suburb’s amenity
This south-of-the-river suburb is packed with amenity, and its offering is only going to be enhanced with a slated $750 million redevelopment of a local shopping centre.
Booragoon is located in the City of Melville, approximately 9.5 kilometres south of the Perth CBD.
Its neighbouring suburbs include Ardross (north), Mount Pleasant and Brentwood (east), Winthrop (south) and Alfred Cove and Myaree (west).
The population of Booragoon is 5,461, with a median age of 43 years.
The median house price is $880,000 with the dwelling stock comprising 79% housing, 17% semi-detached and 5% units.
While Booragoon has predominantly been low-density residential houses, new rezoning for medium and high-density stock around Garden City Shopping Centre, Riseley Street, Marmion Avenue and Leach highway will encourage a more diverse range of grouped and multiple dwellings.
Booragoon features high-quality amenity including the Melville Aquatic Fitness Centre, Booragoon Lake Reserve, Len Shearer Reserve and Booragoon Primary School as well as the Garden City Shopping Centre.
Both Canning and Swan Rivers are within 2km of the suburb as well.
In what will become another major drawcard for the area, Garden City is scheduled to undergo a $750 million redevelopment commencing in late 2017.
The upgrade will take about 3 years to complete and increase retail space by 43,000sqm with the number of stores rising from 190 to around 400.
Part of the redevelopment will include a comprehensive main street casual dining and leisure precinct, new cinema complex, assortment of fresh food and large format international fast fashion retailers and flagship stores.
Looking into the long term, Perth’s transport plan for 3.5 million residents identified Booragoon as a key secondary centre where new rail infrastructure will connect Booragoon north under the Swan River to Queen Elizabeth II Medical Centre and the University of Western Australia, as well as south to Murdoch Station.
This slated transport project would vastly improve the accessibility of Booragoon in the coming decades.
The suburb is bordered by Davy Street, Almondbury Road and Coomoora Road in the north, Norma Road in the west, Leach Highway in the south and Rogerson Road in the east.
Its main arterial roads include Kwinana Freeway, Leach Highway, Riseley Street and Marmion Street.
The suburb also features the Booragoon Bus Station, which is located at Garden City Shopping Centre.
32% of workers identify as professionals (19.9% WA, 21.3% nationally), while 15% are managers and 14% clerical and administrative workers.
For more information on how to find an investment-grade suburb, download Momentum Wealth’s new podcast series, The Property Investing Masterclass, which explores the fundamentals of residential and commercial property investing that every investor should know, regardless of age or experience.
Deals and Don’ts – Redcliffe, St James, Greenwood
Deals
Redcliffe Purchase price: $545,000 Purchase date: October 2016 Block size: 809sqm block Specification: 3 bedroom, 1 bathroom house built in 1979, zoned R20.
Deal: This property represents a deal as it is located nearby the soon-to-be built Redcliffe Train Station, which is part of the Forrestfield-Airport Link that is under construction. The new train station will provide great amenity to the area and the property is also subject to draft rezoning, which is likely to allow medium density development on the site. In addition to this the property is also in close proximity to the Perth CBD and Perth Airport. The property has also been recently renovated.
St James Purchase price: $490,000 Purchase date: October 2016 Block size: 582sqm Specification: 2 bedroom, 1 bathroom built in 1954, zoned R20.
Deal: This property represents a deal given its low price point and future development potential – the property is subject to rezoning as a draft R40. It is also in close proximity to Curtin University and the Perth CBD, which are two major employment and education hubs.
Greenwood Purchase price: $560,000 Purchase date: October 2016 Block size: 690sqm Specification: 4 bedroom, 2 bathroom house built in 1987, zoned R20/40.
Deal: This property represents a deal primarily because of its strong development potential being R20/40 and on a corner block, which allows for enhanced project design. The property also has good accessibility to Mitchell Freeway and Greenwood Train Station and is in good rentable condition making it suitable for a family.
Don’t
Queens Park For sale price: $340,000 Block size: 222sqm Specification: 3 bedroom, 2 bathroom villa built in 2001
Don’t: This property doesn’t represent a good investment because it is located on a fairly major road in a large homogenous complex of 12 villas. The property is surrounded by medium-density zoning, which will add to supply levels, most likely of similar villa stock, restraining capital growth and rental yields. The property is also under the flight path adding to noise pollution.
Finding the best location and commercial property for your budget
When buying a commercial property to establish a new business, the location and specifications of the premises are key.
However, as is the case with most start-ups, finances are tight given expenses are high and income is low, or perhaps non-existent.
In most cases, this means compromise, which was the case for one entrepreneur who was establishing a stand-up paddle board distribution centre in Perth.
This client engaged us with a $400,000 budget requiring a 140 – 150 square metre premise comprising mainly warehouse space, but he also wanted a small office and a showroom area as well.
The sticking point in the client’s brief, though, was that he wanted to buy the property in Balcatta, which is regarded as one of Perth’s premium industrial locations.
Knowing the local market, we advised the client that finding a suitable property within his budget in Balcatta would be near impossible.
With no room to expand his financial capacity, we advised the client that we’d search for properties in other locations that suited his budget and criteria, but we’d also examine Balcatta nonetheless.
While Balcatta was all but out of the question, our consultants were confident that, with assistance from our in-house research department, we could find a suitable property in a location that met the client’s needs.
With this in mind, we identified Wangara and Malaga as two appropriate areas to establish his stand-up paddle board distribution centre.
After an extensive search, our campaign confirmed what we had already known – Balcatta was too expensive for the client’s budget.
We advised the client that if he was determined to establish the company in Balcatta, there were a number of leasing options available that we had identified.
However, set on buying his own premises, the client valued our advice and decided he would be happy to consider the other locations that we’d also investigated – Malaga and Wangara. We recommended Malaga as his best option.
Providing the client with a shortlist of properties that we could walk him through and explain the benefits and drawbacks of each, the client eventually decided on a 143sqm site which we were able to negotiate the purchase price and contract terms.
While Malaga isn’t regarded as much as a premium industrial suburb as Balcatta, the former is still relatively central being just 11 kilometres from the Perth CBD, and it comprises property that, although generally older, offers great value for money.
More importantly, as a distribution centre, it fits the client’s needs given that Malaga borders Reid Highway, which is connected to Perth’s major arterial roads providing good connectivity to key retailers.
As an added bonus, we were able to acquire the property for just $310,000 – well below the client’s budget – which provided him with more financial capacity for other aspects of establishing his business.