MPF secures 2 commercial properties in $20m deal

Momentum Wealth’s sister company Mair Property Funds has entered into agreements to acquire two commercial properties in Melbourne for $20.3 million in two off-market deals.

The properties are located in Ravenhall and Altona North in Melbourne’s west, and will form part of MPF’s Diversified Property Trust, which already holds commercial assets in Western Australia, Queensland and Victoria.

The Ravenhall property is a modern industrial facility constructed in 2010 and is located 22 kilometres west of Melbourne CBD. The building is 100% occupied with a 15-year lease until 2031, and there is the potential for future expansion on a vacant part of land.

The property in Altona North is an industrial warehouse built in 2008 and located 13 kilometres south west of Melbourne CBD. The building is also 100% occupied with a recently agreed 8-year lease that expires in 2025.

Upon completion of the acquisition, the properties will be included in MPF’s Diversified Property Trust, which already holds four commercial assets in three states.

These include a retail premise in Maroochydore (Queensland), a medical facility in Ellenbrook (Western Australia), an industrial premise in Henderson (Western Australia) and a retail industrial premise in Lynbrook (Victoria).

The trust was established to offer investors a sustainable income with the potential of future growth, and has targeted commercial properties in high profile locations with strong lease covenants.

Previous capital raisings for the acquisition of the existing properties in the trust were strongly supported by investors and closed oversubscribed.

The acquisition of the Ravenhall and Altona North assets takes the value of properties under management by MPF to $208 million as the company continues to grow its funds to meet investor appetite.

MPF are continually searching for and assessing new investments. If you are interested in being notified of their next opportunity, simply follow this link.

Buying a tenanted property – what you need to know

At first thought, buying a tenanted property may appear to be an advantage. However, acquiring an investment property that’s already tenanted can pose a number of problems. So what do investors need to be aware of?

There are a number of benefits to having tenants in place. Firstly, you’ll likely save money from having to pay letting fees if you use a professional property manager. You’ll also save on advertising costs associated with finding a tenant.

If you decide to manage the property yourself (which we advise clients against) you’ll save yourself time – no need to vet applications and choose a tenant.

One of the biggest advantages though is that you’ll start to receive rental income immediately, as your property won’t be sitting vacant. This is helpful when you’ve first acquired a property, as cash flow can be constricted with additional associated costs such as insurances and rates.

However, while these aspects are beneficial, there are also a number of potential drawbacks that investors need to consider.

1. Are they good tenants?

It’s important to ask the selling agent or property manager about the tenant’s history:

• Who is living in the house?
• What do they do for work?
• Do they have a good track record of paying the rent on time?
• Do they take care of the property?

If the tenants are sub-standard, they may consistently miss rental repayments and may fail to maintain the property, or worse, they could trash it.

1. What’s in the lease agreement?

The terms of the lease agreement may be highly favourable to the tenants, so it’s important you know:

• The amount of bond held

• How much the tenant pays in rent each week (it may be under-priced)
• How often inspections are scheduled
• The length of the lease

Review the lease agreement to ensure there are no surprises after you’ve bought the property.

1. Are there likely to be any immediate maintenance requests?

With a new owner, the tenant may see an opportunity to lodge their list of maintenance requests, leading to unexpected costs for you. Speak to the selling agent or the property manager to determine if there are any pending or potential maintenance requests in the near term.

1. What are your intentions with the property?

If you’re planning to develop the property, or want to undertake renovations, you may have to wait for the existing lease agreement to expire. This could cause complications with your plans, particularly if the tenant is on a long-term lease.

Before you buy your next investment property, ensure you review all relevant documentation, including existing lease agreements, thoroughly.

This will help ensure risks are mitigated and give you a comprehensive understanding of the associated contracts, and how these might impact your investment strategy.

$1b upgrades set to benefit this NOR suburb

The redevelopment of Scarborough Beach and Karrinyup and Innaloo Shopping Centres, with a combined cost of more than $1 billion, are set to significantly increase amenity for this neighbouring suburb.

Doubleview is located in the City of Stirling, approximately 9 kilometres north west of the Perth CBD, with a population of 8,404 and a median age of 35.

The suburb is bound by Newborough Street in the north, Wau Lane in the west, Huntriss Road in the east and Williamstown Road in the south.

The main arterial roads of Scarborough Beach Road, Sackville Terrace and Ewen Street provide Transperth bus services to Glendalough Train Station or straight through to the CBD.

Doubleview is in good company with neighbouring suburbs including Scarborough to the west, Karrinyup to the north, Innaloo to the east and Wembley Downs to the south.

It is an established residential suburb, named due to its views of both the Indian Ocean to the west and the Darling Range to the east.

Original subdivision of the area dates back to the early 1900s, however blocks were slow to sell. Significant development didn’t occur until post World War II when the government begun providing returned soldiers housing in the suburb, hence why much of the housing still consists of post-war, original timber-framed dwellings.

Doubleview is made up of medium and low density residential housing, with the majority of the suburb zoned R30 or R40. A special control area along Scarborough Beach Road was recently gazetted by the state government, encouraging mixed-use and higher density residential development along the activity corridor.

While not within the suburb, the redevelopment of Scarborough Beach and upgrades to Karrinyup and Innaloo Shopping Centres, which are in close proximity, will help boost amenity in Doubleview.

The $500 million upgrade to Karrinyup will near double the size of the centre and include additional retail space as well as a new cinema and office and residential components.

Similarly, the $600 million upgrade to Innaloo Westfield will also double the size of the existing centre and include public open spaces, more retail and food and beverage offerings as well as a cinema.

Furthermore, the $100 million-plus redevelopment of Scarborough beach will include a public pool, upgraded main square and parkland as well as a redeveloped surf lifesaving club. Further private investment will also follow, such as cafes, restaurants and hotels, which will transform the area into a major tourist destination.

Approximately 72.7% of dwellings in Doubleview are houses, 24.9% semi-detached, row or terrace houses and townhouses and 2.1% flat, unit or apartments. The median house price is $732,000.

About 64% of properties are either owned outright or being purchased while 33% of properties are being rented.

13.5% of the population identify as technician and trades workers, 13.4% clerical and admin and 32.5% professionals, which is above the WA and national average at 19.9% and 21.3%, respectively.

Features of the suburb include Doubleview Primary School, John K Lyons Oval and Munro Reserve.

Perth’s 10 cheapest suburbs near the CBD

Nollamara, Cloverdale, and Belmont are among Perth’s 10 cheapest suburbs in terms of median house price within 10km of the CBD, according to the latest data from the Real Estate Institute of Western Australia (REIWA).

“Buyers in Perth really are in an enviable position. It’s unheard of in other parts of Australia, particularly in Sydney and Melbourne, for buyers to be able to purchase a house close to the city for less than $530,000,” said Hayden Groves, president of REIWA.

“We are very lucky in Western Australia that there are still great bargains to be had in and around the CBD. It won’t always be this way, so I advise buyers to act sooner rather than later if they are wanting to secure an affordable house close to the city.”

Nollamara was the most affordable suburb on REIWA’s list, with a median price of $410,000, and a lower quartile price of $375,000.

“Buyers only have to look 10 kilometres north of the Perth CBD to find great value. Nollamara is currently undergoing a lot of change, with infill redevelopment rejuvenating the well-established suburb and attracting a lot of first-home buyers to the area,” Groves said.

Of the 10 suburbs on the list, seven were situated east of Perth.

Groves said that the eastern corridor of Perth’s inner-city area held a lot of opportunity for homebuyers and property investors.

“The median house price in suburbs like Cloverdale, Belmont and Redcliffe is hovering around the $450,000 mark, which is notably lower than the Perth median house price. First home buyers in particular will find good opportunity here, especially if they look to these suburbs’ lower quartile prices, which are even more affordable,” Groves said.

“With the Perth Stadium and surrounding infrastructure nearing completion, the opportunity is there for savvy buyers and investors to purchase in a fast growing area at an affordable price.”

SUBURB MEDIAN HOUSE PRICE LOWER QUARTILE PRICE

1. Nollamara       $410,000 $375,000
2. Cloverdale      $443,500 $408,750
3. Belmont           $450,000 $408,000
4. Redcliffe          $452,000 $395,000
5. Bentley            $480,000 $430,000
6. Embleton         $490,000 $450,000
7. Osborne Park $490,000 $450,250
8. Kewdale          $497,500 $390,000
9. Morley              $500,000 $450,000
10. Carlisle            $525,750 $445,000

Should I buy a negatively geared investment property?

A negatively geared investment property is commonly considered a tried-and-tested approach to property investing, however this strategy certainly isn’t suitable for everyone. Here’s why.

Although negative gearing can be beneficial as it allows property investors to reduce their taxable income, it shouldn’t be viewed as a standalone investment strategy.

If an investor buys a property purely for its negative gearing benefits, they’re likely to be left with an under-performing investment that doesn’t align to their wealth creation strategy.

Cash flow or capital growth?

Typically, the goals of any given property investor fall under two broad groups – that is they either want additional cash flow through rental income, or they want to increase their wealth via capital growth of the property.

Negative gearing is not suitable for investors who want additional cash flow. That’s because it actually costs money for investors to hold a negatively geared property because the rental income doesn’t fully cover the repayments for the loan (and therefore the investor has to use their own money to meet the balance of the repayments).

Investors who want additional cash flow need to target positively geared properties – these are typically newer residential properties but commercial properties generally make the best cash-flow positive assets because they offer higher rental yields than residential.

So what about investors who want capital growth – should these people seek a negatively geared property? In short, no.

Understanding your priorities

For investors who want to increase their wealth via capital growth, negative gearing should not be a priority.

Instead, the priority should be on finding investment properties that will record superior capital growth. By doing so, investors will be better positioned to grow their personal wealth.

Put simply, negative gearing should only be viewed as a by-product of properties that offer high capital growth prospects. So it’s important to stress that negative gearing should not be used as a standalone strategy.

In summary, for investors wanting to increase their personal wealth, choosing a property should always be based on its capital growth potential and not its negative or positive gearing benefits.

What about properties with high capital growth and high rental yields?

Typically, residential properties will either offer high capital growth prospects or high rental yields.

There can be rare instances when properties do offer both, but these are generally for only a short period of time. For example, take some rural towns in Western Australia and Queensland that experienced double-digit capital growth and yields of 10%+ during the resources boom.

Therefore, investors who want to increase their personal wealth should focus on properties that are set to achieve high capital growth over the long term.

Simply seeking properties with the best negative gearing benefits could lead investors to acquiring an under-performing asset that will fail to optimise their returns.

Top 6 considerations when subdividing the family home

If you’re contemplating subdividing the family home there are numerous issues you need to weigh up to ensure you’re making the right decision. Here are the top 6 things you need to consider when deciding to subdivide your property.

Owner occupiers are increasingly deciding to subdivide their family home as areas in our capital cities are rezoned for higher-density development to make way for our growing populations.

Carving up the family block isn’t a step to be taken lightly as there are many issues that need due consideration. Here are the top 6 points you need to weigh up before making a decision to subdivide your own home.

1        It could inhibit the future sale price of your home.

Subdividing your family home impacts its value. To which extent will depend on the size and type of your home as well as the way it’s subdivided. For example, you may have a large 4-bedroom, 2-bathroom property suitable for a larger family, however if you subdivide the property and sell the backyard, this may deter prospective buyers in the future and impact the sales price of your home if you wanted to put it on the market.

2        Can you use the equity in your home instead?

When subdividing a family home with the goal of realising the value of the property, another option would be to use the equity in the home instead. This way you’re able to keep the property as is, but you can then draw the equity to use as desired.

3        Will you make a profit?

After you have subdivided your property and taken all costs into consideration, will you make a profit? This includes costs of a land surveyor, selling agents fees as well as any negative impact on the value of your existing home.

4        What are the tax implications?

A common mistake made by those who subdivide their family home is a lack of understanding about the tax implications. Make sure to speak to a qualified accountant so you’re aware of what you’ll need to pay the tax man.

5        It allows you to downsize without moving

If you’re an empty-nester and your children have grown up and moved out of the family home, you might be considering downsizing, particularly if you have a big backyard that requires considerable upkeep. If you can keep the existing dwelling, subdividing the backyard off from your family home can be a good way to downsize without the headaches of moving. You may also prefer to subdivide the land, build on the new lot and move into the new dwelling before selling or holding the old house.

6        Is it better to sell or hold?

While subdividing the family home and selling a vacant parcel of land can provide a financial boost, it may be better to build on the new parcel of land and lease the new property. By doing so, you will receive rental income and can take advantage of future capital growth.

Everyone’s situation and goals will be different when it comes to subdividing the family home, but it’s important to weigh up these considerations to determine what’s right for you.

Case study: Knowing motivations key to good deals

When it comes to buying or leasing commercial property, it can be highly advantageous to understand the motivations of the seller or lessor.

Once you understand these motivations, you can use this knowledge to negotiate harder on these specific points to secure a better outcome.

This worked particularly well in one instance with a Momentum Wealth client, who was seeking a commercial space to lease.

The client, a financial services firm, had been leasing in East Perth for several years but with their lease due to expire, and an unreasonable landlord who was unrealistic during new contract negotiations, the client engaged us to find them a new space.

The brief included:

• Circa 1,500sqm of open-plan office space with 30-50 car bays
• Ready to go with existing systems (such as AV, high-speed internet, furniture in breakout rooms, desk and chairs etc.)
• Preferably in West Perth (or close to but not in the Perth CBD)
• Scalable floor plan allowing room for expansion

Armed with the brief and a 6-month deadline, our commercial property consultant began the search and issued a request for proposals.

After shortlisting several properties and showing them to the client, our consultant began initial negotiations with a handful of potential landlords and leasing agents.

During the process our commercial consultant learned that one of the shortlisted premises would be negotiated under a sublease agreement.

The existing tenant in the premise had several years remaining on their contract but had recently consolidated their office premises to another location amid financial pressures. The tenant was also dealing with some major and very public disruptions to their operations, which proved to be a large distraction to the company as a whole.

In short, the existing tenant wanted a quick resolution to subleasing the office space that they had recently vacated. Understanding this, our commercial property consultant was able to negotiate hard on price and incentives.

The A-grade office space was a perfect fit for our client and included 40+ car bays, circa 1,800sqm of space and included a high-specification fitout, including reception space, tables and chairs, AV equipment and breakout amenities.

Although negotiations for the space proved complicated, having to deal with the existing lessee and the lessor, our commercial property consultant knew the outcome would be very beneficial for the client.

Understanding that the existing lessee was motivated to sublease the space immediately, our consultant was able to secure a highly favourable agreement at a significant market discount with favourable incentives for up to a 9-year term.

Subsequently, the client was able to move into a larger, more modern office space on much more competitive terms.

Every commercial property seller or lessor has a problem to solve, and by gaining a more in-depth understanding of this problem, you can help resolve the issue faster and secure a more favourable deal.

Young Perth suburb offers major potential to investors

Padbury offers some major benefits to property investors, following the recent rezoning for higher density development and a soon-to-be finished $80 million shopping centre upgrade.

Padbury is located within the City of Joondalup and is approximately 17 kilometres north-west of the Perth CBD.

The suburb is well serviced by public transport with bus services running through all main arterial roads as well as offering the Whitfords train station and Greenwood train station along the Joondalup train line.

Neighbouring suburbs include Craigie and Kallaroo to the north, Hillarys to the west, Kingsley to the east and Sorrento and Duncraig to the south.

Padbury is a relatively young residential suburb, only being named in 1971 after the Western Australian settler Walter Padbury followed by the start of residential development of the area in the late 1970s.

It wasn’t until the late 1990s that the area was fully built out, fuelled by the development of the Whitford City Shopping Centre and Hillarys Boat Harbour.

Padbury is predominantly low-density residential, with the majority of the suburb zoned R20.

However, in early 2016 the City of Joondalup implemented an R20/40 split zoning for certain pockets of the suburb to encourage higher-density development.

This will help diversify the composition of dwelling types in the suburb, which currently stands at 92.6% houses, 7.4% semi-detached, row or terrace houses and townhouses and 0% flats, units or apartments.

79% of properties are either owned outright or being purchased, while 19% of properties are being rented. The median house price is $540,000.

Padbury has a population of 8,183 residents with a median age of 37 years. 21.2% of the suburbs residents identify as professionals (19.9% WA and 21.3% national averages), while 19.1% are technician and trades workers and 16.8% clerical and admin.

Features of the suburb include Gibson Park, Macdonald Park, Hepburn Heights Conservation Area, Padbury Primary School and Padbury Shopping Centre.

There is also Whitford City Shopping Centre (1km) and the Hillarys Boat Harbour (3km).

The $80 million redevelopment of Westfield Whitford City Shopping Centre is now nearing completion with less than 70 days to go on its construction calendar.

Residents of Padbury are set to benefit from the increased vibrancy the upgrades will bring with plans including a casual dining piazza with 10 new restaurants as well as an entertainment precinct with an eight-screen Event Cinema complex.

The suburb is bound by Whitfords Avenue in the north, Marmion Avenue in the west, Hepburn Avenue in the south and Mitchell Freeway in the east.

The main arterial roads nearby are Giles Avenue, Gibson Avenue, Hepburn Avenue and Whitfords Avenue.

Deals and Don’ts – Woodvale, Leederville, Belmont

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

Woodvale

Purchase price: $581,000

Purchase date: May 2017

Block size: 729sqm

Specification: 4 bedroom, 2 bathroom, single garage, below ground pool, built in 1979, zoned R20/60.

Deal: This green-title property represents a deal because its split zoning means it has good development potential, and it is located just 500m to Whitfords train station. The property is also highly presentable with a good fit-out, meaning that it’s highly rentable and would attract quality tenants.

Leederville

Purchase price: $776,800

Purchase date: June 2017

Block size: 243sqm

Specification: 4 bedroom, 2 bathroom townhouse, built in 2002, high specification finish.

Deal: This townhouse on a strata lot represents a deal because of its location and specification. Tucked away in a quiet street of a blue-chip suburb, it is situated within 3km of the CBD, 100m to the vibrant Leederville café strips and 600m from Leederville train station. The high-quality build, which features 3 living spaces, means the property should be easily leased at a yield close to 4%.

Belmont

Purchase price: $491,000

Purchase date: May 2017

Block size: 713sqm

Specification: 3 bedroom, 1 bathroom, single garage, below ground pool, built in 1974, zoned R20/50/100.

Deal: This green-title property represents a deal because of its significant development potential. Located within 7km of the Perth CBD and within 2km of the Swan River, the property has good growth drivers for the future as well. Over 90% of the value exists in the land component yet the property is still in good rentable condition. It is also located within 500m of Belmont Forum Shopping Centre.

Don’ts

Thornlie

For sale price: $355,000

Block size: 680sqm

Specification: 3 bedroom, 1 bathroom house built in 1987, zoned R17.5.

Don’t: This property doesn’t represent a good investment because it’s located on a busy road (Forest Lakes Drive), which is a high frequency route for public transport buses. Although good for overall amenity, the bus and car traffic would frequently disrupt the property with noise and traffic pollution, restricting demand from tenants and buyers, and lowering its overall capital growth potential.

Should I sell my investment property?

“Should I sell my investment property?” is a question that will likely be a serious consideration for most investors at one time or another, whether it’s a structured sell down as part of your property investment strategy, or because the asset isn’t meeting your expectations.

Here are 6 questions to ask yourself first to help ensure selling is the right move for your property investment strategy.

1. Does the property meet long-term investment criteria?

When using the buy-and-hold strategy to capture capital growth of a property, it’s important the asset meets long-term investment criteria. Investors need to consider the macro factors, such as population growth and employment prospects, as well as micro factors, such as local amenities and demographics, for example. It’s not uncommon for investors to start to doubt the quality of the property if it doesn’t rise in value as expected. Therefore, investors must recognise if they’re being impatient (and the property does meet long-term investment criteria) or if the property is likely to continue to under-perform.

2. Is the decision to sell being driven by temporary financial pressures?

A change in life circumstances, unexpected costs or a strain on your cash flow could create financial pressures that may lead you to reassess if holding an investment is the right decision. Before deciding to sell, it’s essential to determine if these short-term financial pressures can be alleviated by refinancing your loans or through budgetary adjustments, for example. Selling an investment property may end up costing you more when taking into consideration selling agents fees.

3. Is it a good market to sell?

The cyclical nature of property markets may mean that selling straight away might not be the best option. If the market is in a downturn it could be better to hold on to the property until conditions rebound or at least stabilise. Consider the conditions of the wider property market as well as the sub-market in which the property is located. Is it a seller’s market, or is it a buyer’s market?

4. Are there loan debt structure issues that could impact the sale or expected proceeds?

In instances where loans are cross collateralised, lenders will typically revalue any co-secured properties. If your borrowing capacity has changed or a property has dropped in value, the amount of money received from the sale may be reduced. In some extreme instances, lenders may force investors to sell a second property to maintain a specific loan-to-value ratio.

5. Are there any opportunities to add value to the property before sale?

If you’ve decided the answer to “should I sell my investment property” is yes, then you’ll want to maximise your property’s value first. Tidying garden beds, applying a fresh coat of paint, installing modern blinds or laying new carpet are a few options that can rejuvenate a tired and ageing property. These types of cosmetic upgrades and add-value opportunities can help demand a higher asking price.

6. Are there likely to be changes to the property’s zoning?

If a property’s zoning is likely to be reclassified to allow for higher-density development, it might be worthwhile holding the asset to achieve a higher selling price. For example, a property that’s appropriately zoned for 4 dwellings is likely to be worth more than a property in the same suburb that is zoned for only single dwellings.

Be the master of your money

Money management is the foundation to building a large property portfolio and should be implemented before starting your investment journey. Here’s what you need to know to be the master of your money.

The first thing that many start-out property investors will do is begin their search for a suitable investment property, whether by trawling property web portals, attending home opens or brushing up on market insights.

However, this is typically useless if you don’t have adequate money management systems in place that will show you how much cash you can allocate each week to servicing (i.e. repaying) a loan for an investment property, after allowing for the income on a property. Most higher growth residential properties have negative cash flow in the first few years if you borrow around 80% or more, so understanding what it costs is vital.

When it comes to building a property portfolio, your personal cash flow is critical because this will allow you to hold your investment properties by meeting your loan repayments, and subsequently capture the capital growth of the assets over time.

This is why every investor should create a household budget that will detail their income and expenses to determine how much surplus money (i.e. cash flow) they have left over at the end of each month.

What should my budget include?

In short, your budget should detail all of your income and all of your expenses – whether on a weekly, monthly or annual basis.

Your income will include your salary from your job as well as any government payments, dividends from shares, rental income or interest accumulated from savings deposits.

Your expenses should comprise an estimate of all your outgoings including household (utilities, groceries, council rates, mortgage repayments, insurance etc), transport (fuel, car registration, repairs, public transport etc), health (gym, doctor, dentist, cosmetics, haircuts etc) and personal expenses (clothes, entertainment/eating out etc).

Your budget should also set aside money for holidays and funds for upgrading your car, as well as any other expenses you might have.

By allocating a certain amount of money to ‘entertainment’ you don’t have to account where every dollar is spent, such as $17 per week on coffee or $40 per month on movies, for example.

The money allocated to ‘entertainment’ can be treated as your weekly pocket money that can be spent on any discretionary items.

In addition to helping you manage your money, a budget will also alleviate any guilt or buyer’s remorse you might feel when buying a new leather jacket, booking a holiday or purchasing your morning cup of coffee. If you’ve allocated money to these things in your budget, then you know the funds have been set aside and are there to be used, while you’ve also allocated money for ‘savings’.

When making a budget, you obviously have to be sensible about how much money you allocate to ‘non-essential’ items, and perhaps make some compromises. For example, if you have Foxtel which you rarely use, it might be worth considering stopping your subscription. Instead of buying a coffee every day, perhaps start buying it every other day.

It’s all about finding what works for you. You don’t want to make your budget so conservative that you have to live on baked beans for the next 10 years, but if there is room to make some savings then try and make them.

With your budget set, you will know your surplus cash flow and can allocate part of this as repayments for an investment loan.

Finding a property that suits your cash flow

Depending on the type of property you buy, the rental income will help you cover either part or all of your investment loan repayments. Typically though there’s likely to be a shortfall that you’ll have to cover.

However, you can target different types of properties that will suit your cash flow circumstances.

For example, if you have limited cash flow available, you can target properties that are neutrally or positively geared, meaning the rent will cover all of the repayments.

Typically these types of properties will be villas or apartments and are generally more modern builds. Generally, the downfall of these types of properties is they will deliver lower capital growth.

On the other hand, if you have a high cash flow then you can target properties that are higher growth and lower cash flow, meaning the rent won’t cover the loan repayments and you’ll have to cover the rest from your own pocket.

Typically these types of properties will be older houses on larger lots. Generally, the benefit of these types of properties is they record higher capital growth.

There are other factors to consider when determining what type of investment property is right for you, such as your risk profile, your investment strategy and your borrowing capacity.

However, by mastering your money management by creating a budget, you’ll form the foundations needed to build a large property portfolio and help avoid financial distress from buying the wrong type of property.

Syndicate given green light for construction

Momentum Wealth’s Silk Oak residential syndicate received development approval recently, paving the way for construction to begin on the 38-apartment project early next year.

The Silk Oak Fund was launched in early 2016 before raising $6.4 million from a group of investors for the residential development syndicate.

Following the raising, Momentum Wealth’s research and residential syndicate teams identified and acquired 3 adjoining sites in Highgate in an off-market transaction.

A key feature of the sites is their superior location, being just 2km north of the Perth CBD, 400 metres to the local train station, 400m to the popular Beaufort street café strip and opposite a lush park.

To complete design of the project we engaged Scanlan Architects, who have designed some of Perth’s most recognisable buildings including the Indiana Teahouse in Cottesloe.

Given the existing supply of ‘box-on-box’ style apartments on main arterial roads in the area, the design brief was for a premium market product that’s suitable for young professionals and downsizers.

The end result was a modern design that reflected the character of the existing streetscape and included green vegetation and mature trees, while the spacious 1, 2 and 3 bedroom apartments have been formed to a high specification, many with double car bays.

Following the 38-apartment project being granted development approval last month, construction is expected to begin early next year and take approximately 12 months to complete.

Returns for investors are expected to be circa 15%-20% per annum with payments to occur in mid-2019

New rail and redevelopment to gentrify suburb

Forrestfield is located within the Shire of Kalamunda and is approximately 15 kilometres south east of the Perth CBD.

It is bound by Welshpool Road in the south, Tonkin Highway and Abernathy Road in the west and Sultana Road in the north. Its main arterial roads include Tonkin Highway, Roe Highway and Hale Road.

Forrestfield has a population of 11,811 with a median age of 37 years.

Neighbouring suburbs include Maida Vale and High Wycombe to the north, Wattle Grove to the south, Lesmurdie and Kalamunda to the east and the Perth Airport to the west.

Forrestfield is an established residential suburb with settlement dating back as far as the late 1800s. The area wasn’t significantly developed until the 1950s with rapid growth occurring up until the 1970s. Population has stayed relatively stable since the 1990’s.

The majority of Forrestfield is currently zoned R20, with pockets of R25 and R30. A proposed amendment to the local planning scheme will allow for dual-density coding across the suburb from R20/30 up to R25/60.

The suburb will greatly benefit from the $2 billion Forrestfield-Airport Link, which is under construction.

The Link will provide a brand new train station to Forrestfield, connecting it with the Perth Airport and the Perth CBD by rail.

The station will be located adjacent to Dundas Road, east of the Forrestfield freight marshalling yard and south of Maida Vale Road.

It has been designed as an end-of-line station with parking bays for 2,500 vehicles and 180 bicycles.

Houses in areas surrounding future train stations often experience above average capital growth as was seen when the rail lines to Joondalup and Mandurah were completed.

Transperth currently provides peak-hour and off-peak bus services to and from the Perth CBD, as well as bus services to Midland or Cannington Train Stations.

Approximately 90.4% of dwellings in the suburb are houses, 7.6% semi-detached, row or terrace house and townhouses and 0.6% flat, unit or apartment. The median house price is $408,500.

About 73.1% of properties are either owned outright or being purchased, 21.6% of properties are being rented.

Just 10.4% of the population identify as professionals (WA and national average is 19.9% and 21.3%, respectively), while 19.3% are technician and trades workers and 17.9% clerical and admin.

Features and amenity of the suburb include Hartfield Country Club and Golf Course, Darling Range Sports College, Hartfield Park and Recreation Centre and Forrestfield Forum and Marketplace.

Deals and Don’ts – Bibra Lake, North Perth, Lynwood

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

Bibra Lake

Purchase price: $461,500 Purchase date: May 2017 Block size: 696sqm Specification: 4 bedroom, 2 bathroom, double garage, built in 1982, zoned R20.

Deal: This property represents a great investment because it is subject to rezoning, which would change its coding from R20 to R40, allowing for higher density development. The property is also appealing as it sits on a corner block, allowing for greater design specifications, it is also on a pleasant streetscape and a short walk to a local park. It was also purchased at an excellent price point, more than $50,000 less than the median house price for the suburb.

North Perth

Purchase price: $682,000 Purchase date: April 2017 Block size: 253sqm Specification: 3 bedroom, 2 bathroom house, fully renovated to a high specification

Deal: The property represents a deal because of its location and condition, which provides good yield and capital growth prospects. Tucked away in a quiet cul-de-sac of a blue-chip suburb, it is situated just 3km from the CBD and walking distance to multiple café strips. The recent, high-quality renovation means the property could be easily leased at a high yield.

Lynwood

Purchase price: $414,000 Purchase date: April 2017 Block size: 812sqm Specification: 4 bedroom, 1 bathroom, enclosed single garage, built in 1967, zoned R30.

Deal: This property represents a good buy as it’s situated on a large land lot and within close proximity to the Perth CBD. It’s located on a quiet, attractive street just a short walk from local parks. Its zoning allows for future subdivision.

Don’ts

Redcliffe

For sale price: $490,000 Block size: 627sqm Specification: 4 bedroom, 2 bathroom house, built in 1998, zoned R20.

Don’t: This property doesn’t represent a good investment because it backs onto the recently completed Gateway WA road project and is located under the Perth Airport flight path, both of which would provide significant noise impediments.

Expanding your medical practice: Opportunities for growth

For medical specialists seeking to expand their practices in Perth, location is key and can be the difference between lucrative growth or a financial black hole. So which Perth suburbs should medical practitioners be targeting?

When considering expanding a medical practice, there are a number of ‘big picture’ locational factors to consider.

The current spatial framework and development blueprint for Perth – Directions 2031 – sets out a plan and hierarchy for primary and secondary activity centres so that they may grow and develop as community focal points.

These centres feature higher-density housing and commercial precincts to comprise retail, entertainment, civic/community, higher education and medical services.

Activity centres vary in size and diversity and some present better opportunities than others for medical practitioners – population growth, demographic shifts and public and private investment will have significant influences on these areas, for example.

Perth’s key activity centres

Second only to the Perth CBD on the activity centre hierarchy, primary centres are large urban nodes that are intended to provide entire regions with a full range of economic and community services.

The Western Australian state government places important focus on the connectivity of these centres, with passenger rail and or high frequency bus transport considered essential to their operation in the long term.

Directions 2031 outlines Cannington, Fremantle, Morley and Stirling as the four primary metropolitan centres for the Perth central sub-region.

Due to major visitor drawcards, such as department stores, supermarkets, major offices and state government agencies, medical spaces in and around these centres present good opportunities for medical practitioners looking for high rent returns and strong capital growth.

Specialised centres are a slightly different hub to typical activity centres as each has a strong specialised role based on a major institution within the centre.

Directions 2031 identifies the major specialised centres of Perth as Murdoch, UWA/QEII, Bentley/Curtin and the Perth Airport.

Both Murdoch and UWA/QEII are focussed on delivering high-quality education and health services, Bentley/Curtin provides education and technology while the airport’s primary function is aviation and logistics.

Murdoch and UWA/QEII present opportunities for the development of complementary medical activities nearby and allow for benefits from agglomeration to be gained, however medical practitioners should be cautious of these centres as competition is high and many strong medical practices are already well established here.

Sitting beneath primary centres are the slightly smaller secondary centres, which are generally dominated by retail but can also include office, housing, community services and recreational activities.

They share similar characteristics with primary centres but serve smaller catchments and offer a more limited range of services.

Directions 2031 outlines Belmont, Booragoon, Claremont, Karrinyup, Leederville, Mirrabooka, Subiaco and Victoria Park as the central sub-region secondary centres.

These centres play an important role in the wider economy and provide residents within their catchment with essential goods and services.

Medical spaces within these centres are common and present an excellent prospect for specialists.

They are designed to service up to 150,000 persons, enough to provide steady demand for health care needs, and property within or around these centres is generally more affordable than the higher profile primary centres.

At the bottom of the hierarchy, servicing the daily and weekly needs of residents are district centres and neighbourhood centres.

Their smaller scale means they have a greater local community focus and can provide the immediate residents with services that reflect the particular needs of their catchments.

Hubs such as Dog Swamp, South Perth, Kardinya, Jolimont and Noranda are all examples included in the long list of district centres identified in Directions 2031.

Medical specialists can uncover opportunities in these centres by targeting specific suburbs with demographics that require frequent medical needs.

For example, certain health services might succeed in a district centre with a catchment that includes a high proportion of aged residents as this demographic hold a strong and steady demand for health care.

Population growth and favourable demographic shifts

The population of Greater Perth has grown rapidly since the turn of the millennium and despite a recent dip in growth rates, the region remains on track to hit 3.5 million residents by the year 2050 as pre-empted by the state government.

Not only is the population growing, it is ageing and this shift in demographic will become increasingly pronounced in the years to come.

The latest census data shows that the biggest proportion of over 65s are residing in areas within the western suburbs as well as Fremantle and its surrounds.

It is this information that medical specialists should consider as they select locations that will facilitate strong demand and therefore have the best chance of receiving high rent returns and strong capital growth.

As outlined in Directions 2031, areas earmarked as major activity centres will be the target of increased residential density and with the popularity of mixed-use developments increasing, new spaces and opportunities are becoming available.

Medical suites and pharmacies are commonly proposed tenancies for such mixed-use developments. Taking advantage of such initiatives, which create greater amenity and act as major drawcards for local residents, present good opportunities for medical practitioners.

What’s more, investment opportunities aren’t solely limited to these new developments as the surrounding streets or nearby commercial precincts may also benefit and provide favourable opportunities as such areas are transformed.

Thorough research, analysis and feasibilities are needed, however, to ensure any medical spaces in these areas perform as expected.

There are also site-specific demand factors that medical specialists need to consider, such as parking, exposure, accessibility and location of competitors and referral partners, for example, that need to be taken into account to help ensure the success of any expansion.

This article is an extract from Momentum Wealth’s Perth Medical Property Report. For more information on what medical specialists need to know when expanding their practices, click here to download your free copy of the report

Benefits of buying property counter cyclically

Given the cyclical nature of property markets what are the benefits of buying an investment property in a downturn?

While property markets are cyclical and experience ebbs and flows, many investors will only buy when the market is running hot and retreat or delay an acquisition during a slowdown.

However, is that the best strategy that property investors should utilise?

Although sentiment suffers during a property market slowdown, there are advantages to building your property portfolio when everyone else wants to sit on their hands and take an ‘I’ll-wait-and-see-what-happens’ approach.

So what are the benefits of buying an investment property in a market slowdown?

1. Fewer buyers. During a downturn many buyers, including property investors and owner occupiers, retreat from the market and wait for a recovery. Those left in the market wanting to make an acquisition will therefore encounter fewer buyers and less competition.
2. More choice. When property markets cool, the amount of housing stock available typically increases meaning buyers have more options to choose from and are more likely to find a property better suited to their needs.
3. Better bang for buck. With fewer buyers in the market and more stock available for sale, sellers have to price their properties more competitively and are more likely to discount their asking price. Buyers have a better chance of securing a property for less or can even purchase a superior property that they otherwise couldn’t have been able to afford in a normal market.
4. More control over contract negotiations. Given the market is weighed in buyer’s favour, buyers have more control over contract negotiations, whether that be for negotiating more favourable settlement periods, rent-back periods with owner-occupiers or early-entry clauses, among others.
5. While it’s easy to become disheartened when residential property markets slow, there are definite advantages to buying property in a downturn.
6. Regardless of market conditions, though, investors need to take a long-term view with their investment decisions, keep property investment fundamentals at the fore and buy when they are ready, rather than trying to time the market.

WA strata reforms back on the agenda

After being put on the back burner for more than a year, reforms to Western Australia’s strata titling system are again in the spotlight with the newly-elected state government supporting an overhaul of the existing arrangements.

One of the biggest changes will be the introduction of community titles, which will allow multiple strata schemes to be managed individually under one umbrella management structure.

This is particularly beneficial for mixed-used precincts and buildings that feature a combination residential and commercial space, whether that be office, retail or other, as it allows more efficient management of the area

For example, the community title will enable schemes to cover specific areas of a building or precinct. So one scheme can exist for the common areas that are used by all individuals, such as driveways and foyers, while a separate scheme can exist for an individual building, which may have a pool that not everyone can use.

Another major benefit is the ability to terminate old strata schemes. Currently, it requires 100% of landlords to agree to terminate a strata scheme but this will be dropped to 75%, which will allow for greater utilisation of sites through development.

Property buyers will also benefit from a more transparent system as sellers of strata-titled property will have to provide specific strata information prior to purchase.

There are more than 300,000 strata lots in Western Australia valued at more than $170 billion.

The strata reforms were first announced in January 2016 after a 2-year consultation period.

However the changes were put on the back burner in the lead up to the WA state election in early 2017 when the Labor party rose to power.

The reforms will be the first major shakeup of the strata legislation in 20 years and comes after significant growth in strata living with strata development making up 40-50% of current development.

Why every property investor needs a cash buffer

Cash buffers are essential when building a large property portfolio as they provide a safety net for investors. So how much money should you set aside for a cash buffer and when should it be used?

When building a large property portfolio, it’s important to set aside a sum of money that can be used for contingency situations.

Without an adequate cash buffer, you may find yourself in a financial bind if you suddenly need to pay some unexpected bills.

Typically, there are two income buffers that you should keep – a personal income buffer and an investment property buffer.

A personal income buffer is important in the event that you lose your job or need to take an extended period of time off work because of illness or another reason.

The aim of this buffer is to allow you to maintain loan repayments on your home loan and investment loans during the period that your salary is reduced or cut off.

The size of your personal income buffer should depend on your risk profile, stage in life and job security, among other factors, but it’s typically recommended to hold 2-4 months of your current income on hand.

The second type of buffer, the investment property buffer, is useful for repairs and vacancy periods.

The aim of this buffer is to ensure you have enough cash on hand should you need to complete maintenance works on an investment property, such a replacing a hot water system or fixing a leaking roof, or to maintain loan repayments during vacancy periods.

The size of the investment property buffer should vary on the age of the property (the older the property the more maintenance that is generally required), the vacancy rate in the area and likelihood of changes in the market. Typically, it’s best to hold 2-4 months of rental income on hand as an investment property buffer.

By failing to hold adequate cash buffers, investors can easily find themselves under financial pressure should they need to address urgent maintenance works or if their salary is suddenly reduced or cut off.

This can have significant consequences on investors’ property investment plans and goals and could even lead to forced sales.

However, by planning ahead and putting these cash buffers in place, investors can have peace of mind that they can continue to meet their financial obligations should repairs be required or there are disruptions to their income.

Retail and rail to benefit this suburb

This suburb is poised to benefit from a new train station under the state government’s Metronet plan in addition to a major redevelopment of a local shopping centre.

Embleton is located within the City of Bayswater about 7 kilometres north east of the Perth CBD.

The suburb is bound by Broun Avenue, which runs into Beaufort Street, in the north and west and Beechboro Road in the east. As well as these roads, it is also highly accessible via Tonkin Highway, Embleton Avenue and Collier Road.

Its neighbouring suburbs include Morley to the north, Bedford to the west and Bayswater to the east and south.

While Embleton doesn’t offer a train station, residents in the south of the suburb are in close proximity to the Bayswater train station. There are also bus services that run down Broun Avenue into the Perth CBD.

Development of the area dates primarily to the late 1950s when much of the land was resumed by the State Housing Commission, which subdivided and developed the residential lots still present today.

Embleton is predominantly low-density residential stock, with practically the entire suburb zoned R25. The suburb’s median house price stands at $502,500.

Of the existing stock, 85.4% are houses, 10.4% are semi-detached, row or terrace houses and townhouses and 4.2% are flats, units or apartments.

About 61% of properties are either owned outright or being purchased, while 35.4% of properties are being rented.

The suburb’s 2,737 residents have a median age of 38 years.

Of Embleton’s population, 20.3% identify as technician and trades workers, 13.7% as clerical and administration workers and 17.7% as professionals (WA average is 19.9%)

Features of the suburb include the Embleton Public Golf Course, Embleton Primary School, Bayswater Waves, Broun Park and McKenzie Reserve.

Nearby amenities include Morley Galleria (1km), Bayswater Train Station (1.5km) and the Beaufort Street Café Strip (3km).

The City of Bayswater has recently recommended planning approval for a proposed $350 million redevelopment of Morley Galleria, which would increase the size of the centre from 78,000sqm to 128,000sqm, including the establishment of a town square and an urban plaza.

This is set to add a significant amount of amenity to nearby Embleton, with works expected to commence in 2018.

Furthermore, the recently-elected Labor government’s Metronet public transport plan is set to greatly benefit Embleton with a station planned for Walter Road that would service the area.

The Walter Road station is expected to form part of the Ellenbrook train line, the North Circle line and the Wanneroo line.

The Ellenbrook train line is the first stage of Metronet with construction expected to start in 2019 before opening in 2022. This would include the Walter Road station that would service Embleton.

Deals and Don’ts – Wanneroo, Heathridge, Yokine Deals

Wanneroo

Purchase price: $375,000 Purchase date: April 2017 Block size: 792sqm Specification: 3 bedroom, 1 bathroom, house with double garage built in 1971 zoned R20/40

Deal: This property is a great buy because it’s located on a corner block with zoning of R20/40 meaning it has good development potential. Its location is also excellent being within 350m of Lake Joondalup and within 800m of the Wanneroo town centre. The streetscape is also highly desirable and it’s a short walk to Taywood Park.

Heathridge

Purchase price: $445,000 Purchase date: April 2017 Block size: 723sqm Specification: 3 bedroom, 1 bathroom house with double garage built in 1977 zoned R20/40

Deal: The main feature of this property is its subdivision potential and the fact that it is opposite a neighbourhood park. It’s also close to amenity with Belridge City Shopping Centre just 300m away.

Yokine

Purchase price: $486,000 Purchase date: March 2017 Block size 353sqm Specification: 3 bedroom, 2 bathroom house with enclosed double carport, built in 2002

Deal: The main features of this property are its proximity to the CBD, being just 7km away, and its relative affordability. It is in excellent condition making it easy to lease, and the fact that it is situated on a green title block means it has no common property with neighbours.

Don’ts

Spearwood

For sale price: $425,000 Block size: 721sqm Specification: 3 bedroom, 1 bathroom, house

Don’t: This doesn’t represent a good investment because it backs onto the freight railway line and it is located in close proximity to the busy Rockingham Road. The condition of the house would also make it difficult to lease and the irregular block shape will put constraints on any future development potential.

Capital cities vs regional towns – what makes a better investment?

It’s a common question among property investors, what makes a better investment destination, capital cities or regional towns? The answer may not be as clear-cut as you think.

When it comes to choosing an investment destination, many investors will consider both capital cities and regional towns, comparing the two to determine which location would deliver better returns.

To put it simply, the large majority of investors should invest in capital cities, however regional towns may be a good option for a very small percentage of investors.

Why are capital cities better for most investors?

Let’s start by looking at why the large majority of investors should focus on capital cities.

These locations make a better investment option because they typically have stronger population growth and more diversified economies, which helps to underpin property price growth and doesn’t make them as volatile.

You only have to look at the population figures to see this.

According to the latest Australian Bureau of Statistics, 276,400 people were added to Australia’s capital cities in financial year 2015/16, a 1.7% rise. This is compared to just 61,000 people who were added outside the nation’s capitals, which is a 0.8% rise – less than half the rate rise of our capital cities.

People are increasingly moving to capital cities as these locations are where they want to study, work and live because they offer more career and education opportunities and amenities.

While this continued population growth helps to underpin property prices, capital cities also offer more diversified economies, which make them more resilient during economic shifts and changes.

Take a regional town, for example. Typically these will be reliant on just one or two industries, such as tourism, mining, farming, fishing or manufacturing.

If a town’s economy is heavily reliant on just one industry, and this industry hits an economic downturn, then the town’s overall economy will slow significantly.

In a capital city however, the impact of one industry faltering will be cushioned as there are other industries to help support the local economy.

It’s for these reasons that make regional towns inherently riskier as an investment destination.

When should regional towns be considered?

So if the large majority of investors should focus on capital cities, then who are the very small percentage of investors that should consider regional towns?

These are typically established, sophisticated investors who have already built a large property portfolio by investing in capital cities and are comfortable buying an investment property in a regional town.

While regional towns are inherently riskier, they can also deliver greater rewards. If a regional town’s single economy booms, then this can cause property prices to spike.

However, if the predominant industry in a regional town hits economic headwinds, property prices can drop sharply and investors can end up in financial distress.

Established, sophisticated investors are typically in a much stronger position to take on more risk and buy in regional areas. However this strategy is often more speculative and needs to be considered with care.

Every investor’s plan is different, and there is no one-size-fits-all strategy for property investment so it’s imperative to seek advice from a reputable property investment advisor or buyer’s agent as to the right approach.

3 tips to subdivide property for profit

When it comes to wanting to subdivide property, the thought brings about dollar signs in the eyes of many. However it’s not a guaranteed money maker and it’s easy to see your profits disappear if not planned correctly.

While it might seem fairly straight forward, in many instances profit margins can be slim and a single miscalculation or cost blowout can turn a profitable subdivision into a loss-making money pit.

To help ensure you maximise your property subdivision, here are 3 tips to help you win.

1. Do you know the best use of the property?

The zoning of your property will determine the number of new lots or dwellings that can be created or built. However, there may be clauses in the local planning scheme that allow for greater density, such as design bonuses or lot variations, for example. Speak to a town planner or project manager to understand how to maximise the potential of your block when subdividing.

2. Research the costs involved

The costs to subdivide property vary from state to state, and will depend on how many new lots are being created. Make sure you have a thorough understanding of all the costs associated with a subdivision. Typical costs will include:

• Land surveyor fees for subdivision plans, cadastral surveys, subdivision clearances and preparation/lodgement of subdivision application.
• Application fees to the local planning authority to assess the subdivision.
• Connection fee for water head works
• Connection fee for power supply works
• Conveyancer fees for application of new titles

There may also be other fees required including demolition fees (in cases where an existing dwelling needs to be removed), contractor services fees (for required civil works) and contributions to local council amenity initiatives.

3. What’s your plan – to hold or sell?

It’s important to have a clear plan in mind as this will have a big influence on many of your initial decisions and final profit. After you subdivide the property, do you plan to sell the vacant land? Or, in the event that you build on it, do you intend to sell the dwellings or hold them for future capital growth? Perhaps it’s a mix of sell some and hold some. Detailed calculations need to be completed to determine estimated profits, impacts on your cash flow from holding property and relevant tax implications from selling property.

5 tips to secure higher rental returns

It’s important to maximise rental returns from your investment portfolio, in order to optimise your property investment journey.

By securing even small increases in your rents you’ll be in a stronger financial position and it may help you to buy your next investment property sooner.

Here are 5 tips that could help you maximise rental returns:

1. Install additional appliances. ‘Value-add’ appliances can help to maximise rental returns. A large family may pay more rent for a dishwasher, tenants in a hot climate may pay more for air conditioning or older tenants may pay more for security cameras. Remote garages, house alarms or other appliances may also allow you to secure higher rents.
2. Is development an option? If you have the budget for it, undertaking a redevelopment could justify higher rents. Check the zoning of your property as you may be able to demolish your existing dwelling and build several properties in its place.
3. Allow pets. Permitting tenants to keep pets can be a fast way to secure higher rentals returns without spending any money. Include clauses in the rental agreement that places the responsibility on the tenant to rectify any damage that a larger pet, such as a dog, may cause.
4. Complete cosmetic upgrades or larger renovations. Low-cost cosmetic upgrades can be an effective means to securing increased rents, whether it be a fresh coat of paint, new blinds, or replacing fixtures and fittings. Alternatively, larger renovations can also help, including adding a new kitchen or a makeover of the bathrooms or outdoor area.
5. Offer a long-term lease. Depending on the market, tenants may be happy to pay extra if you offer them a long-term lease. This may be the case for families in particular who don’t want to move house every year, and want the peace of mind that they won’t be asked to leave if the landlord wants to sell.

A good property manager will be able to provide you with advice and recommendations when maximising your rental returns.

While the above tips can help to secure higher rents, it will also depend on the market conditions at the time so it’s always best to consult with your property manager.

Suburb snapshot: Heathridge

Opportunities abound in the northern suburb of Heathridge, which has recently been rezoned and is just a stone’s throw to the beach, WA’s largest shopping centre and university grounds.

Located in the City of Joondalup, 23 kilometres north of the Perth CBD, it has a population of 6,802 with a median age of 32.

The suburb is bound by Hodges Road in the north, Mitchell Freeway in the east, Ocean Reef Road in the south and Marmion Avenue in the west, all of which provide good connectivity.

There are also bus and train services from the Edgewater Train Station in the south-east of the boundary.

With 95% of dwellings being houses, Heathridge is predominately low density, however recent rezoning throughout parts of the area now allows for medium density development, particularly near the Edgewater Train Station.

The suburb offers good amenity in the Heathridge Village Shopping Centre, Heathridge Leisure Centre, Admiral Park, Heathridge Park and several schools. It is also 3kms to Mullaloo Beach, 2kms to Lakeside Joondalup Shopping Centre, 1.5kms to Edith Cowan University and 1.5kms to Joondalup Resort.

The suburb will also benefit from the slated Ocean Reef Marina, which is proposed to include first-class boating facilities including a mix of residential and commercial developments comparable to Hillarys Boat Harbour. This project is expected to be developed in stages and take approximately 12-13 years to complete the whole marina. It is estimated that construction will commence in 2020.

The median house price in Heathridge is $455,000 with 74% of property either owned or being purchased, and 24% being rented.

Its neighbouring suburbs include Connolly in the north, Edgewater in the east, Beldon in the south and Ocean Reef in the west.

The area was largely developed from the mid-1970s with rapid growth occurring during the 1980s.

21% of the population identify as technician and trades workers, 16% as clerical and admin and 15% as professionals, which is below the WA and national average at 19.9% and 21.3%, respectively.

Deals and Don’ts – Kingsley, Melville, Joondalup

Here we take a look at 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

Kingsley Purchase price: $555,000 Purchase date: February 2017 Block size: 720sqm Specification: 3 bedroom 1 bathroom, double garage house built in 1979 zoned R20/40

Deal: This property represents a deal because of its location and development potential. Sitting on a corner block with zoning of R20/40, the property is in a quiet cul-de-sac and walking distance to Whitfords Train Station, which is just 400 metres away.

Melville Purchase price: $875,000 Purchase date: March 2017 Block size: 868sqm Specification: 3 bedroom, 2 bathroom house built in 1950 zoned R20

Deal: This property represents a deal because its location is one of the best in Melville, being close the Swan River and on a quiet street, as well as for its development potential. The property’s wide frontage also provides superior subdivision potential and limited supply in the area will help buoy prices over the long term.

Joondalup Purchase price: $475,000 Purchase date: April 2017 Block size: 701sqm Specification: 4 bedroom, 1 bathroom, enclosed double carport with remote automatic door zoned R20/60

Deal: The property represents a deal because of its high development potential being zoned R20/60, its location on a quiet street and because of its proximity to Currambine Train Station, which is 450 metres away, and Blue Lake Park, which is 250m away. The house also presents very well making it more rentable until development.

Don’ts

St James

For sale price: $519,000 – $529,000 Specification: 3 bedroom, 1 bathroom, single garage house

Don’t: This property doesn’t represent a good investment because of its location on a busy road, neighbouring state housing and opposite medium-size high voltage power lines, which aren’t pleasing aesthetically and can cause issues with finance as banks view these unfavourably. The property was last sold in April 2014 for $570,000 and these negative features would have exacerbated the fall in value during a soft market.

The 3 ‘Ps’ of success – presence, presentation and peers

The success of a business in the services sector can largely rely on the three ‘Ps’ – presence, presentation and peers.

Presence being the overall visibility and convenience of the company’s building, presentation meaning the appearance of the shop front and fitout of the space, and peers being the nearby tenant mix.

This is particularly the case for many businesses within the health industry, such as radiologists and cosmetic specialists, as these businesses need to depict a hygienic workplace and typically offer complementary services providing referrals to each other.

So when a cosmetic medical specialist engaged one of our buyer’s agents to find a space for their clinic, the three ‘Ps’ were a top priority in the search criteria.

The client, who specialised in skin care, had been leasing a commercial premise in Perth’s inner-northern suburbs for 7 years. However, with her business well established, the client decided that it was time to acquire her own property where she could relocate her clinic.

The client’s brief was fairly flexible, which gave our buyer’s agent great scope when completing their research and creating a shortlist of potential premises.

After several months of research, property inspections and due diligence from our buyer’s agent, the client showed particular interest in one of the properties that we recommended.

The property was a 122sqm office space in Mt Hawthorn in a highly presentable building and was in a good location being next to other complementary businesses, including a physiotherapist and other medical specialists.

While the premise was slightly bigger than the client had required, the additional space would allow for future growth of her business, which is important for those acquiring a premise for owner-occupier purposes.

Although the space was zoned for office use, our consultant saw the potential of the premise and showed it to the client, explaining that if we could have it reclassified for medical use, it would be an ideal location – it also featured the three ‘Ps’, presence, presentation and peers.

With the client happy to proceed on this basis, our consultant was able to negotiate the acquisition of the premise on the basis that the local council would approve a reclassification of the space to medical.

We were able to secure the property for the client with a small deposit while the decision was before the council.

Under the terms of the agreement, our buyer’s agent also negotiated that if the space couldn’t be reclassified the client would be entitled to a full refund of her deposit.

This allowed the client to secure the premises while maintaining peace of mind that if the plan couldn’t proceed as intended, she would be refunded her full deposit and the search for her new clinic location would continue.