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