This post has the potential to make you hundreds of thousands of dollars on your next Perth Property Investment…
The point of this post is simple and all you have to do when making your next property investment in Perth is remember 1 thing and the rest will take care of itself…
Make money before you buy a Perth investment property, not afterwards!
Every Perth property investment purchase is a big life decision and the time for planning and ensuring that a property will meet your investment goals is before you buy, not afterwards. If your property has negative holding costs every year with no capital growth the opportunity cost while you wait it out or later realise your mistake and sell is far too high.
Purchasing the wrong Perth investment property will set you back 5 years or more
Do yourself a big favour and consult an expert that can advise you on the best strategy that suits your situation and then ensure that your purchase is made at or below market value in a suburb with the best chances for capital growth, on a property that has the clear cut profit potential to meet that strategy.
A real life Perth property investor example- choosing a strategy to suit a situation
I met with Helen just over a year ago, she had very little deposit and her financing capacity was average. She was wanting to start her property portfolio and didn’t know where to start, but she wanted her first purchase to enable her to keep building her property portfolio. She didn’t mind the idea of building to actively add value but didn’t want to be hands on involved in the process.
With the Perth market struggling at the time I recommended that we look at purchasing a property at discount to market value and using that discount as her deposit so she would not have to tip in any of her own money… yes this can be done when you know how! By building she would create some value and get a brand new property, one that would have high depreciation, good rental yield and attract great tenants. Or she could just choose to sell on completion.
We used a suburb price prediction tool coupled with local knowledge to narrow down the suburb choices to those expected to have the greatest likelihood of capital growth over the next 1-2 years. She purchased a house and land package on 300sqm of street front land in Wattle Grove through us at a pre-release discount. The house and land package at December 2010 was valued at $382,000 by a licensed valuer and she received a 10% discount to effectively secure the property for $343,800. I showed her how to use that 10% discount as her deposit. At the time it had an expected rental return of $380 per week, which already represented a good yield for Perth.
The plan to make money was clear and the purchase perfectly suited her situation.
The result of planning to make money before you buy
This afternoon Helen and I have been out to Wattle Grove to view the new villa she purchased which is nearing completion, the build time will be close to 9 months. With the increase in the rental market we have just leased the property at $440 per week, which is a gross rental yield of 6.65%. Plus with all the land in Wattle Grove now sold out, we expect the current market value to be $430,000. Yes you can make money in any market!
So some of her capital growth was actively created with buying at a discount and building the property and some of her gain was from the increase in property prices as a result of tightening land supply. She didn’t just buy any old property over market value and then hope and pray while losing money every week. With my help she took control of her financial future, investing smarter and now being so much closer to her next purchase… which we will have to do even better on!
Watch this video feedback from Helen on the whole investing process
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