some buys in WA

Driving south-east of Perth yesterday I stopped in Narrogin. Probably ~200km from Perth. Seems a prosperous enough locality. Looked in two real estate agents windows. A couple of cheap houses caught my eye; presumably cash flow positive. Asking prices $52,000 and $53,000. The latter one was on an 1800m2 block of land near the hospital; ad said that site suitable for multi-unit development! There was another house advertised for $49,950. Another one again had a bit more land on offer - 3 bedroom house on 702 acres with "negotiable" asking price $210,000.

For those who like coastal land, how about an 80km Indian Ocean frontage? Back in Perth city there is an ad in the Elders' window for ~200,000 hectares or ~500,000 acres on the coast north of Port Hedland. Fronts onto the highway about 130km from Port Hedland on the road to Broome. Asking 5.5 million. So, averages $11/acre. I don't recall what that included in the way of improvements or stock. Located ~2,000 km from Perth.

that ocean front land sounds good. if I had serious dollars I'd love to build a new city... not just a typical north-west dust bowl but a proper Las Vegas style glamour town! I guess that's my multi-lotto dream

Narrogin, like it's twin Katanning just down the road, has been losing population for about 30 years and is now down to 4000.

What recent and future developments are there that you think will turn this around? Also there is a very high risk that if population trends continue there may be no local PMs or tradesmen. If people don't want to live there, there will be limited demand for multi-unit developments.

There are other WA towns that have slightly higher but stable populations and I would regard as much better propositions. But prices are about 50-100% more than Narrogin's.

Rgds, Peter

I am just about ready to get my feet wet in property investing. Have spent the last few weekends driving round the WA countryside and have only come up with similar situations to Narrogin.
There must be somewhere out there for first time investors to consider. I'm not asking for addresses or telephone numbers, just clues.
Anyone got any?

In search of the next Margaret River

Hi wannabe

After a period there there has been intense interest in investment property, the only towns that tend to have concentrations of cashflow positive properties either:

1. Have high wages, an (often transient) population that prefers to rent and high rents.

2. Have average or low rents but prices are relatively lower because few (and fewer) people want to live there (indicated by population decline).

1. is typically your mining towns. 2. is typically towns in agricultural areas.

Sometimes you can get turn-around, eg a new project or mine that brings people into the area and reverses a long-term decline.

Country towns near a major metropolitan area might change from being agricultural/tourist to dormitory suburbs, with population growth and increases in land values. This is also true if there are natural attractions or 'glamorous' industries such as wine making nearby.

At other times an area that has had a stable population, offers good amenity but has been undervalued for years can spurt up with a few new projects and/or 'discovery' by investors.

It gets harder as the boom progresses, but it would help if you could eliminate areas by:

1. Looking at long term (>30-50 years) population trends of towns.

You will find strong growth in metropolitan areas, steady growth in major regional coastal towns (Bunbury, Albany, Geraldton) and explosive growth in others (Mandurah, Busselton). Mining towns go up and down, with the smaller centres most volatile and the larger centres quite stable. Agricultural towns have had a long-term decline, with the smallest dropping most.

There are exceptions and it's your job to work out where these are and if they're likely to remain exceptions or become more 'normal'.

2. Then follow current news and developments to see if there's anything that strong enough to reverse past trends if they are adverse. If the trends have been good, try to look for threats to them.

3. Depending on what your aim is, you might be looking at (a) an 'undervalued' area with great appeal and growth propects, with rental returns being less important (ie you might tolerate some negative gearing), or (b) an area that you can find positive cashflow in but has a long-term future.

It sounds as if you're aiming for b, but you'll need to satisfy yourself on this through your own research on local economies, industries, population movements, etc.

4. The more entrepeneurial can find properties that initially are not cashflow positive but can find another use that brings in more revenue. Actual area is less important than what you can make the property do for you. (This is the key theme of Steve McKnight's latest book)

Now the absolute ideal would be to identify the next Margaret River (ie dirt cheap to buy in the 80s but now with both high rents and prices) but this takes research, an intimate understanding of people's lifestyle wants, a TV series, concert, movie or two, and maybe some good luck.

Regards, Peter

Peter,
Great comments.
Pete

The Next Margaret River

Thank you, Peter, for taking the time to post such a lengthy reply!

Took a drive down to Bunbury last week after reading the last API article concerning same. Checked out the Carey Park & Withers "gentrification". Whilst the idea of these refurbished homes appeals - the area still basically looks like a Homes West estate. Most verges and lawns are dead or overgrown, the locals I saw wandering the streets did not appear to be the sort of tenants/neighbours I would prefer , lots of bomb cars on lawns, torn + broken window treatments, young girls with babies, hoons etc. However, the properties are cheap (http://onebunbury.com) and several on the busier streets have been tarted up. I think it will take more than a nice sign and planting a few natives on the nature strips to change the image of these areas.

Dalyellup was at the other end of the spectrum, with a nice big windy beach, very clean, new and a bit out of the way. Felt a bit like we were driving into Stepford (maybe a touch sterile). I am still researching this area for an IP, given the proximity to Bunbury, views, undulating landscape, rental opportunities, demographics, time in cycle etc. Blocks start at $89K or so.

Bunbury

Juliezzz - thanks heaps for the info about Bunbury. I too was intrigued by the API article and was intending to take a look. You've saved me a trip .

Cheers

logic says the new freeway must have a postive impact for Bunbury though

Why go as far as Bunbury?

What about just going to Waikiki, Golden Bay, Singleton & Madora? All beachside & north of Mandurah. Have had some excellent recent growth but still undervalued, beachside suburbs for long term investment, IMHO. [Note, I own properties in some of these suburbs.]

Or around Halls Head or Falcon?

Or further south at Preston Beach, or Australind?

Pete can you please advise what your personal experience of finding tenants for these areas is like?

LOL, shhhh, don't let out how undervalued the props are yet! I am about to buy there!
I used to live in the area, the employment prospects are great, and the shopping is 7 days unlike the rest of loopy Perth. I have always been confused as to why 'Swinging Pig' et al hasn''t done better (even well before the prospect of a rail line and freeway!)

vacancy rates in beachside areas north of Mandurah

Ausprop,

Last financial year all (five) properties fully let for whole year. Nil days vacant. Located from San Remo to Golden Bay.

Purchased latest property in Golden Bay in July 04 (that is, current financial year). It was vacant for about two months before leasing.

Leases renewal/extension expected on all. All properties managed by local Mandurah real estate agency.

With the current building frenzy there is demand from home builders to rent locally while their home is being built. And, many of the construction force also rent.

regards,

Dalyellup

juliezzz said:

Took a drive down to Bunbury last week after reading the last API article concerning same. Checked out the Carey Park & Withers "gentrification". Whilst the idea of these refurbished homes appeals - the area still basically looks like a Homes West estate. Most verges and lawns are dead or overgrown, the locals I saw wandering the streets did not appear to be the sort of tenants/neighbours I would prefer , lots of bomb cars on lawns, torn + broken window treatments, young girls with babies, hoons etc. However, the properties are cheap (http://onebunbury.com) and several on the busier streets have been tarted up. I think it will take more than a nice sign and planting a few natives on the nature strips to change the image of these areas.

Dalyellup was at the other end of the spectrum, with a nice big windy beach, very clean, new and a bit out of the way. Felt a bit like we were driving into Stepford (maybe a touch sterile). I am still researching this area for an IP, given the proximity to Bunbury, views, undulating landscape, rental opportunities, demographics, time in cycle etc. Blocks start at $89K or so.

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Hi This is my first time post guys so be nice.
Dalyellup. I actually live hear, well rent with a PPR building on the way.
The windy beach is a bit over the top. %90 of all Perth beaches are windy in the after noon due to the old flying doctor sea breeze.
The estate is made up of three areas
1 Beach Side
2 Non Beach Residentual
3 Half Acre Blocks
I purchased my beach block 18 months ago for $87K and estimate it to be 170K plus now. I believe we still havent seen the growth out of this location yet.
I just secured a another two blocks. One on the Beach side and the other non beach.
Building to start ASAP
The location is great 10min to city center, Hosp 5 min TAFE 7Min, Uni 7Min.
The local construction time for housing is 12 to 18 months because of the growth in the area.
The local block I bought was lump of dirt without titles and all the street blocks sold within one week.
Local industry is booming and with the new international race track due in November it will put Bunbury on the global map.
If you need any extra info let me know.
As you can tell I recon its one of the best places in Australia and I have lived in most states.

Cheers

Forrest by the Sea !!

I'm with you Madmurf,

I believe that what we're seeing is just the start of the growth & potential of the Greater Bunbury area.

BUT Shhhh!, don't tell anyone just yet, I want to get a couple more IP's under me belt before the prices hike! LOL

Bigfella

Narrogin-good to buy now?

Spiderman said:

Narrogin, like it's twin Katanning just down the road, has been losing population for about 30 years and is now down to 4000.

What recent and future developments are there that you think will turn this around? Also there is a very high risk that if population trends continue there may be no local PMs or tradesmen. If people don't want to live there, there will be limited demand for multi-unit developments.

There are other WA towns that have slightly higher but stable populations and I would regard as much better propositions. But prices are about 50-100% more than Narrogin's.

Rgds, Peter

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Hi I have been reading the posts for long time. I would like to thank the members who are teaching new comers like me in the property investment. I am planning to buy a property in Narrogin for $90K with rental income of $ 170 per week. But, I am not sure whether there will be any capital gains in the long term. The prices has gone down by 17.5% in the last year. So, I think the prices has to go up in future. Is there any one invested in that area who can provide me with more info please. I need to know why the prices have dropped by 17 %, Thank you in advance. I saw the above posted in 2003 but it is now 2013 and the population is actually rising.

surprised no one has mentioned Northam yet....?

Hi Guys
Must mention Busselton here as compared to Bunbury / Dalyellup the market in Busselton is looking better with yields increasing (still not great but getting better), shortage of land and rentals, FIFO increasing from airport, RIOTINTO opening an office in town.. Might be worth a look for 10yr plan.
Not personally a fan of Dalyellup unless it's beachside or you find a good street.... there's definately a lot of problem houses popping up highway side

Thread is probably a bit old to rely on...