Finance advice

Investors warned about rising Perth vacancy rates

KevinYoung- 70x60Property investors risk playing ‘Russian roulette’ with the PerthPerth, TAS Perth, WA property market by taking a cavalier approach to buying a rental property during rising vacancy rates.

Blogger: Kevin Young, president, Property Club 

The latest REIWA figures show that rental vacancy rate in Perth jumped to four per cent and there has been a 30 per cent increase in vacant rental properties during the year to June 2014.

As a result, the median weekly rent in Perth has dropped by $10 to $450.

Gone are the days when renters used to queue up to fight over a rental property in Perth and offer above asking rental prices.

Despite the increase in the overall rental vacancy rate, there are still pockets in Perth that offer investors both high rental returns and prospects of good capital growth.

That is why I closely monitor local government residential building approvals to determine areas of future undersupply and oversupply in housing.

A year ago, the average Perth investor could close their eyes and drop a pin on a map of Perth and be assured that area would be in high demand by renters.

There has been a radical change in the property market and now research is the difference between success and failure in the Perth real estate market.

You should avoid properties that are located in areas of oversupply with little prospect of future capital growth.

Anyone who had bought a rental property should also seek to boost their rental returns though small improvements. For example, offering a high level of security, including security doors and window locks, makes it much easier to lease the property and command a higher rental return.

An air conditioner and a dishwasher are two other key features prospective tenants want in a rental property. Split reverse cycle air conditioning systems are popular with tenants because they allow for temperature control during both summer and winter months.

A property that has these added features may command additional rent of $20 or more per week and, equally importantly, is likely to have a lower vacancy rate. A low vacancy rate obviously will maximise the rental return for an investor and aid their cash flow. For most investors these items will pay for themselves over about three years, through tax deductions and extra rent.

It is also a good idea to employ a gardener to maintain the outdoor areas. These expenses can be built into the rent, and engaging a contractor to maintain the gardens ensures they are always well looked after. Rental properties with poorly maintained gardens are more difficult to lease and return a lower rent compared to similar properties with well-maintained gardens.

Another way landlords can boost rental returns is to consider leasing their property to a tenant with a pet. A large proportion of households now own either cats or dogs, and pet owners generally will pay higher rent to secure a rental property that allows animals. The landlord can request a pet bond from the tenant to cover expenses for any damage.


About Kevin Young
KevinYoung- 340x408

Kevin Young is President of Property Club which he founded in 1994 to help Australians on average incomes and above to fund their retirement through property investment. During the past twenty years, Property Club has emerged to be one of the most successful independent property groups in Australia assisting thousands of members to become property millionaires. Kevin Young owns a substantial property portfolio comprising of over 180 properties and has been listed on Queensland's Top 100 Rich List.

Further information on Property Club can be found at www.propertyclub.com.au

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About the Blogger

Julie Cumming

Julie Cumming

Based in Melbourne, Julie has been actively working in the property arena for over 12 years in diverse roles ranging from Shopping Center Manager and Commercial Property Manager to a qualified Investment Property Buyers’ Agent with a focus and expertise in the Brisbane market. Her experience in such mixed roles has given her a unique and broad property experience where she has identified opportunities within niche areas in the residential and commercial markets and developed services to meet those needs. Julie is a qualified property investment adviser (QPIA) accredited by PIPA, a licensed Real Estate agent in ACT, Victoria and Queensland. 

 

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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected]tment.com.au for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
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  ["id"]=>
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  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
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  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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