The Next 10 Years In Perth - Property and SMSF’s

Trevor Dunkley, Director, Property Wizards Buyers Agents

Introduction to Property Wizards…

Introduction to Property Wizards

Trevor Dunkley – Director and buyer’s agent

Specialist Buyer’s Agency representing buyers

Run by me, Liz Sterzel, my life partner for 37

years and our trusted team

Operating in Perth for 13 years

Won many awards:

Buyer’s Agent of the Year Award three

times

Australian Gold Customer Service Award

2012 and 2015

What is a Buyer’s Agent?…

What is a Buyer’s Agent?

We help our clients create wealth

We help them develop strategies

We find properties that outperform the

market

Research: areas, types of property,

government plans, infrastructure, trends

Search, negotiate, due diligence, deal

with agents, contracts

The right finance strategy and structure

Help our clients add value through

subdivision, renovation or development

Help our clients sell their properties

What We Will Cover Tonight…

What We Will Cover Tonight

The changing dynamics of

Perth

Property strategies that

work in a SMSF

The Changing Dynamics of Perth …

Disclaimer

The information presented by Property Wizards Pty Ltd, its presenters or employees (Property Wizards) at this seminar or in any of its materials is general information only for educational purposes only. Any information given by Property Wizards is given purely as illustrations and should not under any circumstances be construed as specific investment, financial, legal, taxation, real estate, valuation, forecasting or any other advice and must not be relied upon as such. Property Wizards will not bear any responsibility or liability for action taken by any person on the basis of the information presented at this seminar or in any of its materials. You should obtain independent professional advice and make further independent enquires before making any investment, financial, legal or real estate decisions. Property Wizards does not present information at this seminar as a licensed real estate agent. While Property Wizards attempts to verify the information given at this seminar or in any of Property Wizards’ materials, it does not warrant or represent that it is free from errors or that the information contained is suitable for your intended use. Any such use of products or information is at your own risk. Property Wizards expressly disclaims any responsibility or liability for any direct or indirect damage, loss, claims, costs, or expenses, as a result of any error, omission, inaccuracy or misrepresentation. Any slight of people or organisations is/are unintentional. Property Wizards is not a licensed financial/investment/tax/legal advisor, nor is it providing or to be taken to be providing financial/investment/tax/legal advice. Any financial/investment/tax/legal information provided does not purport to be financial/investment/tax/legal advice and should not be viewed as a substitute for professional financial/investment/tax/legal advice. Individual investment considerations are likely to vary widely and it is advisable to seek independent professional financial/investment advice tailored to your specific situation and needs prior to making any financial/investment decisions.

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The Changing Dynamics of Perth

The mining construction boom is history

What is the focus now and in the next 10

years?

Where do government and big business

see the future?

What effect will it have?

Where do Government and Big Business See the Future…

Where do Government and Big Business See the Future?

Government and big business

are investing in

Oil & Gas

Tourism

Infrastructure

Oil and gas …

Perth In The Next Ten Years: Oil & Gas

• Australia is forecast to become the world’s leading

exporter of LNG by 2017

• Major resource companies Perth based

Tourism…

Perth In The Next Ten Years: Tourism

Visitor numbers 27 million and increasing

Spend $9 billion, increasing to $12 billion by 2020

Most time spent in Perth

Hotels …

Perth In The Next Ten Years: Hotels

More than $3billion is being spent on providing

4,000 new hotel rooms in Perth, so what?

Ritz-Carlton at Elizabeth Quay

Infrastructure…

The big hoteliers do their homework. They invest

where they expect serious demand and rooms filled

Perth In The Next Ten Years: Infrastructure

Many large projects

underway next five years

Massive investment -

Private and Government

$499 million from Federal

Government for West

Australian infrastructure

Creating jobs

Transforming Perth

10 Examples of Massive Infrastructure Spend …

Perth Children’s Hospital

Due for completion

in late 2016,

expected to create

8,000 new jobs

Tourism, Elizabeth Quay …

Fiona Stanley Hospital The biggest

Hospital in the

Southern

Hemisphere, now

operational

10 Examples of Massive Infrastructure Spend

Elizabeth Quay

Stage 1 opened 2016

Transport, Perth Airport …

Perth City Link

3,100 new jobs,

two major new hotels

Perth Stadium

Museum of WA

5,700 new jobs

$423m redevelopment

Perth Airport Redevelopment

$750m redevelopment,

passenger numbers to double

The Results of Massive Infrastructure Spend …

MAX Light Rail

First services due to run in 2022

Forrestfield-Airport Link

Gateway WA

Opening up new access between

the city and the airport

165km of new roads,

7,000 new jobs

The Results of Massive Infrastructure Spend

Creating new jobs

Making Perth more vibrant and

interesting

An attractive destination

People want to live in Perth

No. 8 in the Global Livability

Ranking 2015

Drawing people to grow the

economy

What was a brain drain is now

a brain GAIN

Migration …

Perth In The Next Ten Years: Migration

People coming to Perth

WA population continues

to increase (at slower

rate)

Coming for jobs and

lifestyle

People need homes

“WA has one of the brightest futures in the developed world”

(quote)

House prices …

Perth In The Next Ten Years: House Prices

Never been a 10 year

period without house

price growth

For example:

2005 median price $300,000

2015 median price $545,000

GFC in-between!

Before that: always long

term growth

What to take out of this? …

What to Take out of This?

Optimism for Perth’s future

Confidence in Perth

property

Perth is being upgraded,

the quality of life lifted to

become a vibrant, dynamic

place to rival any other

modern city

Perth’s current property market …

Perth’s Current Property Market

At the bottom of the Perth property cycle

Buyers from Eastern states see Perth as good value

Investors are getting in to Perth’s market now

Good properties that tick all of the right investment

boxes are selling quickly

To make the most of Perth’s property market…

The right locations and property types

will continue to drive long-term capital growth

To Make the Most of Perth’s Property Market

Right now, it’s all about

strategy

4 examples of strategies

for SMSF’s

Yield/Cash Flow

Growth

Balance of Cash

Flow and Growth

Add Value

Strategy 1: Yield/Cash Flow …

Yield StrategiesStrategy 1: Yield/Cash Flow

Yield/Cash Flow Strategy Example …

Land10-30%

Building70-90%

Apartment

Land to house value ratio around 10-30% land : 70-90% building

Strong yield, lower growth potential

Strong depreciation benefits

Generally low maintenance; set and forget

Good strategy for SMSF targeting Rental Yield/Cash Flow

Advanced StrategiesYield/Cash Flow Strategy Example

Strategy 2: Capital Growth …

Rockingham Road, Spearwood

Bought for $400,000 in October 2015

Off the plan

Expected rental return of 4.7%

Depreciation >$10,000 year 1

Attractive to tenants

Marina and beach

Shops, parks, and schools

Employment hubs at Fiona Stanley/Murdoch

Good SMSF cash flow strategy investment

Capital Growth Strategies

Land70%+

Building30%-

Strategy 2: Capital Growth

Buy and Hold

Growth Strategies Example …

Land to house value ratio 70%+ land : 30% or less house

Hold for long term organic capital growth

Mostly older houses that have been well maintained

In the best location you can afford, with strong growth drivers

Excellent properties for SMSF growth strategies

Advanced StrategiesGrowth Strategies Example

Strategy 3: Part Capital Growth-Part Cash Flow …

Forest Walk, Kardinya

Bought $537,000 6 years ago

1988 4x2 on 525sqm

Older house well maintained but will

require some maintenance over time

Attractive to tenants

Murdoch Uni

Murdoch hospital (& now Fiona Stan)

Freeway, Garden City, shops, schools

Excellent SMSF growth strategy

investment if enough funds available

Yield StrategiesStrategy 3: Part Capital Growth-Part Cash Flow

Example: Part Capital Growth-Part Cash Flow …

Land40%

Building60%

New/Near New House

Land50%

Building50%

New/Near New Villa

Land to house value ratio around 30-50% land : 50-70% building

Balance between cash flow and growth

Good depreciation benefits

Generally low maintenance; set and forget

Good strategy for SMSF targeting Rental Yield and Growth

Land : house value ratio balanced

Balance of cash flow and growth

For example – newer villas in good locations

Excellent properties for SMSF

Example: Part Capital Growth-Part Cash Flow Strategy

Strategy 4: Add Value …

Example bought for a client

Eastbourne Cres, Nollamara

Nollamara median price over $450k

Nollamara median rent currently $370pw

4.3% yield

Close to amenities such as bus, shops, parks and schools

Easy access to Perth CBD and other employment hubs

Advanced Strategies

HigherDensity

&FutureZoning

Changes

Strategy 4: Add Value

Add Value Strategies Example 1 …

Add-value properties have greater potential for growth

SMSF can’t develop the property

BUT SMSF can buy and hold for potential accelerated growth

May be duplex, triplex, multiple, future rezone

Add Value Strategies Example 1

Add Value Strategies Example 2 …

Rannoch Rise, Joondalup

Bought for $490,000 in an SMSF

Single house just rezoned for 4 villas

Simple, modestly refurbished, low maintenance 1989 home

Tenant attractions:

Clean, refurbished, simple

Close to freeway and train station

Close to schools, parks, shops

Leased at $390 per week

Client set it up so his mortgage was well covered by the rental

Keep10 to 20 years and sell to a developer

Advanced Strategies

Proposed Rezoning

Way of gaining a potential extra increase in value

Add Value Strategies Example 2

Summary: To Make the Most of the Market…

Cumberland Road, Forrestfield

Bought for $467,000 in December 2014

Growth drivers are Forrestfield train line and rezoning

Close to shops, parks and schools

Once rezoning gazetted this 1012sqm site can have 4 new villas built

SMSF can hold and sell to a developer

Summary: To Make the Most of Perth’s

Property Market

Structure

Budget and finance

Strategy

Focus On:

Growth drivers

Outperforming

Rental

Expert help

Start now

What Do We Believe? …

What Do We Believe?

using carefully chosen property

in the Perth market.

How Do We Do This For You? …

We Believe in helping clients create wealth

How Do We Do This For You?

We help clients outperform the market by:

Strategies tailor-made to clients requirements

The right finance structure

Researching areas, types of property, government

plans, infrastructure, trends, rezoning

Researching the best properties to buy

Searching the entire market, not just cherry picking

Buying where the growth drivers are stacked in your

favour

Strong negotiation and due diligence on your behalf

Adding value through subdivision, renovation or

development

Thank you for listening …

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*Conditions apply. Please see http://www.propertywizards.com.au/termsand

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Thank You for Listening

Trevor Dunkley

Director

Senior Property Wealth Strategist

Mob 0409 691 201

Tel 08 9381 7450

www.propertywizards.com.au