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Perth buyers wanting to
invest in properties primed for the executive rental market are best to
turn their search to Perth’s
western suburbs, according to buyers’ agent Liz Sterzel.
Sterzel, of Subiaco-based Property Wizards
Buyers’ Agency, says that’s because the western suburbs prove exceedingly
popular with the executive rental market due to their proximity to the city
and abundance of lifestyle facilities such as schools, parks, shopping
strips and nightspots.
She says Subiaco and Cottesloe
are amongst the most sought after western suburbs. South Perth, south of
the river, and inner city West Perth are also popular areas.
“There is always demand for
executive rentals, and in Perth
they are in steady demand,” she says.
“The mining boom has added to the
growth in the market, but it is not dependent on the boom, so it is a solid
long-term niche investment market for those with reasonable budgets.”
ABOUT THE EXECUTIVE
RENTAL MARKET IN PERTH
Typical tenants in the Perth
executive rental market include corporate workers relocated to Perth who need temporary accommodation, new arrivals
to the city who are still searching for a home and
those in Perth
for short to medium term projects such as mining workers and academics.
Because of the variety of tenants, in Perth, a range of
properties are suitable for executive rentals – everything from 4 bedroom, 2 bathroom houses to 2 bedroom apartments.
“For a premium large home, rentals
can fetch $850 to $1100 a week,” Sterzel says.
“A good quality 3 bedroom, 1
bathroom home could pull in $600 to $650 a week, and a one bedroom
furnished apartment could get anywhere from $300 to $550, depending on the
quality of the property and its location.”
Six month leases are typical, but may be up
to 12 months or longer. Leases are rarely shorter than three months.
Leasing agents specialising
in executive rentals in Perth
include Leasing Elite, Executive Apartments and Access Property.
WHAT TO BUY
“Executive rentals, by their nature,
need to be furnished in order to command good rental income,” she
says.
“Quality décor and furnishings are
very important in this market, so if you are unsure of how to do that
definitely seek expert advice.”
Sterzel points out that buying a corporate
rental property fully fitted out will cost more and that if investors
“do it themselves” it can help boost profitability, although
she says positive cash flow is rare because of the high cost of properties
suitable for the market.
POTENIAL PROS
“The benefits of executive rental
properties include the high rental income and the increased likelihood of a
quality tenant, though this is not always the case if a company is paying
the bills,” she says.
Sterzel says a benefit of the market was
that capital growth prospects could be good if the investor chose a quality
property.
“Capital growth is likely to come
from a growth in the land value and because the areas boasting corporate
rental properties in Perth
are quality areas, if investors focus on selecting the right property,
they’re on track for good growth,” she says.
POTENTIAL CONS
“Tenants understandably expect a lot
in the executive rental market so maintenance costs such as for furnishings
can be high in order to keep the property at a high standard and, if you
don’t, your rental income can suffer,” she says.
“You also generally have to take
full responsibility for the garden as the type of
tenant these properties attract do not want to be concerned with
maintenance.
“Another concern can be that vacancy
rates are sometimes higher because it’s a small niche market of
tenants and also property management fees can be as high as 11% to 15% of
rental compared with about 8.5% for unfurnished rentals.”
Sterzel says that although investing in Perth’s
executive rental market can be profitable, the cost of entering the market
can be high.
“Because of the suburbs you’re
looking in, to get into a house, you are looking around the million dollar
mark, and a starting price of half a million for apartments in better
areas,” she says.
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