Property Newsletter – February 2017

Momentum Wealth Golden Guinea Fund

Target returns: 

17.5% per annum*

*based on the total return per annum over a 24 month investment term.


Fixed price building contract and planning approval completed means reduced risk from cost variations

Backed by director – key staff members have also invested and are personally guiding the project

Preferential equity – new investors receive preferential returns over existing investors

24 month investment term


Established area with low supply and growing demand

Strong infrastructure – Fiona Stanley Hospital and Murdoch Health Precinct, Murdoch Activity Centre, Garden City expansion, Port Coogee Marina and more

Strong market fundamentals – as at December 2016, percentage of stock on market for sale is 1.16%* and rental vacancy rate is at 2.4%* *sourced from and REIWA December 2016


The keystone of the suburb is the large leafy reserve located right in the heart of Samson. The Golden Guinea Fund project is set directly opposite this urban oasis, providing investors with access to a well-positioned metropolitan lifestyle that has the best of both worlds.


This syndicate is open to anyone** who meets one of the following criteria:

Combined gross income of more than $250,000 per annum (which includes gross rent, income from other investments and business turnover)

$2.5 million in net assets

Is able to invest $500,000 or more

** must be a wholesale investor under the Corporations Act (2001)

Pendragon Capital Ltd AFSL 237549

Deals and Don’ts – Eden Hill, Edgewater, South Lake

Eden Hill

Purchase price: $430,000 Purchase date: October 2016 Block size: 669sqm Specification: 3 bedroom, 1 bathroom dwelling, zoned R17.5

Deal: This property represents a deal because of its great condition (being recently renovated) coupled with its future development potential – using the corner zoning discretion and the 5% variation its zoning could be increased to R25. The cheap price point and the fact Eden Hill is a gentrifying suburb along with the individual benefits of the property with its location opposite a park make for good long-term growth prospects.


Purchase price: $532,000 Purchase date: October 2016 Block size: 789sqm block Specification: 4 bedroom, 2 bathroom house built in 1984, zoned R20/40.

Deal: This property represents a deal for its strong development potential being zoned R20/40, in addition with its location on a corner block, which will allow for enhanced development designs. It is also in a highly rentable condition featuring 4 bedrooms and 2 bathrooms making it suitable for a family.

South Lake

Purchase price: $450,000 Purchase date: October 2016 Block size: 775sqm Specification: 3 bedroom, 1 bathroom house built in 1987, zoned R20.

Deal: This property represents a deal because it neighbours a park and is subject to rezoning as a draft R60. The property also presents well with a basic internal presentation that is clean and liveable.

Don’ts – Applecross

For sale price: $299,000 Specification: 2 bedroom, 1 bathroom apartment in a complex of 21 built in 1964

Don’t: This property doesn’t represent a good investment because it is located on a busy road in an aging flat-style complex with other affordable housing. The complex is dated and poorly presented with little chance of revitalisation due to the strata ownership style. A number of new large-scale apartment developments from the nearby Canning Bridge precinct will also add significant new apartment stock to the area, which will contain future capital growth.

Suburb snapshot: Cottesloe

Cottesloe was established in the 1800s with the opening of the Fremantle train line and is now one of Perth’s most prestigious postcodes.

The beach-side suburb is located in the Town of Cottesloe, approximately 10 kilometres southwest of the Perth CBD.

Growth in the area took off in the 1890s, spurred by the opening of the Perth-Fremantle railway line.

Significant development occurred during the 1910s and 1920s aided by the promotion of the beachfront.

Today, there are four train stations in the suburb on the Fremantle train line including Victoria Street, Mosman Park, Cottesloe and Grant Street Station.

Neighbouring suburbs include Swanbourne (north), Peppermint Grove (west) and Mosman Park (south-west).

Cottesloe has a population of 7,398 with a median age of 40.

The median house price in the suburb is $1.7 million and features a mix of dwelling types consisting of 70% houses, 11% semi-detached and 19% flats and apartments.

66% of properties are either owned outright or being purchased, with 32% of properties being rented.

A massive 43.6% of residents identify as professionals, which is twice as high as the state and national averages at 19.9% and 21.3% respectively.

The suburb’s main features include the Cottesloe Beach, Sea View Golf Club, Cottesloe Central Shopping Centre and North Cottesloe Primary School.

The popular Claremont Quarter is also nearby, as well as the Swan River and Allen Park.

The suburb is bound by the Indian Ocean in the west, North Street in the north and Stirling Highway in the east, and features Stirling Highway and West Coast Highway as its main arterial roads.

Specialist medical loans – not so special?

Are you a medical professional seeking finance? Some lenders offer special deals for those in the medical industry, such as doctors, physiotherapists and dentists, among others. But are these exclusive loans all they’re cracked up to be?

A wide variety of lenders offer special rates and fee packages for medical professionals, including GPs, specialists, surgeons, vets, physiotherapists and dentists, among others.

While some of these deals might seem great, it’s important to examine the lending requirements and structures more closely before signing on the dotted line.

Cross collateralisation risks

Some lenders will require such special loans to be cross collateralised, which can tie you to a particular lender and restrict your lending capacity in the future.

This might not be specified upfront, so it pays to ask, and the lender may require security over your business.

This can create problems when it comes time to review your loan, and in the event that one of your properties underperforms, you may not be able to secure finance again or could even be forced to sell your property.

No LMI loans

Some lenders also offer a ‘no lenders mortgage insurance loan’, which can be an advantage for some borrowers and help them purchase their property sooner.

However, in some cases, the total cost of the loan over the period of time (including rates, charges etc) is higher than the saving, meaning it’s not a better option in the long term.

One 100% loan – or is it?

There are also 100% loans on offer to medical professionals, meaning you’ll require no deposit or lenders mortgage insurance.

In some instances this can actually be 2 loans though, consisting of an 80% loan with one lender and a 20% loan with a second lender. The second loan is usually at a higher rate though (presently about 8%).

In these circumstances it may be better to save a 10% deposit and apply for a 90% loan – with no lenders mortgage insurance – rather than pay the extra costs.

Obtaining a specialist package can be beneficial, but it’s essential to compare your options and understand the fine print before committing.

A good finance broker will be able to assist you with this, and recommend packages that suit your individual circumstances and work for you now and into the future.

Should I undertake my own development or join a development syndicate?

Many investors aspire to undertake a residential property development at some point in their investment journey, but is it better to complete your own project or join a development syndicate?

Whether developing yourself or through a syndicate, when done right there is no question that the end result can be highly lucrative.

More often than not, though, aspirational developers only hear about the big profits on offer and don’t understand the amount of time and effort required to complete a residential property development themselves.

As such, if you want to undertake a development on your own, it’s advised to engage a project manager, who can oversee the build on your behalf.

A good project manager will be able to guide you through the entire process, from designs and approvals, to selecting a builder and tendering work, as well as monitoring the progress of the project to completion.

This option allows you to have a high degree of control over the project, while having peace of mind and conviction in your decisions as you’re being advised by a professional.

Comparatively, a development syndicate is a much more passive means of property development.

Investors have little input into the process as the syndicator manages the project and has final say on all aspects of the development. That includes the final designs and fittings and fixtures to choosing the builder and trades etc.

Investors are kept up to date with regular progress reports, but it’s as simple as investing your funds and waiting for the syndicator to hand back the profits at the end of the project.

If you ask anyone who has completed a property development themselves, they’ll confirm that it’s essentially a full-time job, as you need to manage a vast array of consultants and the builder through the entire process.

This is why engaging a project manager to help you or choosing to invest in a development syndicate can be a much wiser option than developing on your own.

What’s the best type of investment property to buy?

When searching for your first investment property, investors are spoilt for choice, whether it be a house, apartment or villa. But what’s the best type of investment property to buy?

The answer to this question will largely depend on your own unique circumstances because the different types of properties offer different pros and cons.

Smart investors understand that they must acquire properties that work in tandem with their own investment goals, financial capacity, life circumstances and risk profile.

For example, if you have a high risk tolerance you may prefer a development site. If you don’t have a high disposable income, a villa that is neutrally geared might suit you better, and so on.

So what are the advantages and disadvantages of different types of investment properties?

Here’s a quick overview of the different benefits and disadvantages that are typically offered by houses, apartments and villas.



  • Usually better capital growth prospects compared to apartments and villas
  • Relatively easy to add-value to through renovations/redevelopment
  • Greater control over the asset


  • Lower rental yields compared to apartments and villas
  • Greater maintenance required, which often means higher expenses
  • Higher price point



  • Higher rental yields compared to houses
  • Often better rental returns, meaning lower or no holding costs
  • Less maintenance required


  • Usually lower capital growth prospects compared to houses and villas
  • Strata fees can be high, particularly if the complex has large common areas, such as pools and lifts
  • Less control over the property with limitations for renovations due to strata bylaws
  • More competition for tenants and buyers, particularly in large complexes and in areas where apartments are highly prevalent (i.e. CBDs)



  • Relatively good capital growth prospects (not as good as houses though)
  • Relatively good rental yields (not as good as apartments though)
  • Ability to renovate the property (unless it’s restricted in the bylaws),
  • Lower price point than houses


  • Strata restrictions can limit what you can do with the property
  • Less control in terms of renovation options
  • Fairly homogenous, similar to apartments, meaning there can be more competition when selling or leasing

Investors should also consider other investment options like development sites, commercial property as well as development and commercial syndicates in their investment plans, which are often part of the portfolio for more experienced investors. First time investors should generally start by looking at houses, villas or apartments, but again, individual risk appetites and circumstances apply.

Why you need to start your property investment portfolio in 2017

If you haven’t yet kicked off your property portfolio, here’s why you should start your property investment in 2017.

Most people are aware that property investment can be a great wealth creator, however many of us fail to act.

The reasons for this are varied, but typically centre on short-term matters.

For example, when property markets are booming people are typically concerned about property bubbles – they don’t want to buy at the peak and be part of a market ‘crash’, so no action is taken.

On the other hand, when the market is in a slump many are not imagining any recovery, believing that prices will only continue to fall, and again no action is taken.

While it would be great if property prices rose steadily in a straight line, the cyclical nature of property markets – as demand and supply drivers move up and down – means that this is not the case.

Although there are ebbs and flows in the property cycle, history has shown us that property prices in Australia’s capital cities have continued to rise over the long term.

Therefore, investors need to take a long-term view when considering investing in property and put the short-term matters into context.

So why should you start your property investment in 2017?

Two reasons.

1) the earlier you start the better, and;

2) the stats are indicating that 2017 will be the year to invest.

Get in as early as you can

The sooner you start the more time you’ll have in the market to capture compound growth on your property (i.e. you’ll have more time to create greater personal wealth).

So a $500,000 property acquired today that achieves 5% per annum growth over 10 years will be worth $818,334. That’s an additional $318,334 from the initial purchase price.

But hold that property for 20 years and it will be worth $1,339,341. That’s an additional $839,241 from the initial purchase price.

By holding the property for 20 years (instead of 10 years), the property can make a further $520,907.

Therefore, the sooner you start investing the more opportunity you’ll have to capture compound growth.

As the saying goes, it’s about time ‘in’ the market, not ‘timing’ the market.

While starting your property portfolio sooner rather than later is beneficial to achieve greater wealth, investors need to ensure they acquire high-quality properties that will outperform the market over the long-term.

2017: The year to invest

An increasing number of experts, media and recently released statistics have suggested that the Perth residential property market is primed for investment in 2017.

The latest data released by the Real Estate Institute of Western Australia (REIWA) shows that Perth’s preliminary median house price for the December 2016 quarter did not change from $520,000, which is a positive sign, as historically once all sales have settled this preliminary median generally increases, so Perth could in fact record an increase in price over the quarter.

Sales activity is increasing with the preliminary dwelling sales for the December quarter 2016 five per cent higher than the same time in 2015. For the week ending 31st of January 2017, property listings were down about 2% year on year, indicating that some of the excess supply in the market is starting to be absorbed.

Great time to buy right

Buying strategy is just as important as timing in order to maximise the benefits of any approaching upswing. Investors who examine potential demographic, social, infrastructure and planning changes will have the best chance in purchasing a property that will outperform the market.

For example, in 2007, our research team identified the City of Belmont as an investment-grade suburb with strong short and long term growth drivers exposing many of our clients to the rapid price growth that occurred in this area.

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