A small, tight-knit community near Margaret River has been left reeling, following the mass murder-suicide of seven people, including four children.

It is understood three generations of a family lived at Forever Dreaming Farm in the small community of Osmington, northeast of the popular tourist hub of Margaret River.

The well-kept property, where the bodies were found yesterday, belonged to Peter and Cynda Miles, who were well known and respected in the Margaret River community.

Katrina Miles lived at the Osmington property with her four children. (Facebook) (Facebook)

Cynda Miles, who owned the farm, was well known and respected in the Margaret River community. (Supplied) (Nine)

Their daughter Katrina Miles also lived at the property, where it's believed she home schooled her four young children.

Police said the bodies of two adults were found near a shed that had been converted to living quarters, while the children and the other adult were discovered inside when police were called to the property just after 5am on Friday.

The grandparents daughter lived at the property, where it's believed she home schooled her four young children. (Nine)

Police forensics investigate the deaths on the rural property. (AAP) (Nine)

They were all found with gunshot wounds.

"I feel sick to the stomach…that couldn’t happen here," a friend of the family Felicity Haynes told 9NEWS.

"It's just horrifying. They were good people. It's not fair."

"They are a hugely respected family and a great asset to the community." (Nine)

The small, tight-knit community has been left rocked by the tragedy. (AAP) (Nine)

Ms Haynes described grandmother Cynda Miles as an outgoing, bubbly person loved by the community.

"You can imagine this warm, motherly person whose always smiling, always generous and brings fresh baked scones to everything. That's Cynda," she said.

Authorities are not looking for a suspect and are treating the deaths as a mass murder-suicide investigation.

Just one month ago, the mother-of-four, Katrina, posted on Facebook that she believed she was being stalked by someone close to her.

WA police chief commissioner Chris Dawson said the incident was a "devastating tragedy". (AAP) (AAP)

Chief Commissioner Dawson described the deaths as "a horrific incident".

"They are a hugely respected family and a great asset to the community," WA police chief commissioner Chris Dawson told reporters.

"It's just absolutely really shocking.

Police are yet to officially name the victims, but believe they were residents of the property. (9NEWS) (9NEWS)

Forensic crews found two firearms at the scene. (9NEWS) (9NEWS)

"I can't imagine just how disturbed someone is how they could do that."

"The loss of any life is tragic but, four children and three adults, this is a significant tragedy.”

"This devastating tragedy will no doubt have a lasting impact on the families concerned, the whole community and in particular the local communities in our south-west."

Chief Comm. Dawson said a man "connected to the property" had called police and alerted them to the property.

(9NEWS)

"A male person called police early this morning, but I'm not prepared to go any further as to the identity of that person," he said.

"There is a priority to these investigations, so we will immediately concentrate on the scene itself," Chief Comm. Dawson said.

"Naturally we will be asking for anyone who does know anything about this matter to contact police."

Police say a man "connected to the property" called them early this morning, leading them to the horrific scene. (9NEWS) (9NEWS)

The first responding officers will be offered counselling.

WA Premier Mark McGowan has offered his condolences to those affected.