Our client’s brief.
Budget – $850k
Holding Period – 5 years
Objectives – Pure Investment, ideally a property that is both cashflow positive and has good appreciation potential
After going through the HausLife Investment Framework, this is the unit purchased.
Property Price – $812,000
Size – 474 sqft (1 bedroom unit)
Rental – $3,600 (newly signed 2 year tenancy)
Loan – 3.9% fixed for 2 years
Return on Investment
Capital Invested
= 25% Downpayment + Buyer’s Stamp Duty
= $221,960
Return on Capital Invested
= Net Monthly Rent/Capital Invested
= $1,019*12/$221,960
= 5.51%
Projected gains after 5 years.
We make the following assumptions:
– Property value only appreciates by 5%
– Interest rate remains at 3.9% p.a.
– Monthly rental remains at $3600.
Total Gains (Rental Gains + Capital Gains)
= $1,019 * 60 months + 5% * $812,000 = $101,740
Total Return on Investment (Total Gains/Capital Invested)
= $101,740/$221,960
= 46%
Other Factors
The HausLife Investment Checklist also looks at other factors that affect the eventual exit strategy.
Here are some examples:
– Good transaction volume indicating demand for 1 bedders in the area
– Rental volume and trends
– Discovering the lack of supply of 1 bedroom units with good facing in the area
– Upcoming new development that is priced 20% above this unit
In a nutshell…
Many people are fearful with rising interest rates and may think that it is not a good time for property investment.
However, these are all sweeping statements.
Every case differs.
As you can see, there are still opportunities in the current market where the numbers show us that we can still counter the high interest rates and emerge from this investment with a good ROI.
Speak to us if you’d like a non-obligatory free consult!
