Brisbane Cash Flow Positive Investment Property
Brisbane Cash Flow Positive Investment Property purchased for a Sydney investor is typical of the type of properties we source for our clients. Generally, under $500,000 brick and tile Home on 500 m2 of land with 16 kilometres of the Brisbane CBD in a location that will become a future Brisbane Hot Spot returning in excess of 4%.
The client was referred by a mortgage broker to assist his client in Sydney to purchase and investment property in Brisbane. Initial requirements:
- Cash Flow Positive
- Strong Capital Growth
- Low Maintenance
- Good Area
- Under $500,000
- Good Location
This list of customer requirements is very close to the minimum requirements we place on all our property purchases and results in a cash flow positive investment property that will attract good long term tenants.
The location of the property is the first major consideration, it must be as close to the Brisbane CBD as the clients budget allows and must be showing signs of future growth. The suburb we chose was within 16 kilometres of the Brisbane CBD and within this suburb, there are a small number of areas that had homes built around 10 to 12 years ago on very good-sized blocks of land, around 500 m2.
Future Market Drivers
There are 3 suburbs surrounding this suburb that are undergoing a lot of development right now with many new property estates coming online. These suburbs are further from the Brisbane CBD than our target suburb. The average property being built and sold in this estate is a 4 bedroom home built on a 300 m2 or smaller block of land. Pricing averages around $485,000 plus.
These properties are being sold for around the same amount as the established property we are have purchased on land sizes 200 m2 less. As the major component of the value of a property is the land value, it makes reasonable sense that in the next 5 years, our target suburb which is closer to Brisbane and on bigger lot sizes will experience significant growth in value.
In addition to the above observation is supply and demand. Again it makes common sense that in 5 years time, anyone looking to purchase a property in this area will be drawn to our target suburb due to the bigger houses and land sizes which will increase the demand on these properties which in turn will increase their values and returns.
Investment Property Features
It is important to consider the features of a property that will appeal to a wide range of tenants which increase the number of applications you receive when offering the property to rent which reduces your vacancy rate. For that reason, we foll0w a very simple formula that we apply to all properties we select.
- 4 Bedroom
- 2 Bathroom
- Double lock-up garage
- Aircon to the main living area
- Ceiling Fans in all rooms
- Land size in excess of 400m2
This minimum set of standards ensures you get the best rental return for your property, appeals to a wide range of potential tenants and in the future buyers, has a low vacancy rate and a high capital growth potential and is low maintenance.
With the clients Brisbane Investment Property requirements entered into our property search system we identified a suitable property and commenced researching and booked an inspection. This property is less than 10 years old and was last purchased just over 3 years ago for over $500,000. Every valuation I conducted on the property through a number of different systems valued the property at over $500,000.
When negitation the purchase of a property it is important to know a number of key sale drivers. Why is the property for sale etc. In this case, through discussions with the agent it weas established that there were a number of critical factors at play in this property sale. Using this information I was able to prepare a purchase strategy and price we wanted to pay for the home. Our offer for the property was $485,000 which was accepted. There were no counter offers, our first offer and terms were accepted and the deal was done.
How Did We Do It
By Identifying the current owner’s issues and preparing an offer that was focused on solving their problems rather than submitting an offer based on price. In this case, the asking price was for offers over $500K and yet we have secured the property at $485,000.
The cost of financing this property at 100% with an interest rate of 3.5% interest-only equals $326 per week
The actual achieved rent for this property is $460 per week
Cash flow is $134 cash flow positive per week.
Rate of return is 4.9%
If your looking to invest in the Brisbane property market and want exceptional results like this, then call me direct Alistair Kelsall on 0405 131 333 and find out how I can help you.