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Invst Australia helping to put the property puzzle together.
Regional towns performing well. Drouin: Median price $355,000, Annual capital growth 4.97%, Number of sales 277, Weekly median advertised rent $315. Over the last 12 months investment property in Drouin has done well for investors when compared to the country as a whole, with an increase in the median house price of 10.94%. Comparing its long term performance over a 5 year period as compared to the quarterly gain, the short term has done better for investors. In the last year 277 properties changed hands in Drouin, which puts it among the more active markets in VIC when comparing the number of sales per suburb. A $315 per week rent on the median house gives suburb investors a gross yield of circa 4.61%, without taking into account capital value appreciation, which has been averaging out at 4.97%.
Warragul: Median price $345,000, Annual capital growth 4.28%, Number of sales 394, Weekly median advertised rent $315. This rapidly growing, masterplan community comprises 1,250 diverse-sized lots as well as 25ha. of parks, waterways and open space and all connected by tree lined boulevards and a network of shared pathways that link to the renowned Two Towns Trail. Waterford Rise is the standout estate in the region with median sales rate at similar levels to Melbourne Metro and among the highest in Regional Victoria. Buyers are flocking to Warragul in record numbers to take advantage of the affordable, larger lot sizes. This affordability/size equation has seen sales increase dramatically in 2017 as buyers snap up land faster than ever Armstrong: The most remarkable development the Geelong region has ever seen! Located only 11 minutes to the surf and 15 minutes to the Geelong CBD,
ARMSTRONG boasts a unique position, enticing home hunters wanting to be close to the heart of Geelong and the Surf Coast. This remarkable community will be delivered by Victoria’s premier residential developer, Villawood Properties. As an industry-leading developer with 25 years of experience, Villawood Properties prides itself on delivering first-class liveable communities.
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THE INVST AUSTRALIA COMMITMENT We have a product to suit the needs of any purchaser with a varied range of options for different investor needs. From traditional House & Land packages at fixed prices to medium density projects to choose from and also SMSF (Self-Managed Super Fund) compliant homes all form part of our turnkey offer. As the Melbourne market expands and moves, we analyse and develop new markets and present new investment option to our clients. Invst Australia is committed to analysing market trends and suburb statistics to help investors into new and emerging residential growth areas across the state of Victoria. Our team of real estate professionals, financial planners, credit advisors and builders collaborate to bring about the best possible result for first time or mature investors.
Subdivision and development Our associates can advise on design constraints, council requirements, town planning guidelines, building regulations and what will be suitable for your site before proceeding with an application. Along with our team we can handle your application on your behalf through the relevant council, and liaise with town planners, surveyors, engineers and other consultants as required. Our Town Planner can organise all permits required to assist with gaining permission to build your new dream. He will also ensure prompt building permits through the use of our private building surveyor, draftsman and engineers
PREMIUM INVESTOR PACKAGE INVST PREMIUM PACKGE
As you expect, all our builders offer a comprehensive range of inclusions to enhance the rental value of your property. Our range may vary depending on the builder you choose but the minimum is always turnkey with no additional work for the busy investors. Our Premium Investor packs include quality stainless steel appliances, floor and window coverings, heating and refrigerated cooling to every home and landscaping, clothes line and letter box. We want your property to be ready to move into.
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INCLUSIONS
WINDOWS
Fixed price site costs including rock excavation
Obscure glazing to ensuite, bath and WC Aluminium sliding windows (unless an alternative is required due to energy rating) Window locks to openable windows (keyed alike) Timber venetians to front windows, Holland blinds to remaining clear glass windows and sliding doors
EXTERNAL ITEMS
DOORS - EXTERNAL
Concrete roof tiles as per colour document Colorbond fascia, gutter and downpipes Bricks as per colour document Natural colour mortar with rolled joints Brickwork above windows to front Painted infills above windows to balance of home and garage Plaster lined ceiling to porch and outdoor living (if applicable) Two part termite treatment Colour sealed concrete driveway and paths including porch, front path, rear path to clothesline Letterbox (with numbers)
Feature Corinthian Madison entry door 2040mm x 820mm with clear glazing Cylinder deadbolt to entry Entrance set to all external hinged doors
SITE COSTS
INTERNAL ITEMS Engineered waffle slab concrete floor Pine wall frame and roof trusses 2440mm ceiling height to single storey 2590mm ceiling height to ground and 2440mm to first floor to double storey Plasterboard walls, ceilings and cornices 67mm single bevel architrave and skirting boards throughout 72mm scotia cornice Melamine shelf with one (1) hanging rail to bedroom robes
GARAGE Colorbond sectional garage door with two (2) remotes Pedestrian weatherproof door (product specific) Flush panel internal access door to the garage (plan specific) Concrete floor (poured as part of slab)
DOORS - INTERNAL Stylish flush panel doors 2040mm high throughout (including robes) Lever door handles to passage doors Contemporary lever half set door handles to hinged robe doors
ELECTRICAL Double power points throughout 240 volt downlights to living areas Modern battern holder light fixtures with shade to remainder of home Oyster Lights to all bedrooms Flood light with sensor outside laundry
LED downlight to porch White wall mounted switches Hardwired smoke detectors with battery backup Safety switch to meter box Two (2) x TV points One (1) x TV antenna Two (2) prewired phone points
FLYSCREEN / SECURITY DOORS Flyscreens to all openable windows Barrier doors to sliding glass door at rear of house
HEATING / COOLING
BATHROOM
Gas ducted heating to all bedrooms and living areas with programmable thermostat Split system air conditioner (cooling only) to living
Quality wall tiles to wet areas as required Quality floor tiles or timber laminate to wet areas, meals, kitchen, entry and hallway (refer to plan) Stylish carpet to balance of home
Stylish vitreous China vanity basin Contemporary acrylic bath Premium laminate cabinet and bench top (square edge) Designer chrome handles Semi frameless designer shower screen with clear glass Tiled showerbase Polished edge mirror to full width of vanity Modern mixer tap Designer single towel rail
KITCHEN
PAINTING
Premium 600mm stainless steel underbench oven Premium 600mm stainless steel gas hot plates Premium 600mm stainless steel slideout rangehood Premium stainless steel dishwasher Premium laminate bench tops (square edge), cabinets, including overhead cupboards Designer chrome handles 1ž bowl sink - stainless steel Modern mixer tap Modern fully tiled splashback Melamine shelving to pantry x 4
Premium three coat paint system throughout Full gloss enamel paint to skirting boards and architraves
FLOOR COVERINGS
LAUNDRY Laundry trough within acrylic cabinet Modern mixer tap
ENSUITE Stylish vitreous China vanity basin Premium laminate cabinet and bench top (square edge) Designer chrome handles Semi frameless designer shower screen with clear glass Tiled showerbase Polished edge mirror to full width of vanity Modern mixer tap Single towel rail and toilet roll holder 4 star toilet suite
WC / POWDER ROOM 4 star toilet suite Designer toilet roll holder
ENERGY EFFICIENCY 6 star energy rating to building fabric Solar hot water service with gas booster Glasswool insulation to walls and ceilings Self sealing exhaust fans positioned above all showers
LANDSCAPING Combination of turf, plants, mulch and toppings to front and rear yards Irrigation connected to two (2) garden taps with timers Compacted paths around perimeter of home Timber fencing to all boundaries including wing fence and gate Nature strips levelled and seeded Clothesline
GENERAL Fixed price contract Survey and drafting plans All permits as required by Building Regulations Engineer designed foundations All service connections (excluding consumer account opening and fibre optic connection if applicable) Home owners warranty 3 month maintenance period Full house clean on completion Independent quality inspections
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Successful property investors consider the following: 1
Your borrowing capacity
We conduct an assessment to determine your borrowing capacity. We review your income and expenses, your assets and liabilities and provided you have adequate equity in your home, you may be in a position to buy an investment property.
2
Property analysis
3
To build or not to build
A new home will give an investor the following savings and may benefit them in the short and long term. Stamp duty: when building an investment home in Victoria there are substantial stamp duty savings. Maintenance: a brand new home comes with warranties and guarantees, these will significantly reduce your maintenance expenses. A new home is relatively trouble free for the first 10 years of its life.
Its now time to research and analyse the property market based on the money made available from your lender. Where to buy: every suburb has its strengths and weaknesses. Successful investors buy property based on a combination of short and long term strategy. Price point: for the majority of investors the price is dictated by the amount of money made available by the lender. Using this capacity to buy in the most suitable suburb needs a certain amount of market knowledge, research and experience. Net rental return: this is the amount of rent you will receive after deducting all the expenses. Management cost, insurance, water and other services, council rates and vacancy loss. Capital growth: every suburb has short and long term growth results. These statistics must be analysed keeping in mind development and other factors that may raise or lower the capital growth. Rental demand: this is extremely important, an investment property whithout a tenant is costing you money every week. Cash flow: before purchasing an investment every successful investor needs to know if the property will cost them money from their own pocket or will it cover its own running cost.
About Us The sole purpose of Invst Australia is to show you how simple and attainable building an investment property is. We know that the hardest part of property investing is taking the first step, that’s why we created Invst Australia to help you analyse, select and tenant an investment home, apartment or townhouse. We are aware that paucity of time is the reason why most people make hasty decisions without due diligence when buying a new investment property, the result can be a poor selection and a bad experience. Our focus is on helping you complete your due diligence checklist while making sure you don’t miss the fine print in selecting and signing contracts to buy land and build a new investment home. The bottom line is to help you secure an investment property through smart choices using our 18 plus years of experience. Our process involves independent solicitor’s advice with contracts and financial advice from a Financial Planner at no cost to you. We want you to be educated and comfortable with your decisions. Our role is to facilitate, monitor and manage your property selection all the way from the initial discussions to a home built and handed over to your tenant. Our service does not end here, we conduct reviews every 12 months to ensure your loans are performing and equity growth is managed to help you reinvest in new and emerging suburbs.
Tax savings: a brand new home will give an investor a sizeable amount of depreciation, which may help reduce personal tax thereby giving the investors a refund.
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Scope of Service Constructing an investment property with Invst Australia is easy. We manage the complete project from selection to finding a tenent for your investment home.
Invst Australia has done the research, analysis and tax projection for every property we present thereby making it easy for a busy investor to enter into a specific market.
We present you with the most suitable lender & loan for your investment. Every investor has a unique strategy and therefore we structure your finance accordingly.
FINANCE - Your Broker ASSESSMENT Our assessment of your current financial structure and loan balances will give us the information to find the most suitable type of funding for your next investment.
APPLICATION We take care of all the applications and approvals that may be necessary to get you the loans that you need to pay for your investment strategies.
SETTLEMENT Our coordination continues way beyond just the loan approvals. We know we have to be there right up to settlement and if necessary until construction is complete.
REVIEW Because lenders change their offers frequently, we review your portfolio every year to make sure that you are still getting the best possible funding for your investments.
You are never alone. We will coordinate, monitor and inspect the property at each stage. Investors don’t have the additional pressure of coordinating construction. .
We also take away the pressure of finding a tenant. Before completion we will start the process of tenanting your investment to give you the best possible income.
CONSTRUCTION COLOURS & INTERIORS As you are buying for investment we keep our colour selections and interior variations as simple as possible to ensure your time is not wasted on these details.
CONTRACT ADMINISTRATION While your investment is being built, we take care of all queries and follow up with the construction team to ensure timely progress and completion.
PROGRESS INSPECTIONS At each stage and when required, an independent Building Surveyor will inspect your investment while we coordinate and monitor the progress for you.
FINAL HANDOVER Your independent Building Surveyor would have checked to ensure quality. You will only need to visit the completed home at this stage for the final handover.
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Before you buy Purchase Info Purchase Price
$369,465
- First Mortgage
-$295,572
- Second Mortgage
-$78,313
= Cash Back from Lender
-$4,420
+ Buying Costs
$4,420
+ Initial Improvements
$0
= Initial Cash Invested
$0
Square Meters
173.77
Cost per Square Metre
$2,126
Monthly Rent per Square Metre
First
Second
Loan-To-Cost Ratio
80%
21.2%
Loan-To-Value Ratio
80%
21.2%
Loan Type Term Interest Rate Payment
Benefit
Purchase price, along with all State Government
Every investment property comes with a number of
cost, including stamp duties and registration,
variable cost which must be established before you
mortgage registration, legal and incidental cost.
enter into a purchase. We ensure that you are well aware of the amount of funds you will have to make available to complete the purchase of your investment.
$9.23
Mortgages
Loan Amount
Analysis
$295,572
$78,313
Interest-Only
Amortizing
30 Years
30 Years
4.48%
4.48%
$1,103.47
$395.87
The amount of mortgage to be established, the
The lender you choose and the type of loan you
interest rate, the Loan to Value Ratio, term and the
require for a successful investment is very important to
type of repayments.
your success. The repayments on an investment purchase play a huge part in the success or failure of your investment.
Financial Metrics (Year 1) Annual Gross Rent Multiplier
19.2
Operating Expense Ratio
Rental income, expenses, debt, capital rate vs
The amount of rent you receive on your investment is
rental income, income return vs market value, and
not the only criteria which is taken into account to
cash return.
ensure a successful selection of property.
Capital Growth, rental yield, expected vacancy
Every purchase is based on assumptions. These
rates, income and expense inflation and selling
assumptions must be based on sound market
costs.
research, experience and timing. Your success in
13.6%
Debt Coverage Ratio
1.08
Cap Rate (Purchase Price)
5.2%
Cash on Cash Return
N/A
Assumptions Appreciation Rate
7.81%
Vacancy Rate
3.83% 3.0% 3.0% 80.0%
Selling Costs
business will depend largely upon the people you trust
$0
to give you this advice. Income Gross Rent Vacancy Loss Est Tax Refund Operating Income
Monthly
Annual
$1,603
$19,240
-$61
-$737
$326
$3,915
$1,868
$22,418
Gross rent, vacancy loss and estimated tax
An investment is only as good as the tenant and the
benefits will equal your operating income.
income you receive from them. Your estimated tax returns are more easily established as they are mostly controlled by your own circumstance. We ensure that your operating income is acceptable to you before you make any selection of property.
Expenses (% of Income) Insurance (2%)
Monthly
Annual
-$30
-$365
-$121
-$1,457
Council Rates (4%)
-$75
-$900
Water Charges (1%)
-$27
-$325
-$254
-$3,047
Management Fees (6%)
Operating Expenses (14%)
Net Performance Net Operating Income - Mortgage Payments - Year 1 Improvements = Cash Flow
Sale Analysis
Monthly
Annual
$1,614
$19,371
-$1,499
-$17,992
-$0
-$0
$115
$1,378
Insurance, property management, council rates
We make sure you are not up for unknown or
and water are your property expenses.
unforeseen expenses which may change the outcome of your investment. Before entering into any purchase these figures must be made know to you.
Cash flow.
The bottom line is real cash flow every month. Before you buy a property you must be comfortable with this figure as this is real money into or out of your pocket.
Year 3
Year 4
Year 5
Year 7
Year 10
Year 20
Year 30
Equity
$103,726
$143,637
$186,617
$282,759
$456,568
$1,538,366
$3,751,145
Every investment plan is based on a holding term. Our
- Selling Costs
-$11,499
-$12,268
-$13,098
-$14,956
-$18,323
-$37,017
-$76,673
= Proceeds After Sale
$92,226
$131,368
$173,520
$267,803
$438,245
$1,501,348
$3,674,472
analysis will give you the projections based on various
+ Cumulative Cash Flow - Initial Cash Invested
$4,811
$7,653
$11,146
$20,160
$39,066
$58,919
$183,886
-$4,707
-$4,707
-$4,707
-$4,707
-$4,707
-$4,707
-$4,707 $3,853,651
$92,331
$134,314
$179,958
$283,256
$472,605
$1,555,560
Internal Rate of Return
183.3%
142.7%
118.3%
90.6%
70.6%
49.7%
46.3%
Return on Investment
1,962%
2,854%
3,823%
6,018%
10,040%
33,048%
81,871%
holding terms, all the way to 30 years.
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SMSF Self Managed Super Funds
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Key reasons to invest in Real Estate Real estate is something that you can physically touch and feel – it's a tangible good and therefore, for many investors, it feels more real. For many decades this investment has generated consistent wealth and long term appreciation for millions of people. Depending on the location of your real estate, you can enjoy sizable returns on your investment. There are two main types of real estate: commercial and residential. While other types exist (mobile home parks, strip malls, apartment buildings, office buildings, store fronts and single-family homes), they generally fall into those two categories. Making money in real estate isn't as cut-and-dry, some people take the "home flipping" route – searching for distressed properties, refurbishing them and selling them for a profit at a higher market value. Others look for properties that can be rented to generate a consistent income. There are many positive benefits to investing in real estate, including depreciation (writing off wear and tear of a commercial property), tax deductions and finally, you can sell the property to recover your capital. High Tangible Asset Value Unlike stocks and, to some extent, bonds, investment in real estate is backed by a high level of brick and mortar. This helps reduce the principal-agent conflict, or the extent to which the interest of the investor is dependent on the integrity and competence of managers and debtors. Market forces dictate the success or failure of these assets. Portfolio Diversification Another benefit of investing in real estate is its diversification potential. Real estate has a low, and in some cases, negative, correlation with other major asset classes. This means the addition of real estate to a portfolio of diversified assets can lower portfolio volatility and provide a higher return per unit of risk. Inflation Hedging The inflation hedging capability of real estate, stems from the positive relationship between GDP growth and demand for real estate. As economies expand, the demand for real estate drives rents higher and this, in turn, translates into higher capital values. Therefore, real estate tends to maintain the purchasing power of capital, by passing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure, in the form of capital appreciation. The Drawback: Illiquidity The main drawback of investing in real estate is illiquidity, or the relative difficulty in converting an asset into cash and cash into an asset. Unlike a stock or bond transaction, which can be completed in seconds, a real estate transaction can take months to close. Even with the help of a broker, simply finding the right counterparty can be a few weeks of work. The Bottom Line Real estate is a distinct asset class that is simple to understand and can enhance the risk and return profile of an investor's portfolio. On its own, real estate offers competitive risk-adjusted returns, with less principal-agent conflict and attractive income streams. It can also enhance a portfolio, by lowering volatility through diversification. Though illiquidity can be a concern for some investors, there are ways to gain exposure to real estate, such that illiquidity is reduced, if not brought on-par with that of traditional asset classes Treat Investments as Businesses It is important for real estate investors to approach their real estate activities as a business in order to establish and achieve short- and long-term goals. A business plan allows real estate investors to not only identify objectives, but also determine a viable course of action towards their attainment. A business plan also allows investors to visualize the big picture, which helps maintain focus on the goals rather than on any minor setback. Real estate investing can be complicated and demanding, and a solid plan can keep investors organized and on task. Know your Markets Effective real estate investors acquire an in-depth knowledge of their selected market(s). The more an investor understands a particular market, the more qualified he or she will be to make sound business decisions. Keeping abreast of current trends, including any changes in consumer spending habits, mortgage rates and the unemployment rate, to name a few, enables savvy investors to acknowledge current conditions and plan for the future. Being familiar with specific markets allows investors to predict when trends are going to change, creating potentially beneficial opportunities. Stay Educated As with any business, it is imperative to stay up to date with the laws, regulations, terminology and trends that form the basis of the real estate investor's business. Keeping current requires work, but it can be viewed as an investment in the future of the business. Investors who fall behind risk not only losing momentum in their businesses, but also legal ramifications if laws are ignored or broken. Successful real estate investors take the time and make the effort to stay educated, adapting to any regulatory changes or economic trends. Find Help When you Need It Real estate investing is complicated and requires a great deal of expertise to engage profitably in the business. Learning the business and the legal procedures is challenging to someone attempting to do things alone. Effective real estate investors often attribute part of their success to others – whether a mentor, lawyer, accountant or supportive friend. Rather than risk time and money solving a difficult problem on their own, successful investors know it is worth the additional costs to find help when they need it and embrace other peoples' expertise.
Resource: Investopedia