| Investment Purchase Price | $445,000 |
| Deposit 10% | $45,000 |
| Stamp Duty | $8,900 |
| Building and Pest Report | $650.00 |
| Solicitor Costs* | $1,700 |
| Total | $56,250 |
| Purchase Price + Purchasing Costs | $456,250 |
| Gross Annual Cash Flow Return ($520 per week x 52) | $27,040 |
| Expenses (Interest, Rates, Management fees) | $15,100 |
| Net Annual Cash Flow Return | $11,940 |
Now – Let’s Look at the Cash-on-Cash Return
| Deposit Needed = 10% + Costs | $56,250 |
| Return on Equity (pure cashflow return) | 26.5% |
| Return on Equity with a 5% Capital Growth Rate | 75.9% |
| Return on Equity with a 7% Capital Growth Rate | 95.7% |
| Return on Equity with a 10% Capital Growth Rate | 125% |
Client Brief:
We are first time investors based in Darwin. We are looking for a great asset that is positive cashflow and primed for Capital Growth. We would like this property to increase our annual income and equity position so that we can build a high performing investment portfolio. – Paul & Sam
Our 6 Strategic Investment Principles
- Does the property appeal to owner occupiers? *YES* In established suburb with high owner occupier rate
- Is the property below intrinsic value? *YES* Significantly below median suburb price of $550,000
- In a suburb with a history of growth and stability? *YES* very solid growth and stablity due to desirablity and demographic
- High Land to asset ratio? *YES* Very high land content value being an established property in leafy green estate
- Does it have a twist? *YES* No rear neighbours and backs onto a beautiful creek
- Can you manufacture growth through renovations or development? *YES* Renovation potential including option for backyard pool
