Join Sarah Megginson, Editor-in-Chief of Property Property, for an exclusive webinar in which we'll show you how we've used Real Estate Investar's data to discover the high-performance suburbs described in this special report.
Date and time: Wednesday, May 22, 2019 at 8:00 pm
Register: realestateinvestar.com.au/yip-webinar
Bonus: Free report of the Top 200 ripped suburbs. RRP $ 297
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A high-cash-flow real estate investment is an investment that earns you more each month than it costs you to own.
Suppose the property reimburses you $ 2,500 a month once mortgage repayments, municipal rates, insurance and other property costs have been paid; a positive cash flow investment would generate more than $ 2,500 per month, generating instant profits on your bank balance.
When we look at the long term, most investors aim to hold their own investments so that they can live off their retirement income – and positive cash investments could be a step in that direction.
For example, let's go back to the previous example and assume that this property generates a monthly income of $ 2,800, which is $ 300 more than expenses. After paying the tax on this income (equivalent to your tax rate, we will assume about a third), you will still have $ 200 of additional income.
Integrate this income directly into the investment mortgage in order to speed up your property projects. In fact, you could save up to $ 60,000 over the life of the loan and own the property six years earlier *.
High-yield properties are also important for low-income Australians who want to build a portfolio but can not afford to manage additional expenses for a property whose income does not cover expenses.
That said, not all high-performance properties are equal. By seeking big returns on investment, investors could turn to remote areas because of the promise of high rental income, without taking into account the potential for higher vacancy rates and / or slow growth of capital.
When planning your next investment, it is essential to look at the bigger picture, which involves exercising due diligence, vacancy rate and unemployment rate in the historical growth of capital and demographic forecasts. The suburbs in this report can inspire you when you are looking for your next investment.
High-Performance Hazards
In the pursuit of exorbitant returns, do not add risky properties to your portfolio, they could move you away from your wealth creation goals rather than getting closer. The most risky high-yield games include:
Single-industry towns. Does the region depend on its agricultural production, tourist attraction or mining economy to survive? In this case, the value of the properties could be vulnerable during a downturn. Aim for areas with a broad income distribution that support the region, so that if one industry falters, others are the engine of the economy.
Remote suburbs. Do you think you've found the right market to stop all the bargains in a remote Queensland or New South Wales town? Maybe you think back; These types of regional purchases are particularly risky because the size of their population does not support current rental demand and price growth is low and / or stagnant. Search for cities of at least 20,000 people in the local government area.
Financial risks. Now more than ever, banks are looking to reduce their risk when they offer financing. Therefore, if you offer them with a risky transaction, your loan application may be refused. Many banks are reluctant to lend you money to buy goods with "risky" postal codes because they view the future prospects of this investment as low growth. Let them know that the suburbs are too volatile to invest and go ahead.
Small studios. Small studios can perform well, especially if they are located in a vacation building that has a steady turnover of vacationers. But these types of investments are difficult to sell and generally have little or no capital growth.
Join Sarah Megginson, editor of your Investment Property magazine, for an exclusive webinar where we will show you how we used Real Estate Investar's data to discover the high-yielding suburbs described in this article. special report.
Date and time: Wednesday, May 22, 2019 at 8:00 pm
Register: realestateinvestar.com.au/yip-webinar
Bonus: Free report of the Top 200 ripped suburbs. Suggested price $ 297
* Calculation based on the additional repayment calculator of yourmortgage.com.au, in the assumption of a $ 300,000 mortgage, a rate of Interest of 4.5% and a loan term of 30 years, with additional repayments made since the beginning of the loan.
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The full article featuring the 141 high-performance companies, including suburban profiles, was published in the April 2019 issue of Your Investment Property magazine. Download the magazine now.
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