Property Investment Case Study | Sunshine Coast Investment Property Pack

Video Transcript

Robbie:

Alrighty, it’s Robbie Turner from Axel on Property Group. Now, this video is going to go for about five or six minutes. You have never seen this before unless you’re a client, so don’t go anywhere.

It’s going to be absolutely groundbreaking. I’ve got my awesome little pointer with me here, but I can’t be fucked using that, so I’m just going to use my finger instead. So don’t go anywhere.

Like I said, I’m going to show you something that we have never released to the public before. It’s an example property pack. I’m even going to give you the suburb.

Geez, I’ve never, ever do that, but let me just give you a quick little disclaimer. Not everyone should be buying in the Sunshine Coast. You can see the price point’s got a healthy 70 in front of it right now.

This is a property pack from a couple of months ago, so it’s probably about 750 for the exact same pack. Most people can’t operate in that area. I don’t mind disclosing to you, like we’ve been finding properties in the Sunshine Coast for our clients for the last four years.

Some of them got in at $475,000. Now it’s a 750. Guess how much they love us? A lot, right? So this is exactly what it’s going to look like.

Let me give you a quick little overview. I’m going to give you a summary of what the property looks like. Then there’ll be a series of maps to zoom all the way down from the suburb into the estate, into the street.

You’ll be able to see how the house sits on the block, what the fourth floor plan looks like. Then I’ll give you a quick little summary of what is involved in the inclusions. Then we’ll have a look at the rental market and then we’ll crush the numbers to acquire the property and then hold the property long-term as well.

You’re going to love this. Give me another few minutes. It’s going to be groundbreaking.

So you can see it’s a brand new house and land package, four bedrooms, two bathrooms, one separate living area and a double lockout garage. And you can see there all the fixtures and fittings, full turnkey package, ducted air con, choice of flooring, choice of fixtures. And I said, I guess we’re thinking the estimated rent for this property is going to be about 650 bucks a week.

So here we now go on a series of maps to zoom all the way down. The little red box is effectively the next area that we’re looking into. So you can see the sunny coast is about 70 Ks north of Brisbane.

You can then have a bit of look into it. It’s got an airport, it’s got a university and there’s a huge estate down the bottom of the sunny coast here called Aura. You can see from a Sunshine Coast major investments perspective, the billions of dollars of infrastructure that’s going into a very condensed area has made the sunny coast really buoyant over the last few years.

And it’s absolutely not finished growing there, which is an amazing opportunity. You can see effectively on the screen there where Aura takes up the land. Effectively, it’s bound to the western side by the M1 that rolls up through there.

And then it gets pretty close to the water on the eastern side. So the land squeeze is actually on a fair bit before we even get started. It’s got a major train station here on the western side.

It’s got the Sunshine Coast University Hospital up there to the north. And you can see that sort of whole Stockland, Baringah, Caloundra west area, nice and close to the beach. You know, there’s million dollar houses through Pelican Waters there.

And our clients have got the opportunity of buying their own home or an investment property only a few kilometres away. If we have a look at what the overall satellite picture looks like now, you can see the Bruce Highway running up here to the west. That’s how the whole estate is starting to develop itself.

And you can see how far it is to the rest of the local infrastructure. As we zoom right now down into the estate itself, you can see it’s got a lot of infrastructure contained inside the wire. It’s got a huge shopping centre here.

It’s going to have a series of train stations or light rail stations that run through it in the future. It’s got its schools, one, two, and another one just underneath there. Childcare centres, you name it.

So I guess there’s so much to be said about the convenience of living, potentially where you’re working. But if you want to know what a master plan community is, bingo, you’re staring at one right now. As we go down a little bit further, you can see this particular block there.

It’s not too far away from where one of their light rail transport corridors is going to be. It’s about a kilometre up there to a shopping centre, 1.2 kilometres away to a massive state school, which is now built and operating. So it’s not like futuristic shit that might occur in the future.

It’s actually happening. You can see it’s only a very, very short drive to a major city centre, shopping centre over there as well, and all the sporting fields on the other side. As of about three months ago, that’s what Google Earth and or near maps look like.

Obviously nothing there right now. This is a developing area. This particular block of land is due to register in about three months time.

What am I talking to you now? Early 2023. As we zoom down even further, you can see lot 8533 there is effectively like it’s in a nice little cul-de-sac. It’s not on a main road.

The through traffic will be virtually zero. So that makes it really good from a liveability perspective as well. We’ve got our own drone.

So we know we can basically take the drone up there and do some footage. So we’ve got a bit of slant angle going there. So you can see this is effectively from the east looking to the west there where the overall sort of land blends with hills on the backside.

So you can see that’s what it looks like. The M1’s making its way through there. If we have a look on the other side now, west looking east, you can see the left and right of up there.

That’s what that’s what the estate looks like at the moment. It’s huge level of detail, right? That’s what the disclosure plan looks like. There’s a bit of retaining wall towards the back end.

And we now have a look at how the house sits on the block. And you start to get a bit of an understanding that if you’re living in Townsville, Perth, Darwin, Adelaide, whatever else, you don’t need to fly somewhere to go somewhere to go and kick a bit of dirt. You can’t actually get to the site anywhere.

We provide you so much detail so you don’t have to worry about doing that. This is a decision making tool that we give people so then they can go ahead and submit an expression of interest. It’s absolutely no brainer when people see this level of detail.

So you can see driveway on the left hand side. House has got a zero. It’s built to the boundary on the left hand side.

Little sort of gateway through the back. Low maintenance, perfect backyard for a brand new land and build property in a master plan community. This is what the floor plan looks like.

Garage on the left hand side. Laundry through there. Walk-in.

Master bedroom to the front of the house. En-suite walk-in road. Short little hallway.

Basically breaks out now into a large open plan. So open plan kitchen, open plan dining, open plan living. Look at the size of the alfresco.

Up here in southeast Queensland where the weather is mint a lot of the time, you spend the majority of your time outside and or like even a lot of your meals outside. So to have a really decent alfresco out the back there is critical to make sure you can maximize that space. Bedroom floor or like a home office or a study or a junk room or whatever it’s going to be in behind the kitchen.

And then the other two bedrooms down the back being serviced by the main bathroom. That is a good functional middle of the market house. It doesn’t need to be some sort of really, really fancy design.

You just want it to be broadly attractive to the most amount of tenants that are going to come in there and go, bang, that’s going to suit my family’s needs. We then go through a series of photos by the exact same builder or the exact same floor plan. So it gives you a real insight into what the actual property is going to look like.

We also then give you a summary of what the inclusions are. So you can see Calabon, Hind Timber, Renai, Carpacol, National Tiles, Clipsil, our builders use all the big brands to make sure you guys get the very best quality. And you can see basically that’s like a full invested turnkey solution.

And then it’s just another series of like, as a summary, you get extra detail when we go through the actual contract about what’s going to be in the inclusions. But most importantly, you can see there, what’s the rental summary going to look like? So you can see right now, 650, 650, 640 and 630, that’s properties that are available for rent right now. Fast forward probably another 10 or 11 months by the time this house is finished being built, registers in a couple of months, eight month build time.

That could be up around 700 bucks a week if market continues to do what it’s doing now from a rental return. So if you’re buying a $715,000 property, you’re getting nearly 700 bucks a week rent. It’s a no brainer.

It’s so good for cash flow. So that’s everything to do with the property, right? Now let’s look at the most important bit, which is crunching the numbers. Now, did you know when we present this to one of our clients, we skip all the first bit and we go straight to the numbers? Because this is what it means.

If the numbers don’t stack up, all that other cosmetic stuff is irrelevant. So it’s really important that we know exactly what’s going on from an acquisition and a holding perspective to give you the peace of mind that you’re not being backed into a corner from a finance point of view. And this is a good opportunity to go forward with.

Now show me all the cosmetic stuff about what it looks like. So these particular clients were doing a pretty stock standard. This is the majority way that a lot of our clients acquire a property, a 10% deposit of cash plus the lender’s mortgage insurance.

So that’s about 85 grand due at land settlement. Then they’ve got their stamp duty to pay, the loan establishment fee and the solicitor fee. So this is a standard upfront cost, which allows you to get to land settlement and you need about 100 grand set aside to get this property underway.

Then remember you only pay stamp duty on the land. So you’re only paying $11,000 stamp duty on the land. If this was a fully built $715,000 house, you’d be paying nearly $30,000 stamp duty.

So you’re saving a shit tonne of stamp duty up front. But some of that savings is absorbed by you guys having to pay interest on the loan as the house is being built. So it’s really important to get that house built as soon as practicable.

So therefore you get the tenant and the tax man coming in, taking care of the bills for you. So we need to be able to budget for that. You’ve got to be able to take care of the rates and the water throughout the build.

You now own the block of land. You’ve got to be able to pay the rates and the water bill. Three building inspections along the way.

Put your insurances in place. We get a sparkle clean done before the tenants move in. Get your photos and advertising for the internet advertising to make sure you can find awesome tenants.

You’ve got to pay your lending fee, depreciation schedule, NBN connection. Everything’s thought of. A lot of you are probably thinking right now, shit, I had no idea we needed to also be able to budget for those things along the way.

And you can see down here the relative timeframe. The big kicker is can you get to land settlement with your deposit costs and then you drip feed the rest of it. So you don’t need $121,000 all up, 99 plus 21, give or take a couple of bucks.

But you do need to be able to budget for that in your savings routine to make sure you can get to the end of the build. So that’s the acquisition numbers that go into acquiring your first property. Then we get to the bit that matters.

You guys have heard me talk about before. Good property investors don’t just buy houses or property, they buy time. So you need to be able to put the right financial structure in place where you can hold onto this property for a long period.

So in this particular instance, these clients are paying interest only for the first couple of years. I think it’s a smart idea with a little bit of rock and roll with the interest rates right now, pay the minimum off to the banks. You don’t need to pay another 800 or 900 bucks a month into your mortgage by having your principal component as well.

Pay the minimum amount and just see what the interest rates are going to do down the track. So the interest is calculated this one at 5% on a variable loan. So interest is going to be about $32,000.

Now these are all the other standard outgoings that you’re going to have every year. Remember, this is a holding assessment. Pay your property manager, pay your rates, pay your insurances, any maintenance you’ve got for the property.

Now in Queensland, you need to be able to pay water access to the property, but your tenant takes care of any water usage. It’s about a thousand bucks a year. So the overall expenses are the better part of $40,000 a year or 39,600 as you can see there.

Now super important to understand that an investment property has two forms of guaranteed income. It has the rent return and it also has the tax return. Now you guys saw already that there are houses out there that are being tenanted right now in the same estate for $650 a week.

So as opposed to us trying to forecast what it might look like come the end of this year, we just basically look at it and go, right, $650 a week is a good little baseline to work off. And we even times it by 50 weeks a year to say there’s a two-week vacancy. So your first tenant takes a 12-month lease and then they decide to move on and do whatever else they’re doing.

Takes two weeks to find another tenant. We need to be able to budget for that. So you get about $3,200-$3,500 in the door.

$3,200-$3,500 in the door pre-tax. You’ve got $39,619 outdoor, which means this property is negatively geared to the tune of about $7,000 a year or $110 a week. That’s bugger all, right? If you guys have been on a really awesome savings plan, you’ve got to take care of $130 a week, no dramas at all.

But then you also get $8,500-$9,000 back in your tax return. Remember two forms of guaranteed income, rent return and tax return. So your total income is actually more than what the costs are.

So now you’ve got $39,600 outdoor and $41,300 coming in the door. So this is a negatively geared positive cashflow house. And you can see down the bottom there between the tenant and the tax man, that’s who takes care of it with no input from you.

There you go. That’s all the level of detail we provide our clients when they’re doing a property pack. Hope you enjoy it.