Meet Lisa and Chris
Invest And Achieve Positive Cash Flow For Best Of Both Worlds
Lisa and Chris worked hard for many years, saving and paying down their home mortgage. Once the kids had flown the coop they noticed they were building a nice nest egg, some of which they contributed to their super, the rest they thought could be used as a deposit or down payment for an investment property. After all, the stock market was so volatile – even their “safe” superannuation had gone backwards during some years. The problem was, the properties in the area where they lived, while 15KM from the city were priced well over $1million and the thought of another huge loan seemed exhausting to both of them.
With their steadily saved $180,000 deposit, Lisa and Chris explored buying a more affordable investment property, confident that landed property offered consistent and safe return over time. They looked at outer city suburbs as far as 35KM from the CBD but were worried about rental risk in low-income areas. And anyway, even those far flung areas were priced well above half a million dollars for 3 bedroom properties – unbelievable!
Then they saw a lovely new villa on the Mornignton Peninsula. Their $180,000 savings was a significant (38%) down payment towards the $475,000 total cost.
With tenants guaranteed for the first year and many young families as well as retirees in the area the rental risk appeared very low. Needing only $295,000 for their investment loan, which was easily secured against their equity (cash) in the new property, their rental generated $1,750 a month. The mortgage plus other expenses totalled $1,250 per month. For the frugal Lisa and Chris, that was $500 of positive income per month (or $6,000 per year) – which for them, being down to one part-time (semi-retired) income, was below the taxable income threshold and a nice annual holiday fund.
Chris liked percentages to evaluate his investments, so dividing $6,000 by the initial $180,000 investment resulted in a 3.3% return – and that is not including the capital growth of the property – much better than the 2+% interest offered by his bank on his savings account.
Positive cash flow suited Lisa and Chris perfectly, providing them some supplemental income while they looked forward to realizing the capital gain of their investment property.
Would you like to receive the same benefits? Know where to buy in Melbourne? Contact us today to get started.