Nundah Brisbane | Property Case Study

Buyer's Brief

To purchase a low maintenance Investment property (up to $450K) in Brisbane that is well located, popular with tenants and likely to achieve excellent capital growth.

Strategy: Buy and Hold.

Our Solution

The Property

12/91 Hows Road Nundah Brisbane Queensland 4012

3 bedroom, 2 bathroom, townhouse in the northern suburb of Nundah
The property was purchased for $448,500 in April 2012, almost $30,000 less than its August 2008 sale price
The property is currently rented at $480 per week (a rental return of 5.6%).
The property’s low maintenance, near-new construction, and high rental return has meant that this investor contributes only $34 per week to the holding costs of this property (see attached spreadsheet calculation below).

The Location

Nundah is located 8km North East of the Brisbane CBD
The suburb is well connected to the city by public transport with 2 trains stations (Toombul and Nundah) and ample buses (travelling to the city via Sandgate Rd)
Nundah is likely to benefit by the recent opening the the Airport Link Tunnel and Gateway Bridge duplication providing improved vehicle access to the city and Gold Coast
An established retail (Centro Toombul) and café precinct (Nundah Village), as well as ample parks and bikeways along Kedron Brook make this suburb very appealing to tenants and home owners

Nundah	Houses	Units
Medium Value (2012)	$574,500	$352,500
Average Growth Rate (last 10 yrs)	6.9%	8.5%
Current Rental Yield (Sept qtr)	4.2%	5.3%

The Numbers

Investment Cost
	Purchase Price	448,500
	Purchase Costs (stamp duty, loan fees etc)	14,923
	Total Investment Cost	463,423
Loans
	Loan Amount	263,423
	Interest Only Loan	5.88%
	Total Loan Payments Per Annum	27,249
Property Income Expenses
	Rental Income (2% Vacancy Rate) PA	24,461
	Rental Expenses (Management fees, rates etc)	6,311
	Net Rental Income (Rental Income – Expenses)	18,150
Pre-Tax Cash Flow (Net Rental Income – Total Loan Payments)
	Cash Deductions
	Loan Interest	27,249
	Rental Expenses	6,311
	Depreciation
	Depreciation on plant	4,317
	Low value pool	700
	Capital allowances	5,606
	Total Tax Deductions	44,183
Tax Credit Calculation
	Tax Loss (deductions – rent)	19,722
	Marginal Tax Rate	37%
	Tax Credit (Marginal Rate x Tax Loss)	7,298
Annual After Tax Investment (Pre-tax cash flow + tax credit)		$1,802
Weekly after-tax investment		$34

Kitchen of house secured by property hound buyers agent

Patio of house secured by property hound buyers agent

From the client

Dear Matt, I wanted to thank you again for all your hard work and excellent guidance during 2012, when I was able to purchase 2 fantastic properties in the Brisbane market, with such high quality information and hard number research, that has set me up so well that I am ready to buy another investment property ! As a Victorian, I didn’t know the Brisbane market at all, but the rental yield is so much higher there at this time than the Melbourne market, and the capital growth is steady and up. Its all about affordability for me, to get going and still be able to live my own life but grow a nest egg in the background You totally understood my requirements and added your experience, and then found just great investment properties. They are both returning a very high yield and also have an excellent depreciation position, which gave me a tax return this/last year of $11,000 ! I am not kidding. So, I will be in touch very soon to start number 3, but I just wanted you to formally know, I appreciate everything you have done for me, by being so professional, comprehensive, clear and dedicated to my growing investment portfolio.

Pip Warren

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