Bribie Island is a piece of paradise. Why would you choose to invest here? Position, position, position of course!
This particular block is only 300 metres from the Marina with proposed restaurants, bars, and boutique shopping.
Extra bonus: the block is quite large – 986m2 and rare in it’s size!
This is because the builder brought it 17 yr.’s ago and it is one of the last blocks to develop. The proposed dwelling is a duplex, so twice the rental income!
How would one pursue this type of investment as an SMSF?
There are many variables for each interested party. But to give a general example, the full purchase price of this duplex is $1,150,000. So 30% deposit would be $345k. Allow for the costs of setting up a SMSF, stamp duty, Legal’s, plus a ‘buffer’. (A buffer safeguards the investment in the event of a job change or other unexpected occurrence.) Steve suggests a minimum of $440k in an individual or combined super. If the interested party was earning $150k, his employer contribution @ 9.5% would be $14,250 p/a. If he chose also to salary sacrifice a further $10,750 (which would save him about $4k in tax), he would have a total contribution of 25k p/a. This would not only pay everything, he would have a surplus of over $100 p/w!
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How would one pursue this if they had adequate savings or equity?
Ok, the full price is $1,150,000. So, 10% deposit is $115,000. You then have to account for stamp duty, lenders mortgage insurance, Legal’s, construction interest, etc. So, say a total of $160k. If you were earning in the 87k – 180k tax bracket, it is possible to pay it off ‘Principle & Interest’ where, per week you have:
- Rent $920
- Tax Refund $347
- Investor $320 p/w
If you were earning in the $180+ tax bracket, the figures are a little different:
- Rent $920
- Tax Refund $418
- Investor $248 p/w
In this case, the $248 p/w covers paying off the loan and all outlays. Even more than that, it also provides a conservative $80 p/w buffer.
Plausible growth in equity for this kind of investment?
No-one has an accurate crystal ball, but based on the statistics of the last 40yrs, that $115k equity would increase to approx. $1,500,000 in ten years! So yes, if you had the deposit, for as little as $320p/w (in the $87k – 180k tax bracket) and only $248 p/w in the ($180k+ tax bracket), you could be well on your way to a healthy retirement!
The next residential investment hotspot?
Steve has been reviewing data and analysing property hotspots for nearly 40 years. He believes the next residential investment hotspot is Newport on the Redcliffe peninsular.
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At the helm of Steve Taylor & Partners, Steve has been delivering expert advice and product knowledge to clients for over 30 years. We provide individuals, couples and families with the right strategies to create wealth and change their lives with solid bricks and mortar.
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the above subject. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.
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