The price of anything is determined by supply and demand – if the supply is limited and exceeded by demand – prices increase. If you are investing in residential property, get on the tram at the bottom of the hill not the top.
This relates to differences in land prices between North Lakes and North Harbour, Brisbane. I have been putting clients into North Lakes for the last 12 years, but pulled out a year ago when demand started to exceed supply. The supply and demand equation at North Lakes is now such that similar blocks of land are $80k more expensive at North Lakes than North Harbour.
Using the tram analogy, North Lakes is at the top of the hill and North Harbour is at the bottom. My research has identified North Harbour where risk is eliminated due to solid population growth and capital gain is maximised for clients who get in now on the ground floor. The early demand at North Harbour is extraordinary when you consider nothing had started in January 2015 and the first houses to be built started in November 2015. When I secured the land in January 2015, stage one was set aside for a display village, so I selected lots in stage 2 & 3.
The next land I can obtain is in Stage 6 and that won’t be completed until about March 2017.
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Here is an example of what you have at North Harbour and how much it would cost an investor. A 5-bedroom executive home on a relative large block of over 500m2 with a total price of $521,950. This will rent for $480 per week and an investor with 10% deposit, will only need to contribute $77 per week to pay it off, principal and interest, or if using equity and only $5k deposit, $138 per week. Should a client on $100k p.a. choose to borrow 100% using equity and borrow interest only @ 4.88% locked in 5 years, their net contribution per annum would be NIL.
Regarding Self Managed Super Funds, if a client and partner have a minimum combined Super of $200k, it will cost nothing to service as this is covered by the employer contribution of 9.5%.
Bottom Line
Many clients would rather have their Super going into a house that is REAL than take a chance with the stock market.
If you are interested in enquiring about investing in property and would like to know ‘how it works’, you are welcome speak to me about your options. Please contact our office to schedule a free, no obligation consultation and find out if our service is suitable to your needs.
Steve Taylor
At the helm of Steve Taylor & Partners, Steve Taylor has been delivering expert advice and product knowledge to clients for over 30 years. Steve Taylor & Partners 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 subject being discussed. 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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