Gordon Park Brisbane | Property Case Study

Buyer's Brief

To purchase an Investment property (up to $550K) within 10km of the Brisbane CBD that is likely to achieve strong capital growth, good rental returns, has minimal out-of-pocket expenses and no hassles!

Strategy: Buy and Hold.

Our Solution

The Property

6A Alva Terrace Gordon Park Brisbane Queensland 4031

A freehold 3 bedroom, 2 bathroom, townhouse in the inner-northern suburb of Gordon Park
The property was purchased for $492K in October 2011, a massive 10% lower than its August 2007 sale price
The property is currently rented at $500 per week
The property’s low maintenance, near-new contruction, and high rental return has meant that this investor contributes only $25/week to the holding costs of this property (see following spreadsheet calculation).

The Location

Gordon Park is a small, green leafy suburb located 5km north of the Brisbane CBD.
Gordon Park is known for its beautifully renovated Queenslander homes making it popular with families and owner-occupiers.
The recent completion of the Northern Busway and Airport Link tunnel have significantly improved public transport access to the city and car access to the city, Gold and Sunshine Coast.
Gordon Park is bordered by Kedron Brook a popular parkland and bikeway.

Gordon Park	Houses	Units
Medium Value (2012)	$598,500	$351,000
Average Growth Rate (last 10 yrs)	7.2%	7.5%
Current Rental Yield (Sept qtr)	4.6%	5.2%

Suburb Statistics (Residex Nov 2010)

The Numbers

Investment Costs:
Purchase Price	492,000
Purchase Costs (stamp duty, loan fees etc)	17,265
TOTAL INVESTMENT COSTS	$509,265
Loan:
Loan Amount	502,265
Interest Only Loan	5.8%
TOTAL LOAN PAYMENT (P.A)	$29,537
Property Income Expenses:
Rental Income (2% Vacancy Rate) PA	25,480
Rental Expenses (Management fees, rates etc)	4,938
Net Rental Income (Rental Income – Expenses)	$20,542
Pre-Tax Cash Flow:
(Net Rental Income – Total Loan Payments)	-8,996
Cash Deductions Loan Interest Rental Expenses	29,537 4,938
Depreciation Depreciation on plant Low value pool	6,508 746
Capital allowances	4,408
TOTAL TAX DEDUCTIONS	$46,137
Tax Credit Calculation:
Tax Loss (deductions – rent)	20,822
Marginal Tax Rate	37%
Tax Credit (Marginal Rate x Tax Loss):	7,704
Annual After Tax Investment (pre-tax cash flow + tax credit):	$1,292
WEEKLY AFTER TAX INVESTMENT	$25