Nundah Brisbane | Property Case Study

12/91 Hows Road Nundah Brisbane Queensland 4012

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.

Your Property Hound’s Solution

  • 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).

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

Why Buy in Nundah, Brisbane?

  • 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%

Testimonials from Buyer

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.

Yours sincerely,

Pip Warren | Vic 3184