Pete and Hannah reached out to Calla Property to invest in a second property to create another source of passive income in retirement. Calla Property recommended property in the Northern Growth Corridor of Melbourne. Calla Property Insights, the award-winning research that has been developed over 20 years, indicated that this area was set for strong capital growth, largely driven by population growth and new infrastructure projects.
The contracts for this house and land built were signed in November 2021 for $647 300. Due to lockdowns in Melbourne and covid-related supply chain delays, this project has been delayed. The owners asked us to conduct an assessment of the property to see if there had been any growth during this time. The original purchase price for the property was $647 300. And based on our research, the property in the current market is valued at approximately $746 500. This is an equitable growth of $99 200 or 13.4%.
The original average rental income was estimated at $490 per week, and on realestate.com.au comparable properties are currently being rented for $520 - $550 per week, so we would expect this to rise even further, upon completion. With a change in the last 12 months of 11.2% increase and an increase in the quarter prior of 10.4%. There are properties in the area that are renting for $480 per week but these are inferior in size and inclusions. i.e., fully landscaped, high ceilings, roller blinds, and quality finishes.
So, while interest rates have gone up, so have the rents which results in almost a net cash position. The recent research done into the interest rates indicates that it is expected that there will be one more interest rate increase before inflation starts to correct and interest rates will stabilise and then fall.
This is a great case study on how important the research is, how investing in new house and land means that your property is still performing, even if the house hasn't been completed and that rents usually rise in line with interest rates. Can you think of another way you could effectively save $99 200 in a year? We'd love to show you how.
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Calla Property Investment Specialists:
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