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Terry and Eve’s Journey

We were engaged by a lovely couple Terry and Eve*, who came to us through our Financial Planning division, to search for a high yielding investment property with the target numbers of 7 % capital growth and 4.50 % rental yield. That sounds a little tough but it was made even tougher by the fact that we had to achieve all of this on a maximum budget of $300,000and that, being their first investment property, our clients were a little nervous about the whole experience.

We targeted Maribyrnong, an inner North West suburb located just 8 km from the Melbourne CBD on the Maribyrnong River. It’s a convenient, accessible and well supported suburb with great infrastructure that offers excellent buying opportunities for investors in the sub $350,000 price point who are also looking for attractive rental returns.

We came across a property which had been on the market for a while after passing in at auction and, I suspect, becoming a little stale from a marketing perspective. It was a fully renovated/updated 2 bedroom villa style unit which was vacant therefore not producing an income for the current owner/landlord. If a property is vacant and not producing an income you can bet on it that it’s costing someone money each and every week the vacancy drags on.

After conducting all our due diligence checks such as building and pest inspection, owners corporation and so on, we submitted an offer to purchase. We were aware that another offer was in motion but was subject to a finance approval while our clients already had their pre-approval locked in.

Success story - 7% Growth plus 4.5% YieldWe increased our offer slightly in terms of money but sharpened the terms of the offer to appeal to the current vendor given their vacancy situation. We were successful at $292,777 with only one condition in place to allow us to conduct two open inspections prior to settlement to attract a tenant upon the settlement date, leaving virtually no down time trying to secure the right tenant.

With settlement fast approaching we have held our first open for inspection and have already received 3 rental applications at the time of writing this article. On top of that, we advertised the rental price at $300 per week instead of $270 as per the rental appraisal we received which absolutely smashes our projected yield of 4.50% to a new and increased 5.33%. A great result for our clients upon their first foray in to the residential investment property market at $7,223.00 under budget and a rental yield of nearly a full 1% higher than initially targeted. It was smiles all round.

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