Don't wait 10 years before you get in the market

YOUR FIRST STEP into the real estate market may not be as hard as the think. With the right deposit, you could own an investment property for under $21 per day

By Peter McCormack

15-05-2019 |
YOUR FIRST STEP into the real estate market may not be as hard as the think. With the right deposit, you could own an investment property for under $21 per day

THE THEORY
1. Rent where you want to live, but buy where you can afford.
2. Consider buying in an area where real estate prices are growing, where you can buy a property for less than $400,000, where there is low unemployment, and you can achieve a gross yield of around 5% (any higher yield comes with increased risk)
3. Buy BEFORE any changes to negative gearing laws and you may even get help from the government with your repayments.

THE NUMBERS
(Just an example!!)

$390,000 - Purchase price
$20,000 - Stamp duty, legals and other costs
$50,000 - Your deposit
$360,000 - YOUR BANK LOAN

COSTS per week
3.89% - Interest rate (3 year fixed as at 16/5/19)
$391 - Repayments
$45 - Rates
$32 - Real estate management fees
$25 - Insurance
$20 - Other
$513 - TOTAL WEEKLY COSTS

PS. Allow another $1,000 per year for vacancy and letting fees and $1,000 for maintenance (fingers crossed). These cost may or may not come up.

INCOME per week
$400 - Rent

Weekly out of pocket - $113
Daily out of pocket - $16.14

CURRENT NEGATIVE GEARING
On paper you have made a 'loss' on this investment of $5,876 per year.
If you earnt and paid tax on an income of $80,000 per year your new taxable income after the loss would be $74,124.
You may be entitled to a refund on the tax you already paid ($2,917.20)

PLEASE - check all these numbers out with your accountant BEFORE you do anything.

REALLY IMPORTANT - Normally rents go up over time (as do property values). If rents went up by only 3% per year for the next 5 years, you should be getting an extra $60pw in rent.

Check out properties in Orange NSW - It's a strong economic regional area with good growth. www.mccormackbarber.com.au/results

Check out what's happening with real estate in Orange according to Your Investment Property Mag - www.yourinvestmentpropertymag.com.au/t…/nsw-2800-orange.aspx