Good day. My name is Ben Everingham, and I’m the director here at Pumped on Property, a buyer’s agency who buys in New South Wales and Queensland. Today, we’re going to talk about how to find a 6.5% rental return right now in the Brisbane market.
Hey there. My name is Ben Everingham, and I’m the director here at Pumped on Property. I’m really excited about today’s video because I get to dispel a myth in the Australian property market right now, which is you can’t buy property which gets you great capital growth, that you can also add value to, and make money regardless of what the market’s doing, and also get above average cashflow returns.
Today, I’m going to share how you can get an amazing property in the Brisbane market place right now. I’m not going to talk about the suburbs, but I’m going to definitely talk about areas and the exact numbers of deals we’re doing right now where you can get at least the 6.5% rental return. This isn’t your standard strategy. I’m going to give you two different examples of what we’ve done recently. Both of them require you to be slightly more active than just buying a property that gives you 6.5%, but I’ll show you by the end of today’s videos just how easy it is to get that rental return that’s going to give you passive cashflow in a great market or great suburb where you also have the potential, according to BIS, according to HTW, according to CoreLogic, according to everybody that’s talking about it right now, which is the Brisbane market place. So bear with me, I’ll talk about the first example first.
There’s two different ways that you can achieve this, and the first is to go into a property. I personally don’t believe in the South Brisbane market. That’s just me. Everyone’s got their own opinion. That’s just mine. Take it with a grain of salt. I know the same opportunity exists down there, so if you are looking South Brisbane, we’re not the right partner to help you execute on this, but there might be someone else, or you might be able to do it on your own. The market I’m talking about right now is North Brisbane. We’re talking about being anywhere between 24 and maybe 28 Ks away from the city in high quality beachside suburbs. I think I’ve given enough away.
Basically, you’re looking at going in and buying the biggest possible piece of land you possibly can for around about that $400,000 mark. What we’ve been targeting is either three bed, one bath, one or two garage homes, or four bed, two bath, one or two garage properties on at least 500 to 800 square metre blocks with a really well-positioned house at the front of the block, drivable side access, so that you can fit that sweet little granny flat in the backyard, which you can legally now rent out in North Brisbane, to create that dual-income property that gives you that at least 6.5% percent rent return.
The numbers look a little bit like this: You build, sorry, you buy the home for 400k. That property rents out for, let’s call it, if it’s in average condition, 370 a week. If it’s in great condition, maybe 390, 400 a week. We’ll meet somewhere in the middle, and we’ll say you buy for 400k, and it rents for 380 bucks a week, so just under your 5% yield. Then you got out and you build your $110,000 granny flat. I can introduce you to an amazing local company. I’ve tried four different companies in Brisbane over the last two years, and I’ve finally found someone that does what they say at the right price and provides a premium quality product at the right price. And granny flat in these areas, we’ve just begun to hand them over from the clients that came through in the last six months. They’re finished, they’re ready to rent, and we’re getting 280 bucks at least for these two bedroom, one bathroom tidy little granny flats that kind of look like a little mini Hamptons-style homes. You don’t have to do this generic box, that doesn’t serve the tenant, that doesn’t serve you, that’s not going to get you any capital growth or resale value in the future. You can do it a bit nicer, and you can still do it at the right price.
We’re now talking about the $510,000, which is the 400k home, plus $110,000 granny flat. You’re getting $380 a week for the home, plus $280 a week for the granny flat, giving you a total rental return on your $510,000 investment at $660 a week. The vacancy rates in these suburbs are well below 1.5%, so we’re not having any problems getting people into these properties. I own a property management company as well. That’s why we target these suburbs with a really low vacancy rate. That example just in itself is a 6.73% return, gross rental return on your investment. So those of you who don’t think you can get capital growth and cashflow, or you have to buy regional to get good cashflow, or you have to wait for the next 30 years to be able to retire because the properties that you’re targeting get great capital growth, but the cashflow is just not there to support you, to keep you buying or moving forward, this type of property and option is really, really exciting and really simple to execute on.
If you need a hand, just book a one-on-one strategy session with me. We can talk about the market, the opportunity in a lot more detail. I can show you examples of clients who are doing this for right now in today’s market, which is 2017, and it’s working very, very well.
There was a second option I wanted to talk about. I’m putting my peace sign out here, I don’t even know what’s going on. The second option I wanted to talk about was, for those of you who are looking for more depreciation, plus capital growth, plus rent return, plus making some money on the way in, this is an example, again in North Brisbane and very close to the beaches, very high quality suburb. Residex predicts this suburb’s going to go up by 8% per year for the next eight years. I think they’ve got it wrong. It’s probably going to be more like 2 to 4% per year. But I’m very conservative compared to your average investor in Australia that’s still buying property, and probably a bit cynical as well, just because I’ve made some mistakes myself, so I’m very cautious with where I spend my money now, and very, very cautious around where we talk to clients about.
This opportunity is basically buying a piece of land and building a brand new three bedroom, two bathroom, one car garage dual-income property with a one bedroom, one bathroom, one car garage granny flat attached under the same roof line. So for those of you in Sydney and Melbourne that haven’t seen that before because you always do it in Sydney with the house, and then you build the granny flat in the backyard, and most of them look like shit. This is a nice home from the front. It just looks like one house with two letter boxes. The way that we’re doing it is we’re putting the one bedroom granny flat on this side at the front of the house, and then the three bedroom home on this side of the house that opens up to a beautiful, nice open plan living with a nice backyard for the tenants there.
The opportunity looks like this: We’ve been able to secure it for a couple of our clients at between $465,000 and $470,000 turnkey. That’s including house and this brand new product. Close to the beach, close to the city. We’ve just handed over to the first couple, and they’re renting for $580 a week. We’re getting $335 per week for the three bedder, and we’re getting $245 per week for the one bedder. That’s a gross rental yield of 6.42%, which is just under the 6.5%, but you’re also getting the benefit of a brand new property, zero maintenance on it, and the depreciation obviously, which comes from it as well.
These opportunities exist in the market. The cool thing about this opportunity at the 470k mark is that the same developer has been selling it through dodgy property marketers in Sydney and Melbourne to unsuspecting people for between 535k and 550k. So some of our clients have not just bought a great property in a great location with future potential for growth and great cashflow now, but they’ve also made between $40,000 and $65,000, $70,000 on the way in on the day that they sign the line.
What I’m trying to get across in this video is you don’t have to sacrifice anything anymore, but buying, holding, and hoping based on the things that are occurring in the market now, is just not going to work like it has in the past. So you’ve got to be a bit more creative, you’ve got to be prepared to do a little bit more work, but by doing that tiny bit of work upfront by building a granny flat or building a dual-income property, you may end up in a much, much, much better position in the future.
If any of you are interested in talking about these opportunities, then I’m an open book. I’ll happily tell you where we’re doing them so that you can go and do it yourself if you want to. Or if you’re looking for someone to support you, to do it, we’ve bought over $40 million worth of property last year in Brisbane for over 120 clients last year. We’d love the opportunity to have a conversation with you, find out where you are right now, see where you want to go, talk about all the great options in the Australian market right now, develop a crystal clear strategy for your next purchase. Then if you’d like us to, we could be your buyer’s agent and actually help you go and execute the deal. Find the house, renting the house out, introduce you to the granny flat builder, project manage the entire thing for you, and get it rented out. Alternatively, find the land for you, introduce you to the builder, get you the best fixed price quote we possibly can, help you with the colours, help with the construction and manage that process on your behalf, and then again, a property management team will rent it for you in the end.
So there’s great opportunities in the market right now. These opportunities exist all over Australia if you’re smart and you know where to look. I hope you’ve enjoyed this video and at least got something out of it.
Until next time, stay hungry. Thank you.