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My wife and I are from England and have just settled in Melbourne. We understand the benefits of renovating investment property as we did it back home; however, doing it in another country seemed very daunting and we did…
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With AllianceCorp’s help we purchased our second investment property and renovated our first. We are so happy with our progress, and are looking to purchasing our third. If it wasn’t for the DVD and coaching session we doubt whether we…
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After attending the AllianceCorp workshop my wife and I had the inspiration and confidence to engage AllianceCorp to help us purchase our second investment property. We were very impressed with the level of service. Following our purchase…
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As a professional couple and being our first time in the property market, my partner and I lacked the time or experience to confidently make the most important purchase of our life. AllianceCorp Buyers advocates took the stress and legwork…
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Toorak Rd, South Yarra
Located in one of Melbourne’s most sought after locations, our buyers agent was able to save the client approximately $40,000 off the comparable market price on this wonderful two bedroom apartment, and then added a further $47,000…
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Orrong Rd, Armadale
AllianceCorp purchased this 1 bedroom unit in Armadale close to all amenities. The courtyard was completely transformed and is now a feature of the property. The clients will never have a problem renting this property…
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3/28-30 Cumming St, Brunswick West
Purchased site unseen, AllianceCorp saved the client approximately $30,000 due to our relationship with the agents. Within 7 weeks the renovation was complete adding another 40,000 to the property.
Before renovation – Value $330,000 –…
Read More >>In a renter’s market, where renovated older style villas and apartments are competing with brand new developments in the same area, investors are finding that they need to reduce their asking rent below the quoted value either at the time of purchase or after the tenants have vacated. So how do you deal with this, and looking at the bigger picture, what will it cost you?
It is important to always view your investment much like you would a business. In business, you have highs and lows. It is the same with investment properties however, while you have your master facility acting as your buffer to fund your investment, a dip in the market and a drop in rental figures will not affect the bigger picture of your 10 year portfolio growth plan and changes to your holding costs are minimal.
A small rent reduction of $10 per week, will not have a significant effect on rental enquiries for your property. A drop of $20.00 per week however, is what can save you from another week, two or even more without tenants.
Lets look at the following case study to illustrate the above:
• Your current weekly asking price is $300.00 per week.
• Your purchase price was $350,000.
• Current rental yield: 4.4%
• If interest rates are at 7%: your holding costs are 2.6%
Should we reduce the rent by $20 per week:
• Rental yield becomes 4.2%
• Holding costs on the property are 2.8%.
You then need to take into account your tax breaks and depreciation. The actual impact to your master facility in this scenario, is only $13 per week and not the $20 rent reduction per week.
So don’t be overly concerned. If dropping the rent by $20 means your vacant property will be leased, the overall financial impact is minimal and in some cases, could save you money.
Our team of Property Managers are happy to assist you in any way they can. Please contact our office if you would like to learn more.
Melinda Ives – Senior Property Manager
10-03-2012: Property Market Tour - Northern
Join us on an exciting and educational tour on what the Melbourne property market has to offer. This eye opening experience is a must for...
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