Interest Rates Down – Rental Demand Up –
Investment Property Anyone?
Now could quite possibly be the most attractive time to purchase an investment property.
With a bidding war erupting between the banks we now see fixed interest rates at a hugely competitive 4.99% for 5 years.
With rental yields at around 5-6% what does this mean for any potential investor?
Quite simply – better cash flow and certainty around performance.
Take a typical house and land package of $350,000 in any Adelaide suburb.
Projected rental on the property could be $350 per week which offers a gross yield of 5.2%*
If a potential purchaser borrowed the full amount and costs (which is a common strategy among investors) the wash up in terms of out of pocket expenses is less than $20 per week (even on an assumption of a moderate marginal tax rate)*
Given that you can lock your rate in for 5 years and the rental income should increase greater than the ongoing costs over the coming years– there is every expectation that the property will be cash neutral in a very short space of time (or at very worst continually low out of pocket expenses)
Obviously personal circumstances differ however this is the real effect of a low interest rate environment for current investors into residential property.
Property has and always will be an attractive form of wealth creation for everyday Mum and Dad Australians –
If you were considering entering the market for the first time or building on your current portfolio, allow Zobel to review your current financial situation – you may well be surprised with what we can show you.
Our advice – jump on these rates while they are on offer!
*calculations available from Zobel finance