When people think of investment properties, they, unfortunately, think it requires significant amounts of money. Images come to mind of owning second homes and large rental apartment buildings. Those are expensive in sought-after cities like Melbourne or Sydney, which gives the impression that investment properties are unobtainable for the average person. That couldn’t be further from the truth, though. You can invest in property in Australia for only $20 per week!
Read on to learn more about how you can start building wealth in Australian property for such a small sum of money!
How Can You Invest in Property in Australia for Only $20 per Week?
It’s possible to invest in property this cheaply due to the unique market conditions that exist right now. Interest rates are at an all-time low, which means that you will have little ongoing expenses. Meanwhile, you’ll be able to build equity and achieve significant capital appreciation (assuming past trends hold).
Consider the following example. Let’s suppose you find a condo or a home for $400,000 (which is entirely achievable in a place like Brisbane, for example). Right now, you can get loans for interest rates as low as 3%. So, at the beginning of your mortgage, you’ll be paying approximately $12,000 per year in interest. You’ll have to add in other required costs (water, land, council rates). Let’s say those run for $3,000. You’ll also need insurance ($1,000), and you’ll probably have to pay fees to manage the property ($1,500 or so).
Your annual expenses to maintain the property run at around $17,500.
We haven’t factored in rent yet, though! Let’s say you can get at least $320 a week for the place (which isn’t hard at all in many places). $320 per week comes out to $16,640 per year. Your expenses will exceed your rent by $860 annually, or $16.50 per week. Round up for safety, and you can have an investment property for $20 or less per week.
This type of property is “negative geared,” meaning that you lose cash for the first little while until rents begin to rise and exceed that of your mortgage. However, for that $20 per week, you’re building significant amounts of equity in the property with each rent cheque you cash!
What About a Down Payment?
$20 per week represents the amount of money you’ll need to pay in ongoing costs. You still need some form of down payment to buy the property.
Many times you can put as little as 5% down, and that down payment can come from equity in a property you already own. On a $400,000 home, you’d need $20,000 which, if you have any equity in your primary residence, you’d likely be able to use that to cover the down payment.
Note that this down payment doesn’t change the calculations in the example above, since the $12,000 in interest assumed you’d be paying the 3% rate on the entire house’s value.
Talk with the Experts
At Buy Australian Property Investments, we strive to help every individual learn more about property investing and whether or not it’s a good fit for them. Contact us today and let us see how we can help you achieve your dream of owning Australian investment property!
