TOWNSVILLE PROPERTY is on the move…

A wonderful investment opportunity presents itself today with this superb one bedroom fully self contained unit. Currently returning $375.00 per week, you do the maths! Opportunities like this rarely present themselves, so call Mark today

1 bedroom
Fully self contained
Great corporate rental
Superb rental history
Resort style pool
Entertainers balcony
Lockable storage
Study Nook
$375.00 per week return.

PROPERTY VALUE (average growth of 8.00% per year)
Property price: 330,000
Total book value: 330,000
Property market value: $330,000
PURCHASE COSTS
Conveyancing costs: 2,000
Govt. Stamp duty: 9,975
Total Purchase costs: $11,975
LOAN COSTS
Mortgage insurance (1.30% of loan): 4,000
Mortgagee’s solicitor’s fees: 1,000
Valuation fees: 300
Registration of mortgage: 230
Registration of title: 115
Search fees: 175
Total loan costs: $5,820
CONTRIBUTION TOWARD TOTAL COSTS
Investments Loan Total Cost
Property costs: 40,000 290,000 330,000
Renovation costs: 0 0 0
Purchase costs: 0 11,975 11,975
Furniture costs: 0 0 0
Loan costs: 0 5,820 5,820
Totals: $40,000 $307,795 $347,795
LOAN DETAILS
Loan type: I/O Yrs 1-40
Interest rate (yr 1) (%) 5.72
Loan: $307,795
Loan costs (written off over 5 yrs): $5,820
Monthly payment: $1,467
Annual payment: $17,606
RENT
Rent per week: 375
Potential annual rent: 19,500
Vacancy rate (%): 2.00
Annual rent: $19,110
CASH DEDUCTIONS
Loan interest: $17,606
Rental expenses
Regular Expenses:
Agent’s commission (8.25%): 1,577
Letting fees: 375
Rates: 2,204
Maintenance: 800
Body corporate: 2,108
Special expenses: 0
Total expenses: $7,064
Regular expenses as % of annual rent: 36.22%
Net yield or Capitalisation rate: 3.65%
PRE-TAX CASH FLOW
Year Initial 1yr 2yr 3yr 5yr 10yr
Rent 19,110 19,874 20,669 22,356 27,199
Cash invested 40,000 0 0 0 0 0
Principal payments 0 0 0 0 0
Interest 17,606 17,606 17,606 17,606 17,606
Expenses 7,064 7,346 7,640 8,263 10,054
Pre-tax cash $-40,000 $-5,559 $-5,078 $-4,576 $-3,513 $-460
Prudent Property Group – Townsville Page 3
NON-CASH DEDUCTIONS
Depreciation on the building (Capital allowance)
Property value: $330,000
Construction cost: $145,000
Depreciation allowance rate (%): 2.50
Depreciation allowance: $3,625
Depreciation of fittings (diminishing value method)
Item Value Effective Life Depreciation
(yrs)
General fittings 9,900 15.00 1,320
Low-value pool 9,900 4.00 1,856
Total $19,800 $3,176
Loan costs (written off over 5 yrs): $5,820
TOTAL TAX DEDUCTIONS (Cash and Non-Cash Deductions)
Year 1yr 2yr 3yr 5yr 10yr
Interest 17,606 17,606 17,606 17,606 17,606
Expenses 7,064 7,346 7,640 8,263 10,054
Deprec.-building 3,625 3,625 3,625 3,625 3,625
Deprec.-fittings 3,176 4,160 2,877 1,481 434
Loan costs 1,164 1,164 1,164 1,164 0
Total deductions 32,635 33,901 32,912 32,139 31,719
TAX CREDITS and AFTER-TAX CASH FLOW
(Refunds credited in same year as deductions incurred)
Year 2010 1yr 2yr 3yr 5yr 10yr
Pre-tax cash -40,000 -5,559 -5,078 -4,576 -3,513 -460
Tax credits 5,342 5,541 4,836 3,864 1,785
After-tax cash -40,000 -217 463 260 351 1,325
Cost /(income) per week 4 -9 -5 -7 -25
INTERNAL RATE OF RETURN (over 10 years)
Internal rate of return (IRR) 26.11%
Pre-tax equivalent of IRR 43.16%
Internal rate of return (if sold) 22.11%
Net present value (NPV) $242,097
Cash on cash return -0.54%
Cash positive by year 2
Cash neutral investment $46,284
Disclaimer: Note that the computer projections listed above simply illustrate the outcome calculated from the input
values and the assumptions contained in the model. Hence the figures can be varied as required and are in no way
intended to be a guarantee of future performance. Although the information is provided in good faith, it is also given
on the basis that no person using the information, in whole or in part, shall have any claim against Prudent
Property Group – Townsville, its servants, employees or consultants..