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High yield freehold!

This is our clients first purchase with Rethink Investing. They were purchasing a property in their SMSF. Their key criterial was 1.) Set and forget nature 2.) High yield 3.) Long lease. We found this asset for them which ticks all the boxes. After all mortgage costs and outgoings, this asset will return them a circa $70,000pa passive income! Which will go along way for them in their retirement.

This property was secured off-market for our client. The asset itself represented a chance to purchase a freehold CBD asset in a strong preforming regional economy. With a strong tenant that has been there for over 10 years, on a 5+5 year lease for $120,000pa. This asset can also be strata-titled into three units, so you can potentially access upside through and selling off or revaluing individually.

Purchase Details
Asking Price
1820000
Purchase Price
1725000
Deposit (assuming
70
% debt)
517500
Stamp Duty
80665
Building Report*
700
Solicitor Cost*
6500
Valuation*
3000
Other Costs*
Other Fees* (Depreciation
report, bank fees)
1820000
Total Cash Required
608365
Purchase Price + Purchasing Cost
1815865
Net Annual Cash Flow Return
120000
Net Yield on Property
6.96
%
Net Yield Accounting for
Purchasing Costs
6.61
%
Cash-OnCash Returns
Deposit Needed =
% + Costs
608365
Cost of Loan
(Assume
4.5
% pa on
70
% debt)
50456
Return of Equity
(Pure cash flow return)
11.43
%
Return of Equity with a
5% Capital Growth Rate:
25.61
%
Return of Equity with a
7% Capital Growth Rate:
31.28
%
Return of Equity
10% Capital Growth Rate:
39.79
%
*approximate number

Key Highlights

• NLA: 1,084m2

• 5+5 year lease

• 17 Car Spaces

• Annual income of $120,000 pa + outs + GST

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