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How To Buy A $500k Rental Property

Quick math on how to buy a $500k property

1. Property Cost:

Purchase price: $500,000

Stamp duty (5%): $25,000

Legal fees: Included in stamp duty

Total initial cost: $525,000

2. Rental Income:

Weekly rent: $600

Annual rental income: $31,200

3. Expenses:

Rental agent fees (8%): $2,500

Insurance: $1,000

Rates: $1,000

Maintenance: $500

Vacancy cost (2 weeks): $1,000

Total expenses: $6,000

All these numbers are laid for the sake of the example to make it easier to understand.

So in this blog on how to buy A $500k rental property it’s important to note, all these numbers are laid for the sake of the example to make it easier to understand. Always seek financial advice when making large purchases. TIP: Look for properties where you can buy under market value to increase your immediate returns!

How To Buy A $500k Rental Property – Read for more or check out our youtube page for MORE VIDEOS ON PROPERTY

Step 4-8 is next. Keep reading…

4. Net Return:

Annual rental income: $31,200

Minus expenses: $6,000

Net rental return: $25,200

5. Financing:

Loan amount (80% LVR): $400,000

Cash needed: $100,000 (deposit) + $25,000

(stamp duty) = $125,000

6. Loan Interest:

Interest rate: 6%.

Annual interest payment: $24,000

7. Profit Calculation:

Net rental return: $25,200

Minus loan interest: $24,000

Annual profit: $1,200

8. Return on Cash:

Annual profit: $1,200

Cash invested: $125,000

Return on cash: 1%

This example demonstrates the importance of detailed financial planning and seeking professional advice when investing in rental properties. For more insights and strategies, continue reading our blog or visit our YouTube channel for additional videos on property investment. Remember, finding properties below market value can enhance your immediate returns and overall investment success.

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