As of 18.02.2024, This property is currently for sale, please enquire if you would like further details.
Investment Overview
An investor has secured an exceptional opportunity in Shepparton, VIC, by purchasing a sophisticated co-living property featuring 5 bedrooms, 5 bathrooms, and 5 living areas. The property is designed to meet the growing demand for quality rental accommodation in the region and benefits from a 5-year rental guarantee at 10% yield, backed by the local hospital leasing all rooms.
Investment Details
Property Type: Co-Living Home
Location: Shepparton, VIC
Configuration: 5 Bed + 5 Bath + 5 Living
Price: $899,000
Rental Yield: Guaranteed 10% for 5 years
Estimated Build Time: 24 weeks
Rental Structure: $300+ per week per room after lease expiry
Hospital Lease: Hospital to lease all rooms for the first 5 years, with potential renewal
Management: Fully managed by an expert property management firm
Investment Benefits
Guaranteed Rental Income: The investor benefits from a secure 5-year rental guarantee at 10% yield, ensuring stable cash flow and eliminating vacancy risk during the initial period.
Strong Tenant Demand: Shepparton Hospital employs over 1,000 workers, creating high demand for nearby housing with a current vacancy rate of just 0.8%.
Market Growth Potential: Shepparton’s property market has seen 10% average annual growth for houses, making it a high-growth regional hub.
Depreciation Benefits: The property offers a significant depreciation schedule, with almost 100% depreciation over 11 years and $26K-$28K in year one, maximizing tax efficiency for the investor.
Exemptions and Additional Benefits:
Land tax exempt due to commercial build classification
Furniture package included for tenant-ready, turnkey investment
Strategic Infrastructure Investment: The $1.3 billion allocated to Shepparton’s railway upgrade will enhance connectivity and increase property demand in the area.
Loan & Cash Flow Analysis
For an investor purchasing with a 105% loan-to-value ratio (LVR) (including all costs) and an interest-only loan at 6.5%, the annual interest cost would be:
Loan Amount: $943,950 (105% of $899,000 to include all costs)
Annual Interest Cost: $61,357 (6.5% of loan amount)
Gross Rental Income: $89,900 per year (10% of property price)
Estimated Utility Bills for 5 Residents: $12,000 per year ($200 per resident per month)
Net Rental Income (Before Depreciation & Tax): $16,543 (After deducting interest and utilities)
With a 37% marginal tax rate, the depreciation tax benefits in year one ($26K-$28K) would result in:
Tax Savings: Approx. $9,620 - $10,360 in year one
Net Cash Flow (Post-Tax): Slightly positive cash flow after accounting for rental yield, interest, utilities, and depreciation benefits.
Long-Term Capital Growth Projections
Assuming an average capital growth rate of 6% per annum, the future property value projections are:
5 Years: $1,202,000
10 Years: $1,613,000
15 Years: $2,165,000
20 Years: $2,907,000
Long-Term Strategy & ROI
After the 5-year lease with the hospital ends, the investor has the following options:
Renew Lease with the Hospital: If demand remains high, the hospital may choose to extend the lease, ensuring continued stable income.
Lease Rooms Individually: Market conditions suggest that each room could be rented for $300+ per week, potentially generating higher returns than the guaranteed lease.
Capital Growth Opportunity: With rising demand and infrastructure investment, the investor may experience significant capital appreciation, providing an opportunity to sell at a profit in the future.
Shepparton: A High-Growth Regional Investment Hub
Shepparton is a rapidly growing regional city in Victoria, 165 km northeast of Melbourne, known for its affordability, community lifestyle, and strong employment base. The city has a population of over 70,000, with increasing demand for rental properties, particularly near key employment hubs like hospitals.
Regional Employment Driver: Shepparton Hospital’s expansion creates long-term demand for housing.
Infrastructure Investments: The $1.3 billion railway upgrade is set to improve accessibility and increase property values.
Low Vacancy Rate: At just 0.8%, Shepparton’s rental market is highly competitive, ensuring strong occupancy rates for investors.
Conclusion
This investment in Shepparton represents an exceptional opportunity for property investors seeking high-yield, low-risk investments. With a 5-year rental guarantee at 10% yield, strong tenant demand, significant tax depreciation benefits, and increasing property values, this co-living home is a model case study for modern property investment.
As Shepparton continues to grow, investors in co-living properties stand to benefit from long-term stability, strong capital gains, and attractive rental returns. This case study highlights the power of strategic regional investments in a high-demand rental market, showcasing why Shepparton is an emerging hotspot for savvy property investors.
As of 18.02.2024, This property is currently for sale, please enquire if you would like further details.
Comments