Investors: "The Sisters"

Task: An extensive analysis of many strengths and weaknesses of the property is provided

include:

- strengths and weaknesses of the property in relation to the investors aims as much as what they offer the tenant, ease of letting, more easily maintained etc.

-Analyse the property

Attached below is my first assignment which explains the investors aims and the chosen area.

NOTE: One of my comments from the teacher is that its both income yield and capital growth not just income yield.

Chosen Area: Warrnmabool

Analsye property: 17 Toohey Drive, Warrnambool, Vic 3280

Introduction The aim of this scenario study is to analyse three potential areas of investment in Victoria to identify the preferred investment area for the client. The objective is to use client information to determine the budget and loan option for repayment of a long-term property investment, where the loan can repay. Scenario This scenario study has been undertaken for two potential investors known as 'The Sisters'. Julie is 27 years old and works as a Victorian Police Officer, with an annual salary of $68,000. Her sister Emma is 32 years old and works as a construction manager with an annual salary of $105,000. Client information has been used to inform this scenario study. Investment aim The investment aim of this study is to purchase a long-term investment property, taking into consideration the possibility that the clients' may need to sell the property due to unforeseen circumstances. The clients' investment aim is to focus on income yield to allow a consistent rental income that is greater than the costs of maintaining the property (Defence Housing Australia 2018). Since the clients' are wary that they may need to sell their investment property in the future, income yield allows the clients' to pay off the home loan quicker and reduce mortgage debt in the future (Home Loan Experts n.d). Investment budget and finances The budget for the proposed investment property is $578,137.00 (NAB n.da). The budget calculation results are contained in Appendix A. As stated in NAB (n.db), the following home loan requirements are taken into consideration when determining the investors budget: Personal Debts Job salary Identification Residential status Assets Furthermore, the bank must consider the financial help from Julie and Emma's parents and any third person involvement. Loan Details The preferred fixed rate loan option was chosen as it best aligns with the investment aim of the client. A fixed rate loan is where your interest is secured for a period, with a 30-year fixed rate loan used for this scenario study (Macquarie n.d).Justification A fixed rate loan will provide the clients' with stability, where monthly repayments for the first 30 years are at a fixed interest rate of 4.04%. It will also allow the clients to have a consistent monthly budget (Macquarie n.d). A fixed rate loan aligns with the clients' aim of holding their investment property for the long term but will allow them to make additional repayments without penalty if they were able to pay off the loan sooner (NAB n.dc). Repayment Details At a fixed interest rate of 4.04% per annum for the first 30 years, together the clients" monthly repayments will be $2,218,77 (NAB n.da). After the 30 years, the monthly repayments are subject to change depending on the interest rate at the time. Areas of interest and rationale for selection Areas and regions considered After researching potential investment areas across Victoria, the suburbs of Warrambool, Alexandra and Echuca were selected for consideration as they meet the clients' investment aim and budget. Area 1 - Warrnambool, Victoria Warrnambool is located 285km south-west of Melbourne and is on Victoria's southern coast. Surrounding suburbs include Dennington, Bushfield, and Allansford (refer to Figure 1). Warrnambool is located in the City of Warmambool local government area. Southern Cross Yinger Bushock Wangoom Damninglun Botanical Gardens Chander Point Bungod Mbanda Mar lima Village larfond Figure 1 - Map of Warrnambool with surrounding suburbs Source: Google Maps (2012a)The reported population of Warrnambool is 29,661 (as of the 2016 census) (ABS 2016a). According to Realestate.com (n.da), the current median house price for a 3-bedroom property in Warmnambool is $570,000, with an average rent of $450 per week (PW) and an annual yield of 4.3% for an investment property. Warrnambool supports over 16,600 jobs with an annual economic output of $4.7 billion (REMPLAN n.da). At the year ending June 2021, Health Care and Social Assistance was recorded as the largest employment industry in the area (Warmambool City Council n.da). According to Warmnambool City Council (n.db), to accommodate the growing population, a number of infrastructure developments are currently being completed in the coming years. The key major developments for Warrnambool include the Warmnambool Rail Line upgrade, which will expand current train services, and the Warmnambool Hospital multi-storey redevelopment, which will offer over 800 jobs during construction . Additionally, the Warrnambool Sewage Treatment upgrade is a major project which when completed which will offer 1,500 new jobs and boost the economy in regional Victoria by $200 million in the next 20 years. With an established culture, high employment rate, growing health care system, access to education (primary and secondary schools, Deakin University and Southwest TAFE) and farming community, many people look to live in Warmnambool (Regional Development Victoria n.d). Median Sale Price - Rolling Annual $700k SGOOK # House - WARRNAMBOOL Median Sale Price - Rolling Annual + Unit - WARRNAMBOOL House - Vic Regional Unit - Vic Regional $400k $300k 2017 - 03 2017 - 124 2018 - Q 2018 - Q4 2018 - 03 2019 - Q 2019 - Q3 2019 - 02 2019 - 04 2020 - Q2 2020 - Q1 2020 - 0 2020 - 03 2021 - 02 2021 - 04 2021 - Q 2022 - Q1 2022 - 02 Figure 2 - Medium House Sale Price in Warrnambool Source: REIV (a.d) Figure 2 shows the median house price increase in Warmnambool's over the 2017-2022 financial years. As the demand for living in Warmnambool increases rapidly, the median house price is expected to continuously grow, attracting many more residents making it easier to find a potential renter for the clients property (REMPLAN n.da). It is a great location to invest in for the long term due to the ongoing developments, increasing population and high employment rate