The Sisters

• Two sisters have decided to purchase an investment property and are house sharing with one other, non-related, person. While their aim is to hold the investment for the long-term, they acknowledge they may need to sell it if their life situation requires it.
• Julie: 27 years old, working as a police officer Victorian Police, annual salary of $68,000 (annual increases are expected with experience and promotion, but promotions require further study)
• Emma: 32 years old, working as a construction manager on a salary of $105,000 per year.
• Together they have saved $68,000 as a deposit and their parents have offered a further $80,000 gift towards the deposit. The parents have said they do not wish to have their gift returned if it goes directly towards the purchase of a property.
• The house they are renting costs $500 per week rent and this is divided by three. Household expenses are shared equally between the occupants. For the purposes of this calculation, assume the third person is earning an annual salary of$61,000.

ADDITIONAL NOTES

1. All incomes provided in each scenario must have PAYE tax deducted as part of the financial analysis to determine the net (after tax) income
2. All household expenses are to be calculated at 37% of net income. This amount DOES NOT include rent, if applicable
3. Deduct a further 10% contingency allowance from remaining balance for unexpected expenses
4. Deduct any other expenses that are stated within the individual scenario from the net income

Investment Aims:

The investment aims in this study are to purchase an investment property for long term investment with the precaution they may need to sell it if unforeseen circumstances require it. Julie and Emma's aim is to focus on income yield, which allows a consistent rental income that is greater than the costs of maintaining the property (Defence Housing Australia 2018). Since 'The Sisters' are wary they may need to sell their investment property in time, income yield allows the investors to pay the home loan off quickly to be able to sell the property if need be (Home Loan Experts n.d).

Loan : Fixed Rate loan

Investment location: Warrnambool (information below on the area

Warmnambool supports over 16,600 jobs with an output of $4.7 billion. At the year ending June 2021, Health Care and Social Assistance (19.7%) was recorded the largest industry in employment in the area (Warmnambool City Council n.da). According to Warrnambool City Council (n.db) many infrastructure developments are in the process of being completed in the coming years to accommodate the growing population. The major developments in Warmnambool include the rail line upgrade to include further train services, and the Warrnambool base multi-storey hospital redevelopment. Additionally, the Warmnambool Sewage Treatment upgrade is a major project to boost the economy by $200 million in the next 20 years, which when completed which will offer 1,500 new jobs. Many people look to live in Warrnambool due to its established culture and high employment rate (Regional Development Victoria n.d). Many people looking to live in Warrnambool are blown away by the growing health care system, Education (Deakin University, High schools, and Primary schools), and farming community. Median Sale Price - Rolling Annual $700k 5GOOK House - WARRNAMBOOL Median Sale Price - Rolling Annual $500k + Unit - WARRNAMBOOL House - Vic Regional Ar Unit - Vic Regional 1400k $300k 2017 - Q2 2017 - Q 2017 - Q3 2018 - Q1 2018 - Q2 2018 - 0 2018 - Q3 2019 - Q1 2019- 04 2019 - Q3 2019 - Q2 2020 - Q2 2020 - Q1 2020 - Q4 2020 - Q3 2021 - Q1 2021 - Q3 2021 - Q2 2021 - Q4 22 - 0 2022 - Q2 Figure 2 - Medium House Sale Price in Warrnambool Source: REIV (nd) Figure 2 shows Warrnambool's house price increase over the years. By reading the graph we can see Warrnambool's house prices are continually increasing exponentially over the years. As the demand for living in Warrnambool increases the median house price is anticipated to continuously grow, attracting many more residents and investors. It is a great location to invest in for the long term due to the ongoing developments, increasing population and high employment rate.Area 1 - Warrnambool, Victoria Southern Cross + Warrnamecol Grassmore Junction VingHY Woodfor Bushfield Wangoom Donninglon Levre Pant Warmamboal Botanical Gardens O Thunder Point Sungold Milk stad um Game Reserve Maritim Village Allansford Figure 1 - Map of Warrnambool with surrounding suburbs Source: Google Maps (2032a) Warrnambool is located south-west of Melbourne, with a reported population of 29,661 from the 2016 census, whom 47.6% were male and 52.4% were female (ABS 2016a). According to Realestate.com (n.da) currently the median house price for 3 bedrooms is $570,000 with an average rent out of $450 PW and an annual yield of 4.3% for an investment property