It was a chance job opportunity that enticed Glenn, an IT analyst, to move to Tasmania in 2011, where he inadvertently became a property investor.
Upon making the decision to move to Hobart for a 12-month contract with his work, he quickly realised he would be better off financially if he bought an apartment to live in, rather than renting.
“I was probably a bit naive when it came to research, but I think that actually worked in my favour,” Glenn explains.
“Really, my research boiled down to me working out whether it would be cheaper for me to rent or buy, and to make sure that the rent I would receive after I left would cover the mortgage. It was just about making sure the eventual profit was worth the risk I was taking on, and in that respect the numbers stacked up.”
Glenn ended up purchasing a light and bright one-bedroom apartment in the suburb of West Moonah, located a few kilometres north-west of Hobart’s CBD, for $128,500.
True to his plan, he lived in it for a year before returning to Melbourne. His unit has been rented out steadily, with just one two-week vacancy, ever since.
Cashflow reigns supreme in Tasmania
Glenn estimates that his West Moonah property is worth around $140,000 to $150,000 today. While the property’s value hasn’t moved ahead in great strides, Glenn says it’s the property’s rental return – currently $195 per week – that keeps his investment moving forward.
“After depreciation and tax deductions, it returns a little under $3,000 per year in positive cashflow,” Glenn says.
“I just keep reinvesting those profits back into the mortgage as my goal is to have it fully paid-off in 10 years, so I can just draw a regular income from the rental income.”
John McGregor, Property Consultant at First National Real Estate McGregor in Moonah, says Glenn may also benefit from reasonable capital growth in the medium term.
“West Moonah and Moonah Central are benefitting from a change in perception, as they’re the next closest suburbs to the Hobart municipality.
The value proposition for houses can save you on average 25 to 50% on your capital investment and still deliver higher rental yield of an extra 1-2%, so it’s a popular spot for investors,” he says.
“The suburb boasts some magnificent views as the Moonah business district continues to develop with quality restaurants, manufacturing and a vast array of different services along with easy access to local schools. It is attracting new interest from both younger and mature buyers into the area.”
Will Hobart finally see growth in 2016?
The good news? Property prices in certain suburbs throughout Hobart may finally start to trend upwards in 2016.
The bad news? They’re not expected to break any records; instead, they’re more likely to simply return to the levels achieved at previous market peaks.
West Moonah, for instance, is “just starting to return to the levels that was last achieved in 2010”, McGregor says.
“The indicators are showing we can expect this upward trend to continue through the first half of 2016,” he adds.
“That said, investors in this market are searching for the potential for cashflow more than the expectation of fast capital growth. The highest buying demand currently is for three to five bedroom homes with good storage and garage space for growing families, and the rental market is following a similar trend.”
The information in this article is general information only and does not constitute financial or legal advice. This does not take into account your personal circumstances and accordingly you should seek independent financial and legal advice before taking any action, or refraining from taking any action in reliance on any information contained in this article.
