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Property Investment
Report
The Foothills Estate,
Armidale NSW 2350
Transfield Avenue, Edgeworth,
Newcastle NSW 2285

Positive Real Estate Pty Ltd P: +61 1300 365 886

Level 9, 504 Pacific Highway, F: +61 2 8014 6080
St Leonards. NSW 2065 www.positiverealestate.com.au
Table of Contents
Click to jump to the different sections

Acquisitions Checklist....................................................................................................................3
Acquisition Manager................................................................................................................... 4
Investment Snapshot.....................................................................................................................5
Property Overview..........................................................................................................................7
Introduction................................................................................................................................. 8
Key investment indicators.......................................................................................................... 8
Price List....................................................................................................................................... 9
Finance Summary.....................................................................................................................10
Rental Assurance Program .....................................................................................................13
Property Pictures..........................................................................................................................14
Floor plan...................................................................................................................................15
Stage Plan...................................................................................................................................16
Master plan ...............................................................................................................................17
Satellite map..............................................................................................................................18
Property Expectations..............................................................................................................19
Rental Appraisal........................................................................................................................20
Comparable sales .....................................................................................................................22
Research & articles...................................................................................................................23
How to Finance the Deal..........................................................................................................27
Approval and Construction Timeframes ...............................................................................28
Expression Of Interest (EOI)........................................................................................................29

Disclaimer
Positive Real Estate Pty Ltd does not provide advice on investments. All interested parties must
rely on their own research before making any investment decision and should seek advice from a
qualified Financial Planner or similar professional.

The information contained within this document has As part of your due-diligence, it is the Purchaser’s
been compiled from various sources to assist you in responsibility to seek a legal opinion of the contract and any
conducting your due-diligence. Please ensure you validate additional terms or clauses. You must adhere to the terms,
all information contained within this document. All sources conditions and subject clauses contained within the contract
for information contained within this Property Summary will of sale. We note that Positive Real Estate Pty Ltd has made a
be disclosed at your request. Positive Real Estate Pty Ltd will number of assumptions when preparing this analysis – these
not accept responsibility for inaccurate information provided assumptions have a material impact on the financials and
from external sources or third parties. therefore should be assessed carefully by investors.
 Acquisitions Checklist
This is what we do so you don’t have to:

Location
Population base and growth ü Armidale: 22,484
Average annual growth of 5.44%
Infrastructure spending next 5 years ü $1.2b+

Vacancy rate ü 4.0%

Estate
Total lots and current stage ü 12

Proportion owner occupiers ü 90%

Location in comparison to transport, shopping, schools, ü

hospitals

Land Contract
Checked by solicitor to ensure standard terms as below ü
21 days finance for land and build ü
21 days settlement following finance approval ü
$2,000 initial deposit with balance 10% at finance approval ü
Sunset clause negotiated 6 months

Builder
PRE Acquisitions have met the builder ü
Builder has built projects successfully for PRE before ü

Build Contract
Standard Contract Terms ü
Fixed price contract ü
Build period negotiated 20 weeks
Liquidated damages equal to weekly rent ü
Turnkey includes

ü A/C in master bedroom and living area ü blinds and flyscreens ü fencing ü strata preparation
ü dishwasher ü turf and basic landscaping ü headworks charges û body corporate setup

Positive Real Estate | Property Investment Report 3

Acquisition Manager

Brennan Latimer has been a member of the Positive Real

Estate team for over four years. Brennan has completed a
Bachelor Degree of Property Economics from the University
of Technology in Sydney, and more recently a Certificate IV in
Business Management. He has helped clients buy over 1000
successful investment properties with Positive Real Estate,
proving a solid understanding of the property sector.
Brennan networks with multi-million dollar developments
and a variety of real estate agents to source the best deals for
Positive Real Estate clients. He has a discerning eye for great

Brennan Latimer deals due to his extensive knowledge of property investments,

Acquisitions Manager and an understanding of key features that make a deal
profitable in both city and regional locations.
Brennan believes that the key to successful stock supply is
to be as hands on as possible, be thorough with research,
and concentrate on a particular ‘x-factor’. Brennan is always
vigilant that a property deal adheres to strict structures before
announcing the deal worthy of a Positive Real Estate listing.

4 Positive Real Estate | Property Investment Report

 Investment Snapshot

Type Of Property
Custom Build

The following page details the key indicators of the property’s outlined in this report, which allows you to make an educated decision when
purchasing. From prices to rents to growth figures, the facts are examined for you. It is important to note that financials are done using
estimation calculators and further assistance on this topic may be required from your Property Consultant (PC).

ü 1 New (to maximise depreciation/tax return and

gross rental returns)
Property Strategy Counter Cyclical
Type Custom Build Duplex
6 bedroom, 4 bathroom & 2 garage
ü 2 In proven land estates or infill areas Price Six Bedroom Duplex packages from: $601,600
(that are highly favoured, with high existing
amenities. Mid-to-long term for capital growth) Price/m2 $1,572m2
Total Build Size 284.32m2
ü 3 Benchmark sales (of new properties have Lending Maximum 80%-90%,discuss with broker
occurred, lifting the values in the area for all)
Total Purchasing Costs Land from $155,000
ü 4 Resale (where the property is built to plan for an Build from $446,600
expected resale of the local owner occupier market Total from $601,600
place without over capitalising) Costs: Stamps $4,228 + Solicitor fees $2,000 +
Deposit $120,320 + Loan Costs $1,100 +
ü 5 Area with five or more pillars of economic Vacancy Buffer $2,000 = 80% LVR =
support (including demographic/rental demand $129,648 Approx.
and high employment/wages growth)
Deposit Type Cash

ü 6 Within five minutes of “hard-core” Suburb Growth

(5 year growth)
Your Investment Property Magazine:
Armidale – 19.27%
infrastructure (i.e. major work nodes; secondary
schools; entertainment precincts and public transport) Key Dates Building is estimated to start within approx 6 weeks (du-
plex) once settled on the land assuming the build deposit
ü 7 ensuring the builders have extensive past
Delivered by a proven development team,
was paid at unconditional exchange of the contracts . Late
payment of the build deposit will lead to a later construc-
experience and credibility
tion start date.
ü 8 End prices under $680,000 for Duplexes (better Peak Of Last Cycle 2014
still, less than $500,000 for houses)

ü 9 High owner occupier ration (within the estate,

with over 70% existing owner occupiers over investors)

û 10 Sold with independent registered valuation

support (within an acceptable range of sales/
marketing commission)

TOTAL
SCORE 9.0/10
Rental Projections
Purchase Price $601,600 Yr 1 Pre-tax Cashflow +$153

Market Rent Agent appraised $760-$780pw Yr 1 Aft-tax Cashflow +$6098

Gross Yield 6.4% Yr1 Aft-tax Cashflow PW +$117

Net Yield 5.1%

Note: Completed on 100% finance. For more financial information see property financial details. Buyers please be aware that all information has been collected
by third parties and buyers need to conduct their own further due diligence on all aspects suggested within this report.

Positive Real Estate | Property Investment Report 5

 Growth Drivers

Sources:

COLD WARM HOT COLD WARM HOT

INFRASTRUCTURE INVESTMENT VACANCY RATES

POPULATION GROWTH PROJECTED CAPITAL GROWTH

PROJECTED RENTAL GROWTH ESTIMATED RENTAL YIELDS

DIVERSITY OF ECONOMY AFFORDABILITY

SUPPLY AND DEMAND COUNCIL PLANNING

Demographics The population of Armidale in 2006 was 21,451 people. By 2011 the population was 22,484
showing a population growth of 4% in the area during that time. The predominant age
group in Armidale is 15-24 years. Households in Armidale are primarily couples with
children and are likely to be repaying between $1,000 - $1,400 per month on mortgage
repayments

Infrastructure Great economic expansion marked by $12 million legal precinct and Courthouse, the $60
million Centro Shopping Centre, $50 million rebranding of Kmart Plaza, etc.

Suburb Yield And Yield Variation 5.55% vs 6.4% with subject property

Supply And Demand Increasing demand in line with economic growth. Subsequent increasing supply to cater
for demand.

Population Armidale: 22,484

6 Positive Real Estate | Property Investment Report

 Property Overview

CLICK IMAGE TO OPEN

INTERACTIVE MAP

Location Map

Positive Real Estate | Property Investment Report 7

 Key investment
Introduction indicators:
Positive Real Estate has sourced two (2) 30 years under director Leigh Murphy. Strong average growth
positively geared custom build duplex Throughout the years Leigh has
rates of 5.55% (http://www.
packages in the city of Armidale, NSW. instilled a culture of quality, openness,
yourinvestmentpropertymag.com.
The packages comprise of 6 bedroom, 4 industry excellence and compliance
bathroom, 2 car garage, with large land within all staff and projects. Murphy au/)
lots from 886m2. Builders parent company Murphy Current Gross yields of 6.4%
Builders Qld are well known and highly
Positively geared both (Year 1 Pre
The Foothills is a premium land estate regarded throughout Queensland and
located in the prestigious northern Northern New South Wales. Projects Tax) from $152 and (Year 1 After
part of Armidale in NSW. The Foothills span both metropolitan and regional Tax) from $6,098
covers 19.49 hectares on which 120 areas of Toowoomba, Mackay and Mt
Potential equity gain of $80,000
homes with around 300 residents Isa.
will be situated. Armidale has an
based on agents appraisals

abundance of parks and recreational The custom build duplexes are turnkey 8 minutes to Armidale CBD
facilities available to the community. and include everything required for
12 minutes to Armidale Airport
Many of the Heritage National Parks your tenant to move in on completion
Both private and public hospitals,
within the region offer fantastic walking such as A/C to the master bedroom
trails. Armidale has a number of and living areas, flyscreens and blinds, schools and shopping within 10
sporting team both competitive and turf and basic landscaping, fencing, minutes drive
social. The University of New England council headworks charges and strata
The Armidale economy is a strong
facilitates individual and team sports preparation. On completion the
weekly. duplexes will present very well and economy that has experienced

This rural oasis may feel like a world have a high level of finishes including steady growth.
away, but it is just minutes from Caesar stone kitchen & bathroom
Armidale will grow by some 6,500
schools, shops and other town bench-tops, stainless steel kitchen
people by 2031 at an annual rate
conveniences. Armidale is part of the appliances including dishwasher,
New England Health network and down-lighting throughout and partial of 1.1 per cent, or 25.8 per cent
there are a number of local facilities: external render for brick surfaces. overall.
Armidale Public Hospital, Armidale
Private Hosipital, Faulkner Street
Medical Centre, and Marsh Street
Medical Centre are all only 10 minutes
away from the estate. Also there are 5
shopping malls in very close proximity
to The Foothills, and many more.

The homes are built by one of PRE

white label builders, Murphy Homes
who have been in operation for over Artists impression Duplex

8 Positive Real Estate | Property Investment Report

Price List
Lot Alfresco/ Total Build Land Size
Design Bed Bath Car Internal Garage Land Price Build Price Total Design
no Porch (m2) (m2)

201 Duplex 6 4 2 210 29.4 43.9 284 886 $155,000 $446,600 $601,600 Low Set

202 Duplex 6 4 2 210 29.4 43.9 284 947.5 $158,000 $446,600 $604,600 Low Set

Foothills Estate Duplex - Equity Gain Analysis

Gross Realisation $700,000 $350,000 per side

Purchase Price $601,600 Land $155,000 Build $446,600
Solicitor’s Fees $2,000
Stamp Duty $4,228
Total Costs (approx) $607,828
Net Profit $92,172
Return on Costs 15.2%

Annual Fees Terms & Conditions of Sale

LL Estimated management rates at 7.0 – 8.0% + GST ALL LOTS

LL Council rates $2,500 per annum LL 7 days to enter contract

LL Exchange land contract within 21 days
LL 21 day settlement after registration of titles
LL Builder liquidated damages of $108.55 per day ($760
“All real estate has potential vacancy aspects that must be per week)
catered for by investors. Often with new dwellings there can
LL Building period 20 weeks
be an initial and temporary influx of supply, which can create
LL Titles due for registration between mid to late April
vacancies post settlement. As such, we have included a
2015
capital cost of $2,000 in our financial calculations, which you
will see in the financial summary below. We believe this to be LL Sunset clause 6 months
a normal real estate risk and hence a capital cost.” LL Settle on the land 21 days after registration of titles

Positive Real Estate | Property Investment Report 9

Finance Summary
Scenario: 1 201 Holmfield Drive Duplex/Semi Detached Market Value $601,600
Duval Bedrooms 6 Purchase Price $601,600
LOT 201
Armidale NSW Bathrooms 4 Deposit $120,320
Double Garage Purchase Costs $9,328

10 Year Forecast
Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Capital Growth & Property Value
Capital Growth – 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Value Added – 0 0 0 0 0 0 0 0 0 0
Renovations – 0 0 0 0 0 0 0 0 0 0
Property Market Value 601,600 619,648 638,237 657,384 677,106 697,419 718,342 739,892 762,089 784,952 808,501

Loan & Equity

Loan Amount 481,280 481,280 481,280 481,280 481,280 481,280 481,280 481,280 481,280 481,280 481,280
LOC Limit – 0 0 0 0 0 0 0 0 0 0
Loan to Value Ratio (LVR) 80% 78% 75% 73% 71% 69% 67% 65% 63% 61% 60%
Equity in Property 120,320 138,368 156,957 176,104 195,826 216,139 237,062 258,612 280,809 303,672 327,221
Equity for Refinance at LVR 80% 0 14,438 29,310 44,627 60,405 76,655 93,394 110,634 128,391 146,682 165,521
Buying Power 0 72,192 146,548 223,136 302,024 383,276 466,968 553,168 641,956 733,408 827,604

Rental Income
Gross Rental Income – 38,760 39,000 38,480 39,624 40,820 42,068 43,316 44,616 45,968 47,372
Gross Rental Yield – 6.4% 6.5% 6.4% 6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.9%
Net Rental Yield – 5.1% 5.1% 5.0% 5.2% 5.3% 5.5% 5.6% 5.8% 6.0% 6.2%

Annual Expenses
Loan Interest Rates – 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Loan Interest Payments – 24,064 24,064 24,064 24,064 24,064 24,064 24,064 24,064 24,064 24,064
Principal Repayments – 0 0 0 0 0 0 0 0 0 0
Property Expenses – 8,061 8,229 8,340 8,590 8,849 9,115 9,387 9,669 9,960 10,262
Additional Expenses – 0 0 0 0 0 0 0 0 0 0
Interest on Equity Funds Used – 6,482 6,482 6,482 6,482 6,482 6,482 6,482 6,482 6,482 6,482
Interest on LOC Funds Used – 0 0 0 0 0 0 0 0 0 0
Total Annual Expenses – 38,607 38,775 38,887 39,136 39,395 39,662 39,934 40,216 40,507 40,808

Depreciation & Tax Deductions

Depreciation – 16,000 12,000 11,000 10,000 9,000 9,000 8,000 8,000 8,000 8,000
Total Deductions – 54,827 50,995 50,107 49,356 48,615 48,662 47,934 48,216 48,507 48,808
Net Profit/(Loss) – (16,067) (11,995) (11,627) (9,732) (7,795) (6,594) (4,618) (3,600) (2,539) (1,436)
Estimated Tax Refund/(Payable) – 5,945 4,439 4,302 3,601 2,885 2,440 1,709 1,332 940 532

Pre Tax Cashflow

Pre Tax Cashflow PA – 153 225 (407) 488 1,425 2,406 3,382 4,400 5,461 6,564
Pre Tax Cashflow PW – 3 4 (8) 9 27 46 65 85 105 126

After Tax Cashflow

After Tax Cashflow PA – 6,098 4,664 3,895 4,089 4,310 4,846 5,091 5,732 6,401 7,096
After Tax Cashflow PW – 117 90 75 79 83 93 98 110 123 136
Disclaimer: Property Investment Calculator accepts no liability for the accuracy of this report. Always consult a qualified accountant or financial advisor before making financial investment decisions. © MV Software Pty Ltd 2010. www.propertyinvestmentsoftware.com.au

10 Positive Real Estate | Property Investment Report

 Scenario: 1 201 Holmfield Drive Duplex/Semi Detached Market Value $601,600
Duval Bedrooms 6 Purchase Price $601,600
LOT 201 Armidale NSW Bathrooms 4 Deposit $120,320
Double Garage Purchase Costs $9,328

Financial Summary www.propertyinvestmentsoftware.com.au

Capital Expenses Annual Income & Expenses Tax & Market Factors
Property Value 10 Year Variable Rental Income NRAS applies Property Specifications
Description Amount Year Average PW Wks Vacant Rent PA Description Specification
Market Value at Year 2015 601,600 Year 1 760 1 38,760 Purchase Price 601,600
Purchase Price 601,600 Year 2 750 0 39,000 Nearest City Sydney
Value vs Purchase 0% 0 Year 3 740 0 38,480 Standard of Finish Medium
Year 4 762 0 39,624 Property Type House
Due Diligence Costs Year 5 785 0 40,820 Construction Date 2015
Description Fund Amount Year 6 809 0 42,068
Building Inspection Cash 0 Year 7 833 0 43,316 Estimated Depreciation Schedule
Pest Inspection Cash 0 Year 8 858 0 44,616 Year Amount
Other Cash 0 Year 9 884 0 45,968 Year 1 16,000
Other Cash 0 Year 10 911 0 47,372 Year 2 12,000
Total 0 Year 3 11,000
Annual Property Expenses Year 4 10,000
Settlement Costs Description Amount Year 5 9,000
Description Fund Amount Rates 2,500 Year 6 9,000
Deposit 20% Equity 120,320 Land Tax 0 Year 7 8,000
Stamp Duty Equity 4,228 Building Insurance 1,000 Year 8 8,000
Legal Fees Equity 2,000 Body Corporate 0 Year 9 8,000
Vacancy Buffer Equity 2,000 Repairs & Maintenance 0 Year 10 8,000
Total 128,548 Cleaning 0
Service Contracts 0 10 Year Average Capital Growth
Loan Establishment Costs Garden and Lawn Maintenance 0 Description Amount
Description Fund Amount Letting Fee 760 Average Annual Capital Growth 3%
Set up Fees Equity 300 Landlord insurance 700
LMI Equity 500 Other 0 Consumer Price Index (CPI)
Valuation Fees Equity 300 Property Management Fee % 8% Description Amount
Other Cash 0 10 Year Average 3%
Total 1,100 Additional Annual Expenses
Year Fund Amount Annual Income
Improvements Year 1 Cash 0 Investor Ownership Amount Tax Bracket
Year Fund Amount Value Added Year 2 Cash 0 Investor 1 100% 100,000 37%
Year 1 Cash 0 0 Year 3 Cash 0 Investor 2 0% 0 0%
Year 2 Cash 0 0 Year 4 Cash 0
Year 3 Cash 0 0 Year 5 Cash 0
Year 4 Cash 0 0 Year 6 Cash 0
Year 5 Cash 0 0 Year 7 Cash 0
Year 6 Cash 0 0 Year 8 Cash 0
Year 7 Cash 0 0 Year 9 Cash 0
Year 8 Cash 0 0 Year 10 Cash 0
Year 9 Cash 0 0
Year 10 Cash 0 0 Loan Details
Total 0 0 Description Amount
Value Add Margin 0% 0 Loan Type Interest Only
Loan Term (Years) 25
Selling Costs Loan Amount 481,280
Description Amount Loan to Value Ratio (LVR) 80.0%
Agent Selling Commission % 0%
Advertising 0 10 Year Average Interest Rate
Legal Fees 0 Description Loan Equity LOC
Other 0 Rate % 5% 5% 0%
Other 0
Line of Credit
Year Limit Drawdown Balance
Year 1 0 0 0
Year 2 0 0 0
Year 3 0 0 0
Year 4 0 0 0
Year 5 0 0 0
Year 6 0 0 0
Year 7 0 0 0
Year 8 0 0 0
Year 9 0 0 0
Year 10 0 0 0
Total 0 0

Positive Real Estate | Property Investment Report 11

Positive Real Estate​uses figures in the above spreadsheet that are merely assumptions and, as such, they should not be
solely relied upon by buyers​. Positive Real Estate (PRE) encourages all buyers to undertake their own due diligence and cash
flow analysis t​ o ascertain their personal understanding and validation of these figures or of chosen figures of their own​.

• The following assumptions have been made:

• $100,000 personal income and subsequent 37% tax rate

• 5.2% interest rate

• 100% borrowing

• 3% property and rental growth

12 Positive Real Estate | Property Investment Report

Rental Assurance Program –
Congratulations! This property is eligible.

As part of the Positive Real Estate service, we would like to 5. Paid in Arrears – claims will not be processed until the
give you extra piece mind. Our team works hard every day expiration of the 8th week of vacancy or 14 days after
to find the best possible property opportunities in upcoming tenancy secured, whichever occurs first.
growth markets, so you can gain capital growth and make a
profit. Criteria
1. Positive Real Estate preferred Property Manager must
We are confident that the properties we provide will be be engaged at least 2 weeks prior to settlement.
successfully rented, however, there will always be ups 2. Best endeavours demonstrated to advertise and
and downs in the real estate market. To provide you with proactively locate a tenant (as assessed by Positive Real
additional security, we would like to introduce the Rental Estate audit of Property Manager).
Assurance Program. If, after the settlement of your property, 3. Property maintained to the highest standard to attract
it is vacant for four weeks or more, we will cover the rent tenancy.
at market value from week five, up to a maximum of four 4. Consultation with Positive Real Estate when any offer is
weeks of rent. made in relation to tenancy.
5. Either your Property Consultant or Mentoring Coach
We reassess day-to-day on how we can make a difference in must be contacted if and when the property reaches its
your property journey and how we can go that extra mile to 3rd week of vacancy, which will allow us to make any
help you reach your financial freedom. necessary changes to the letting campaign.

Conditions: Exclusions
1. Positive Real Estate will determine Fair Market Rent at 1. No payment will be made if independent Property
time of settlement. Vacancy period paid from weeks 5 – Manager is appointed.
8 inclusive. 2. Advertised rental must be ‘fair market rent’ or Rental
2. Pro-Rata payment if tenanted during weeks 5 – 8 (e.g. Assurance will not apply.
vacant for Week 5 only, then one week’s rent will be
paid).
The Rental Assurance will be organised with PRE via your
3. No shortfall of rent paid; it will be between the Property
coach or Property Consultant.
Investment Report rent amount and actual market rent
at settlement.
4. For duplex, dual income or small development deals, if
one dwelling is rented within weeks 1-4 the assurance
program is not applicable to any vacancy for the second
dwelling. Full assurance benefits are applicable for both
dwellings if both are vacant beyond 4 weeks.

Positive Real Estate | Property Investment Report 13

 Property Pictures

14 Positive Real Estate | Property Investment Report

Floor plan

Positive Real Estate | Property Investment Report 15

Stage Plan

16 Positive Real Estate | Property Investment Report

Master plan

Positive Real Estate | Property Investment Report 17

Satellite map

18 Positive Real Estate | Property Investment Report

Property Expectations
Socio-economic Assessment
Armidale population as per the 2011 Census was 22,468 Highest & Best Use of Land
people, of these 47.4% were male and 52.6% were female. The H&B use of the land is as a 4 bedroom house
The median/average age of the Armidale population is 34 development. It is possible to simply build a 3 bedroom
years of age, 3 years below the Australian average. Children house however will not drive higher rental yields.
aged 0 - 14 years made up 19.0% of the population and
people aged 65 years and over made up 14.3% of the First 6 Months Purchase Expectations
population. ALL LOTS
In Armidale 40.6% of people were attending an educational • All lots are due for registration mid to late April 2015.
institution. Of these, 19.9% were in primary school, 19.0% • During the build process you will receive regular updates
in secondary school and 37.4% in a tertiary or technical from the builder and will be paying the drawdown
institution. Unemployment is above the state average, 7.7% payments to the builder via your lender
for Armidale versus 5.9% for New South Wales. There were • Just prior to completion you are advised to engage a
10,282 people who reported being in the labour force in property manager and begin advertising for a tenant
the week before Census night in Armidale. Of these 53.8% • The property manager you select will also be able; to
were employed full time and 32.7% were employed part- conduct a pre-settlement inspection for you and note
time. The main occupations of people from Armidale are any defects for the builder to fix
Professionals 25.6%, Clerical and Administrative Workers • Once complete you will commence leases and begin
13.7%, Technicians and Trades Workers 11.9%, Managers paying your council rates.
11.8%, Community and Personal Service Workers 11.3%,
Sales Workers 11.2%, Labourers 9.7%, Machinery Operators Strata Synopsis
And Drivers 3.4%. The median individual income is $488.00 The DA process includes strata title and CMS preparation,
per week and the median household income is $986.00 per council headworks charges and titles office lodgement fees
week. are covered by the builder and included for in the turnkey
build contract price. It does not include body corporate
Flood Zone setup.
Not in a flood prone area. Check your contract with a This will mean that when the duplex is complete you are in
solicitor a position to simply register the individual titles at your will
with the land titles office. During this process the builder will
Zoning Risk and Assessment guide you.
Zoned residential. Check the contract of sale.
Murphy Homes will construction manage the build of your
Vacancy Risk house.
Given the current demand and strong rentals experienced Murphy Homes Contact Details
in Armidale, vacancy is expected to be very low. This type of Gayle Tripp
product is very popular in the rental market. Allow 1-2 week Administration Assistant
vacancy once your custom build is complete given the overall A: 1/103 Brisbane Road Mooloolaba Q 4557
vacancy rate in Armidale is 4.0%. P: 07 5444 2399
F: 07 5444 8070
Valuation Shortfall Risk E: gayle.tripp@murphybuilders.com.au | W:
Given the market today and the hesitance of some valuers to http://www.murphyhomes.com.au
come in on contract price it is possible that at least 2 finance
valuations may need to be done.

Highest & Best Rental Returns

The H&B rental returns for these properties are as 4
bedroom houses unfurnished. It may be possible to rent
them furnished to students or some executive styled groups
but this is anticipated to be very limited and could create
longer vacancy periods.

Positive Real Estate | Property Investment Report 19

 Rental Appraisal

20 Positive Real Estate | Property Investment Report

Positive Real Estate | Property Investment Report 21
Comparable sales

22 Positive Real Estate | Property Investment Report

Research & articles
B risbane has the largest economy
of any city between Sydney and
Singapore and has seen consistent
numerous electronics businesses
have distribution hubs in and around
the city. Brisbane has a range of retail
of Kingsford Smith Drive. Moreover,
recently completed was The Northern
Busway consisting of three new
economic growth in recent years precincts, both in the Central Business stations and costing $444 million.
as a result of the resources boom. District and in surrounding suburbs.
White-collar industries include A $1.5 billion redevelopment project
information technology, financial Fitzgibbon was declared Priority located beside the Mater Hospital
services, higher and public sector Development Area on 25 July 2008 in South Brisbane. The Hospital is
administration generally concentrated and located 12 kilometres from the currently under construction and due
in and around the central business Brisbane CBD, the Fitzgibbon Priority for completion in late 2014.
district and recently established Development Area (PDA) covers
office areas in the inner suburbs. 295-hectares of land in the northern Only the 2013-2014 budget has $1.1
Blue-collar industries, including suburbs of Fitzgibbon, Carseldine, billion for infrastructure investments,
petroleum refining, stevedoring, paper Bald Hills, Taigum and Deagon. The $43 millions for asset investments,
milling, metalworking and QR railway Fitzgibbon PDA is bounded by the $21 million for access and inclusion
workshops, tend to be located on the Aspley School district to the south, initiatives, $372 million for parks, green
lower reaches of the Brisbane River Telegraph Road to the north, Gympie initiatives, waste management etc.
and in new industrial zones on the Road to the west and the Gateway
urban fringe. Tourism is an important Motorway to the east. Due to the rarity The Queensland Infrastructure Plan
part of the Brisbane economy, both in of greenfield sites in close proximity identifies approximately $134 billion
its own right and as a gateway to other to transport networks in Brisbane, the worth of infrastructure investment for
areas of Queensland. Fitzgibbon PDA is being developed into Brisbane and the surrounding region.
a residential community, that includes Designed to manage ongoing growth,
Brisbane is one of the major business significant areas bushland and open the program represents the largest
hubs in Australia. Most major space. public infrastructure spending initiative
Australian companies, as well as in Australian history.
numerous international companies, Brisbane Council’s latest infrastructure
have contact offices in Brisbane, while plan is a $360 million-plus upgrade

Major Projects 2014

Strategic projects

Development of Industrial Land in the Airport precinct $15 million

Catholic Church precinct redevelopment $6 million

Completion of nursing home and retirement village $10 million

Educational Research & Teaching building UNE $18 million

Positive Real Estate | Property Investment Report 23

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How to Finance the Deal
You are buying a property under a house and land arrangement. This is known as a construction loan. In order to finance the
property, you enter a two part contract. The process is as follows:

1. EOI submitted with a $2,000 holding deposit to the real 6. You can now order a valuation for mortgage purposes
estate agent (this comes off your 10% land deposit). and endeavour to obtain formal finance approval within
Deposit accounts detailed in EOI your 21 days finance period. A valuation for the bank will
be organized through your broker
2. Land Contract issued within 7 days
7. Ascertain formal finance approval, unconditional
3. Build Contract sent to you within 7 days exchange on balance 10% (minus $2,000 for your initial
holding deposit) deposit for land and 5% of building
4. Submit your finance application for BOTH land and build
contract. Bank accounts can be supplied to you by your
ASAP using your build contract and land contract front
PM
page
8. For your building contract you need to also send a letter
5. Build Contract and land contract signed and returned
of finance approval to the builder.
within 48 hours of receiving them – conditional
exchange! 9. Settle on the land 21 days following registration of titles.

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Approval and Construction Timeframes:
Building is estimated to start within approx 6 weeks (duplex) once settled on the land assuming the
build deposit was paid at unconditional exchange of the contracts . Late payment of the build deposit
will lead to a later construction start date.

Please note the type of loan you require for the Building Contract is a “construction loan”.

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 Expression Of Interest (EOI)

The Expression of Interest is a formal ‘offer to buy’ a property. It will clearly set out the property
description, price and terms of sale.

The EOI will also contain certain information such as your broker and/or solicitor contact details.
It may also contain a s47 Disclosure regarding fees and charges.

This is not a binding contract – the deposit is completely refundable should a buyer choose to
not proceed with the purchase.

Expression of interest deposit details: Recommended Solicitor

Amount: $2,000 Name: Yates Beaggi Lawyers
Account Name: Positive Real Estate Trust Contact Person: Farbod Salimi
Account
Phone: 02 9261 8899
BSB: 032324
Fax: 02 9261 1779
Account Number: 167428
Email: farbod@yatesbeaggi.com.au
Address: Level 10, 31 Market St
Suburb: Sydney
Postcode: 2000

Fees: Land Contract - $2,360 Inc GST & Disbursements

Build Contract - $1,100 Inc GST & Disbursements
Terms: 50% due on acceptance of cost agreement

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 GLOSSARY:
AAPR — annualized average Cash flow positive — you have Fixed rates — where home loan is
percentage rate, sometimes referred a cash flow positive investment if locked in at a specific interest rate for
to as the comparison rate. This the incomings are more than your a specified term, usually one to five
figure takes into account all the costs outgoings after tax- deductible items years.
associated with the loan and is used to have been claimed. You receive more
compare loan products. rent than your mortgage repayments, Interest-only — only repaying the
plus you are still ahead after taking into interest charged on your mortgage and
Appraisals/valuations —a written account items, such as interest on the not paying off any of the principal or
report of the estimated value of a loan maintenance, insurance, land tax, amount owing.
property, usually prepared by a valuer. rates, etc.
Joint tenants — each owner has equal
Appreciation —an increase in value. CGT (capital gains tax) — the tax shares and rights in the property.
you pay when you sell an investment
Basic variable — a variable home loan LMI (lenders mortgage insurance) —
property if you’ve made a profit.
at a lower rate with fewer features than usually required by lenders when
a standard variable home loan. Conveyancing — the process that you’re borrowing more than 80 percent
legally transfers property ownership of the property’s value. It provides
Break costs —the fees incurred when insurance to the lender in case the
from one entity to another.
a loan is paid off ahead of time. borrower defaults on the loan.
Cooling-off period — a period of
Body corporate —an administrative LOC (line of credit) — a facility
time given to the purchaser to legally
body made up of all the owners available from financial institutions
withdraw from buying a property. The
within a group of units or apartments that gives you a credit limit that you
length of time varies in each of the
of a strata building. The owners can draw down anytime. It’s similar to
states and territories.
elect a committee, which handles a credit card except you don’t have to
administration and upkeep of the site, Cross-securitisation/cross make set repayments of the principal.
also known as Owners Corporation. collaterisation — when the financial
institution uses your property (whether Low-doc loans — relatively new, these
Bridging finance — a short- term loan are loans that don’t require as much
owner-occupied or investment)
used to bridge the gap between buying documentation to set up. They are
as security for other property you
a new property and selling an existing popular with self- employed people
purchase.
one. and those who have not yet established
Default — Failure to pay a debt by the a credit rating. Lower quartile— the
Building approvals — the number of
due date. price point below which 5 percent of
dwellings approved to be constructed
sales were recorded. If there were 100
in a given month, quarter or year. Density — the level of occupancy in sales in a suburb, the 25th lowest price
a given area, or the number of people would be the lower quartile price.
Capital gain — the amount by which
permitted to reside in anarea. For
your property has increased relative to
example, inner-city areas are usually LVR (loan-to-value ratio) — to calculate
what you had paid for it. Simplistically,
higher density than outer-suburban it, divide the loan amount by the value
if you bought a property for $200,000
areas. of the property, then multiply by 100 to
and it is now worth $350,000, you’ve
get a percentage. Banks and financial
made a capital gain of $150,000. Depreciation — the decrease in value institutions use this as a measure of
of an item (e.g. a building) over time. whether you can afford the loan.
Cash rate/bank rate — the cash is
the rate of which the reserve bank Equity — the difference between your Median — the median house price is
of Australia sets interest rates. It’s mortgage and your property’s value. If the middle price of all sales recorded
currently 4.5 percent. The bank rate is your home is worth $400,000 and you in a particular suburb, postcode, city
the interest rates that banks offer and owe $150,000, then you have equity of or state. If there were 100 sales in a
is above the cash rate to allow for a $250,000. particular suburb in ascending order,
profit margin. the median would be number 50 on

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the list. It’s commonly assumed that POA — price on application. You may Stamp duty — a state government tax
the median price is the same as the see this in a real estate advertisement. on the transfer of a property calculated
average price but that’s not the case. To on the value of a property.
calculate the average, you would add Principal and interest — the amount
up the 100 sales and divide the total by borrowed or still to be repaid, plus the Strata title — also known as unit title.
100 (the number of sales). interest on the mortgage. The principal This title grants ownership of a section
is part of the repayment that reduces or a ‘unit’ of a larger building. This
Negatively geared — this is where the the balance of the mortgage. ‘unit’ can be sold or transferred by the
incomings are less than your outgoings owner.
after all tax reductions have been Property cycle — property values
claimed. For example, you receive rent usually follow a cycle of growth, a Subdivision — a parcel of land.
on a property of $600 a month, but slowdown, a bust and an upturn.
History shows this occurs every 7 to 10 Supply and Demand — the number
your mortgage repayments are $900 a
years. of properties on the market at any
month. Your shortfall is $300 a month,
given time determines the supply-and-
which you claim as a loss when doing
Refinance — to obtain new finance for demand equation. If there are lots of
your tax return. Many people on high
something on different terms, usually properties on the market, it’s a buyer’s
incomes use negative gearing to reduce
involving the paying off of an existing market. If there are few properties on
their taxable income.
loan by means of a new (and often the market or those that come to the
O&A (offer and acceptance) form — cheaper) loan. market sell quickly, then it’s a seller’s
when you make an offer to purchase a market.
Reverse mortgage — designed for
property you sign one of these forms.
seniors who are asset-rich (usually Tenants in common — two or more
When the owner accepts the offer, it
with their PPOR) but cash-poor. The buyers own a property with unequal
becomes a binding contract.
facility allows them to access the equity shares and rights.
Off-the-plan — when you buy off the in their homes without having to sell
it. Most often the loan is not paid, or Upper quartile — the price point
plan, you are buying a property before it
until the borrower dies, moves into a below which 75 percent of sales were
is built, having only seen the plans. This is
nursing home or relocates. recorded. If there were 100 sales in a
commonly used for apartments of units
suburb, the 25th highest price would
under construction or about to be built.
Rental yields (and calculations) — be the upper quartile.
Passed in — when the highest bid at the return on an investment as a
percentage of the amount invested. Vacancy rates — a measure of how
an auction doesn’t meet the reserve
Gross rental yield can be calculated many dwellings are available for rent
price set on the property. In effect, the
by multiplying the weekly rent by 52 over a specified time period. A low
property does not sell at the auction.
(weeks in a year) and then dividing vacancy rate means there are not very
Portfolio (as in property portfolio) — by the value of this property and many dwellings available for rent, while
the number and type of investments multiplying this figure by 100 to get the a high vacancy rate means there is an
you own. percentage. ample supply of vacant properties.

Positively geared — this occurs when Reserve price — the minimum Vendor — the seller.
the investment income exceeds your amount a seller will accept at an
Vendor’s terms — refers to instances
interest expense (and other possible auction.
when a property owner is prepared to
deductions). For example, the rent you
Sold under the hammer — this offer buyer finance or other assistance,
receive may be $1000 a month, but the
means a property that goes to auction such as staged payments to assist with
monthly repayments are only $750 a
sells at the auction. the purchase of the property (also
month. You can also receive additional
known as wrapping).
tax benefits on any income derived
from a positively geared investment. Serviceability — whether or not
you can manage your mortgage Yield — the return by an investor on
PPOR or PPR — principal place of payments, based on your income and an investment, shown as a percentage
residence. expenses. of the amount invested.

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