April 2021 portfolio update

Welcome to my April 2021 portfolio update. I am keen to get back into the market again soon as an equity cash-out has assisted me in generating the funds for another deposit. With such rapid market conditions, it can be difficult to determine the value of a property, and thus I have decided to wait until more sales are recorded in order to re-value my properties thus why there has been no change to the value of my portfolio this month.

Market update

According to CoreLogic, the price movement in March showed the greatest increase in property prices for a month since 1988! A growth of 2.8% was recorded across the country as the housing market continues to fly. This data was revealed at the beginning of April and paints a very clear picture of what is going on across the board. It comes no surprise to see that SQM research is recording an average increase of 3.7% growth across all major capital cities since this time last month suggesting April has been an extremely promising month for property prices.

There have been some discussions around the reserve bank (RBA) hinting at changes to the current cash rate which sits at a record low of 0.1% for the sixth consecutive month. Governor Philip Lowe has previously mentioned that the cash rate will be on hold for at least the near future until inflationary targets are met. However, with an ever-changing market, there have been suggestions that borrowing will be monitored and increased interest rates could arrive sooner rather than later.

Disclaimer: Increased competition makes it difficult to negotiate on a property. It is important for all investors to ensure they don’t jump into a property without doing all the necessary groundwork prior to purchasing, despite the movement of the market, due diligence is still paramount.


April 2021 portfolio update: Property breakdown
Property one

 Since last month there have been some updates surrounding Property one. Firstly, given the increased demands for rentals in major metropolitan cities, I was able to increase the rent of the property from $370 to $400 without any questions from the tenants. $400 represents fair value for this property and given the short supply of quality rentals in this area, it was an easy increase to my cash flow. This price change will take place when the new tenancy agreement commences at the start of May. Secondly, the equity cash-out has now been funded as I was able to increase my loan (LVR) on this property in order to access equity. Rather than saving my way to another deposit which can take several months, I will be able to jump straight back into the market given the price movement of this property.

Property Two

Property two has had another quiet month with not too much going on. It has been hard to determine a property value estimate given the configuration of the property (4/1/1) and lack of comparable properties within the last few months. I suspect by the end of the year I will have greater clarification around the true value of this property.

Property Three

The renovations to property three are currently taking place and unfortunately, it looks like I will be hit with a bill higher than I budgeted for. It is a key take away from this experience that many times it costs more money than expected to complete renovations and this is an excellent example. I originally budgeted 15k in order to freshen up this property, however, it looks like it will be closer to 20k by the time everything is done. It will be good to know that by the time this property is ready to rent it will require little to no money at all for the longer term (fingers crossed) and should demand an excellent rent.

The positive I can take away from this experience is that although the renovation was above my expectation, similar properties seem to be selling for absurd prices considering what I paid for this property only a few short months ago. Fortunately, I may be able to tap into the equity of this property further down the track if need be but overall I am quite glad about how this purchase has turned out in the short term so far.

Property Four

This property has been much simpler to manage in comparison to property three. Since purchasing, the property was already tenanted and in overall sound condition. I could spend a small amount of money to freshen up certain areas of the property but the tenants haven’t had any issues or concerns which have been brought to light. I expect an increase in rent for the property when the tenancy agreement expires in September. It is hard to judge the price movement of this property but the suburb has been seeing some much higher property prices since recording this purchase. I expect the following months to give greater clarification around the true value of the property and the impact of the current heated market.

The numbers
 Property I II III IV
Purchase price $390k $250k $317k $331k
Current value $460k $320k $390k $360k
Loan $350k 250k $290k $260k
Rent $400 pw $335 pw $400 pw (to be expected) $350 pw


April 2021 portfolio update: Portfolio breakdown

The Numbers

Change since last month

Portfolio value

$1,530,000 + $0

Loan

$1,150,000

+ $0

LVR 75.1%

+ 0

Rent

$1485 pw

+ $35 pw

Repayments

(loans, rates, maintenance, agent fees & insurance).

– $1461 pw

– $72 pw

Cash-flow (p.a) – $4,932

– $876

 


April 2021 portfolio update: Race to $5 Million Portfolio
Percentage to goal

portfolio growth

Month on Month change
Date Portfolio ($) Change (+/-) notes
April 2021 1.53m +0
March 2021 1.53m +390k IP4 bought
February 2021 1.14m +35k
January 2021 1.105m +370k IP3 bought
2020 740k +320k IP2 bought
2019 420k +30k
2018 390k IP1 bought
2017 50k Cash savings
2016 25k Cash savings
2015 $50 The journey begins

until next month.

Cheers,