May 2021 portfolio update

Welcome to my May 2021 portfolio update. The month has flown by as I begin my search for my next investment property. Life has taken up a large proportion of my time and my focus has been outside of investing over the past couple of weeks. Although, I am keen to get back into the market soon! With more sales being recording it has shed some light on the valuations of my properties and how they are fairing in this continually growing market.

Market update

Last month (April) we saw an extremely strong increase in price growth across the major capital cities. Since then the housing market has continued to grow but it appears momentum has slowed down recording national growth of 0.4%. It will be quite interesting to see how the market continues to perform over the coming months. Is it going to hit the breaks or regain momentum? I am confident we will continue to see price growth throughout the remainder of the year but to what extent is the question at hand.

On a smaller scale, it is important to note a single property is not reflected by the national, state, or capital average. Therefore, although it is great to see the market moving in a positive trajectory it isn’t necessarily a reflection of an individual property. This can be seen in the fact that half of my properties registered above-average growth. Therefore, focusing on the suburb/s you have invested in is likely going to provide more accuracy on your investment’s performance.

From an economic perspective, we have seen Covid continue to provide problems for numerous people as lockdowns and clusters of cases are still present. There doesn’t appear to be any new news on the cash rate and cheap money will likely stay for the short term. This means it may be a great opportunity for individuals in a strong financial position to invest in property.


May 2021 portfolio update: Property breakdown
Property one

 I was fortunate enough last month to be able to increase the rental return on this property by an additional $30 per week! This has kicked in this month and is an added bonus to my cash flow position moving forward. From a growth perspective, the property is continuing to gain momentum. I was curious to determine what an agent on the ground would value my property at. So I got in contact with the agent that did the deal when I purchased this property. He Appraised the property between 470-500k which is right around where I expected it to be. He did mention that we could see a price above this bracket, particularly as the market continues to move. A valuation of 485k (conservative) shows consistent growth since the start of the year.

Property Two

Property two seems to be quite stagnant at the moment. This is likely due to its locality in a lower demographic area. I expect this area to move by the end of the year but am not expecting anything too extraordinary. When purchased I got a great deal which allowed me to leap into my next property. However, I have been contemplating what value this property brings to my portfolio moving forward. I am willing to wait it out to see how things pan out but I may use this property further down the line to pay off debt and increase cash flow.

Property Three

The renovation to property three has finally finished and it was definitely a learning experience. They took longer than expected and I did end up with a few unexpected issues I need to resolve. It didn’t burn a hole in my pocket but the timing was a slight setback. The property is now being advertised on the rental market and I expect to get a tenant quite quickly. With a 317k purchase price and a roughly 15k renovation, the total investment will end up coming to around 330k.

The property should rent around $400 a week which is an extremely good yield. I also doubt this property could be purchased again for a similar price despite being purchased only four odd months ago. Moreover, the renovations would have likely added value to the property which was another benefit of this deal, similar properties are hard to come by given the low supply. I believe this property could comfortably achieve a 390k valuation and will likely hit the 400k mark within the coming months.

Property Four

Ticking along is the newest property to the portfolio. It has been hard to determine the growth of this property as there are limited comparable sales sold within recent months. There is no doubt it was a great deal with a strong upside for growth moving forward. As a 4/1/1 it has the addition of an extra bedroom when compared to a 3/1/1. Although, it doesn’t meet the same requirements of a 4/2/2 or 4/2/1 which mean its value likely falls between these two configurations. 4/2/2 have sold between 400-430k in the last month while 3/1/1 have sold for 360k roughly. Therefore I suspect the property is to be valued at around 380k but could rise as more data comes to light.

From a rental point of view, I am expecting a decent increase once the lease is up. Currently renting at $350 p/w I believe I can achieve close to $400 a week as similar properties are being listed for rent at this price. This would again be another great yield considering the purchase price.

The numbers
 Property I II III IV
Purchase price $390k $250k $317k + 15k reno $331k
Current value $485k $320k $390k $380k
Loan $350k 250k $290k $260k
Rent $400 pw $335 pw $400 pw (to be expected) $350 pw


May 2021 portfolio update: Portfolio breakdown

The portfolio has grown by roughly 45k since last month. This was definitely due to the movement in the market but can also be attributed to the lack of available data I had access to last month. I’m sure throughout this year the numbers posted per property will be changing regularly as the market continues to propel forward. From a cash flow point of view, I have a couple of loans on Interest-only repayments. This means I am in a better cash position right now than I currently thought. Although, I am well aware I will need to keep into account when they move back to principle and interest further down the track.

The Numbers

Change since last month

Portfolio value

$1,575,000 + $45,000

Loan

$1,150,000

 $0

LVR 73.0%

– 2.1%

Rent (per week)

$1485

 $0

Repayments (per week)

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

– $1514

 $0

Cash-flow (p.a) – $1,485

+$3,447

 


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

portfolio growth

Month on Month change
Date Portfolio ($) Change (+/-) notes
May 2021 1.575m +45k
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,