INVESTING
While this might sound too good to be true , it is possible with strategic investment opportunities like multi-lets , student housing , short-term rentals , and certain low-cost housing approaches . These strategies are designed to optimise the rental income , reduce expenses , and adapt to market demand more easily , increasing the likelihood of breaking even in the first year .
Break-even is very seldom achieved with a ‘ normal ’ property investment where you buy a rental property and rent it out to one tenant . Some of the reasons for this difficulty include the high initial costs , the dependence on market conditions , rental competition , lower rental income potential , and high tenant turnover .
What is break-even ? When you break even on a property , the rent you receive ( after the rental agency commission ) is equal to your monthly bond payment , the levies , and the rates and taxes . Having a property break-even is a huge milestone as an investor can own as many properties as possible without needing to subsidise the property every month .
Usually , it takes about four to six years for a property to break even , which often discourages investors , but there are ways to purchase a property and have it at the breakeven point from year one :
Find cash flow-positive properties Besides investing in properties like student housing , identifying cash flow-positive properties is a surefire way to break even within the first year . Focus on locations with high rental demand and growth potential or neighbourhoods close to these locations . You can also explore foreclosures , auctions , etc ., to find off-market properties at great prices .
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41 OCT / NOV 2023 Real Estate Investor Magazine