Tiny Houses, a Con­ser­va­tive In­vestors's Dream

Large Sav­ings for Ten­ants, In­vestors En­joy Dou­ble-Digit Re­turns

Virgin Australia Voyeur - - LESSONS EARNT -

Ian Ugarte: "It sounds too good to be true. But there's a starv­ing crowd for smaller homes, and very few who are fill­ing the need." This tiny house was built as part of a Gov­ern­ment Ad­vo­cacy role for the sum of just 518,569 to prove the Hous­ing Af­ford­abil­ity prob­lem could be fixed. In­vestors are cur­rently gen­er­at­ing un­heard of dou­ble-digit cash­flow re­turns of 10 to 12% (in­stead of 4.5 to 5%) by help­ing to solve this prob­lem.

When Syd­ney 'sneezes', the rest of die coun­try of­ten catches a cold —and prices in pre­mium sub­urbs from Chatswood, North Bondi and Balmain have dropped sharply over re­cent months, leav­ing many Aus­tralian in­vestors con­cerned. Adding fuel to the fire, the big four banks are ex­pect­ing to raise rates by an aver­age of 8 ba­sis points, and data from the 2016 cen­sus sug­gests rent is al­ready at the peak of what we can af­ford with 1.55 mil­lion now deal­ing with hous­ing stress. Af­ford­able hous­ing ex­pert, Ian Ugarte, sees this as an op­por­tu­nity rather than a prob­lem. "By build­ing small, we're see­ing 10 to 12 per­cent in­stead of 4.5 to 5 per­cent yields, be­cause this is what the mar­ket wants," he says. De­bra and Jamie ap­plied the strat­egy in Bris­bane. Build­ing a tra­di­tional prop­erty would have meant they would have lost $15,000 a year, based on the mar­ket con­di­tions. In­stead, they achieved a $35,000 per an­num pos­i­tive cash-flow — a $1000 a week dif­fer­ence. Ke­iron at­tempted it with a 4-bed­room house he owned. In 2016, he was col­lect­ing $620 per week - by 2017 he had in­creased the rental re­turns to $1,270. 'Af­ter costs, it gave me an ex­tra $14,820 per year," he says. In­ter­est­ingly, these high cash­flow prop­er­ties are not just based in the coun­try, de­fy­ing the con­ven­tional logic that to gen­er­ate cash­flow you can't buy in a cap­i­tal city. The "Small is the New Big" works on a dif­fer­ent set of logic. One house re­ceived an of­fer for $930,000 while a sim­i­lar prop­erty next door sold for just $780,000. "It sounds too good to be true," states Ugarte, who left paid em­ploy­ment within 13 months. "But there's a starv­ing crowd for smaller homes, and very few who are fill­ing the need." It's hard to ar­gue with his logic. Not only has the num­ber of women over 50 find­ing them­selves home­less (liv­ing in cars or couch surfing) dou­bled over the past four years, there's been a 100% in­crease in sin­gle adults oc­cu­py­ing pub­lic hous­ing over the past decade. While many ar­gue against the con­cept of smaller homes, 1.55 mil­lion Aus­tralians are cur­rently deal­ing with hous­ing stress. And it's for one rea­son, ac­cord­ing to Ugarte. "We build our prop­er­ties too big," he says. "22 Hong Kong homes can ac­tu­ally fit in­side the aver­age Aus­tralian home." Ten­ants aren't com­plain­ing. Ac­cord­ing to Cas­sidy and Mathew, a young cou­ple from Mel­bourne: "We would def­i­nitely rec­om­mend this type of liv­ing to any­one who's af­ter some­thing that's af­ford­able to them and still al­lows them to be so­cial and live the life­style they want to live." Ugarte is com­mit­ted to de­vel­op­ing a new prop­erty model where every­one wins by help­ing fill the 12 mil­lion empty bed­rooms in Aus­tralia, and build­ing a sense of com­mu­nity "It's frus­trat­ing to see de­vel­op­ers push­ing the old cookie-cut­ter par­a­digm of 4-bed­room, 2-bath­room homes as the ideal. There are 70-year-olds ev­ery­where liv­ing on $399 a week, yet the cheap­est rent they can find is $300," he says. He's on a mis­sion to do what no­body else in the coun­try is do­ing and move peo­ple from de­spair, in­se­cu­rity and fear to­wards hope, con­fi­dence and cer­tainty by help­ing in­vestors sup­ply af­ford­able hous­ing to over one mil­lion ev­ery­day Aussies strug­gling to pay their bills due to soar­ing rents. To dis­cover why neg­a­tive gear­ing is doomed, how you can get higher rental re­turns and cap­i­tal gain, re­place your in­come, boost rental yields and even turn a neg­a­tively geared cash-burn­ing prop­erty into pos­i­tive cash­flow, join Ian at one of his up­com­ing Prop­erty In­come Ac­cel­er­a­tor live events be­ing held in NSW, Vic­to­ria, WA, QLD, SA and Tas­ma­nia. Vir­gin Aus­tralia Voyeur read­ers can reg­is­ter for a free ticket at: www.new­prop­er­tytrend.com.au

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.