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Cross street, Christchurch

Here’s a case study of a development I recently recommended to investors. It’s in Phillipstown, Christchurch.

Please note that this property is not currently available and has already been recommended to an investor. The statistics provided were accurate at that time, but may now be outdated.

#1 – Up to $90,000 cheaper than comparable properties

The first factor in property investment is assessing the price. "Is it a good price compared to other properties on the market?" This is crucial. 

The below analysis shows how Cross Street properties stack up against six similar developments in the area. 

The table shows that some properties are up to $90k more expensive than those on Cross Street. 

Additionally, Cross Street was the lowest-priced property and closest to the city, as shown in a map comparing the location and price of various properties.

#2 - Cross Street has a return on investment of 236%

Understanding cash flow and return on investment is vital for property investment.

Cashflow

Initially, the rent for Cross Street doesn't cover all ownership costs, requiring an investor's top-up, also known as negative gearing. 

The investor needs to top up the property by $375 a week while interest rates are high, averaging out to $151 over the period of negative cash flow. 

However, Cross Street had better cash flow compared to other new builds on the market, mainly due to its lower price but similar rental income potential.

Return on investment

We deep-dived into the numbers which revealed that for every dollar invested in Cross Street, an investor gets $2.36 back, compared to $2.14 for Tancred Street and $2.20 for Banks Ave. 

This financial modelling indicates that Cross Street is the better investment.

#3 – Additional benefits

Aside from the numbers, there are additional benefits to this development. 

Being nearly complete at the time of offer to investors is a significant advantage. 

New builds typically take 6-18 months to build, which comes with risks such as bank pre-approval expiration and potential changes in bank policies that could affect financing. 

Additionally, the value of a property can decrease during construction. However, with the Cross Street properties being almost complete, these risks are mitigated.

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Andrew Nicol

Managing Director, 20+ Years' Experience Investing In Property, Author & Host

Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.

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