Comparison
Sydney, NSW, $1,600,000
Sydney has a population of around 4-5 million people. Liverpool is a blue-collar area in Sydney with steady employment.
Here is a typical block of apartments in Sydney Australia. It's in a working class area. These are basic living apartments in a reasonably good neighbourhood.
| Purchase Price | 1.6M |
| No Of Apartments | 8 |
| Price per apartment | $200,000 |
| Average Income per unit per month | $741 |
| Rental Income | $71,136 |
| Expenses | $19,348 |
| Net Operating Income | $51,778 |
| DownPay 25% | $400,000 |
| ROI | 3% |
| Interest Expense 7% | $84,000 |
| net LOSS | (32,222) |
| Cash on Cash LOSS | (5%) |
Ok so maybe 1.6M is asking too much for this property. In Sydney, however, 1.6M will get you about 8 apartments That's it.
Put in $400,000 now and around $32,000 a year for the next 7-10 years and then you might start making profit.
Recent research in the Sydney market shows that this is very typical of the asking price and consistent with market valuation.
In Sydney with this property and many others, there is no room for error! Fall in rents, vacancies and this property can only lose more money.
Detroit, Michigan
Metro-Detroit region is also about 4.5M residents so this is a comparable sized city to Sydney Australia.
| Purchase Price | 1.65M |
| No Of Apartments | 120 |
| Price per apartment | $13,750 |
| Average Income per unit per month | $564 |
| Rental Income (60% occupied) | $528,000 |
| Expenses | $264,000 |
| Net Operating Income | $264,000 |
| DownPay 25% | $400,000 |
| ROI | 16% |
| Interest Expense 7% | $84,000 |
| net Income | $184,000 |
| Cash on Cash Return | 46% |
In one month, this property makes more rental income than the Sydney property makes in one year.
Even if rents went down, there is still room to make money on this property right now. It also has significant upside potential, given that it is profitable with a 40% vacancy rate!
I don't know about you but I feel compelled to look seriously at the US market as a cash-flow generating source of passive income.