RETURN ON INVESTMENT: Property VS Speed Cam
There are so many assets which you can invest your money on. Heck, even women bags such as Chanel or Hermes can be a good investment as some articles have reported how they have shown 10%+ ROI, especially on the classic models.
Last night I had a bit of free time and suddenly this thought came up: “Which one is doing better when it comes to ROI (Return on Investment), property or speed cam?”. Well, the short answer is, speed cam. And from the data that I have, it is returning at least 20-fold higher than property! Let’s check out some numbers.
According to CURTIN-MONASH ACCIDENT RESEARCH CENTRE 2012: Initial capital outlay for a speed-cam is $150,000. Then it said the following, “The annual certification cost is $10,000 per camera but is expected to halve after three years as a result of the Police negotiating a lower rate in the next tendering process. The annual cost of the manual test checks and data transmission was estimated as $5,700 per camera. Maintenance costs such as pole replacement and electrical upkeep were estimated to be $200 per camera per month”.
Based on the info above, let’s calculate the total cost of owning a single speed-cam for 5 years:
Initial: $150,000
Annual certification: ($10,000 * 3) + ($5,000 * 2) = $40,000
Annual manual test checks and data transmission: ($5,700 * 5) = $28,500
Annual maintenance costs: ($200 * 12 * 5) = $12,000
TOTAL OWNERSHIP COST FOR 5 YEARS: $230,500
TOTAL OWNERSHIP COST FOR 1 YEAR: ($230,500/5) = $46,100
Now…are you ready for this? According to WA Police website, as of September 2020, there are around 377 suburbs that have mobile speed cameras. Then there are around 80 red-light and fixed cameras. I’m not sure exactly how many mobile speed cams there are in each of the 377 suburbs. Let’s assume there is 1 speed cam per suburb, meaning, together with the fixed cameras, there are around 457 speed cameras in WA. Let’s round it up to 460.
So, for 460 cameras, total ownership cost is $46,100 * 460 = $21,205,000/year.
According to http://www.boostdrivertraining.com.au/, in 2015, WA earned $97,000,000 of speeding fines from its speed cameras.
This is a no brainer calculation. The annual ROI for running speed cameras all across WA is $97,000,000/$21,205,000 = 457%!
Let that sink in for a second….my best performing investment property is currently my meth house, returning 10.56%/year (gross) from the rent alone. And we know that property generally grows in value by 8-10%/year. Therefore, total growth for my best performing property is around 18.56%-20.56%/year. That’s 20-fold less than the speed-cam counterpart!
While speed cameras were not purchased by the government for revenue raising purpose (well, I hope not), from the business point-of-view it is actually an excellent investment!
How’s your investment property doing by the way? What’s the ROI you’re getting? If you’re looking to buy property in WA, you know who to call. Let’s chat property! Until next time and thanks for reading. Peace.
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