Recently completed duplex build yields great returns
This client came to Aus Property Professionals wanting to set themselves up for a comfortable retirement in the next 5 to 7 years. This was an ambitious goal given the timeframe, and would require a portfolio to be established quickly through equity creation rather than sitting and waiting for the capital growth of the market.
Strategy:
The strategy for this client was to gain significant profit in a short period of time to meet a 5-year goal of a comfortable retirement.
To achieve this, we would focus on development and renovation projects. The first would be a duplex build to create profits on the sale, followed by other renovation and developments within where the client would hold for the cash flow and pay down the debt.
Manufacturing equity is an excellent way to build a portfolio quickly, increasing serviceability, and not having to wait for the capital growth of the market to see your returns, the profits/equity can then be re-invested into the next project.
Location: NSW South Coast.
We were drawn to this particular eastern coastal town because we could see that the current market was undervalued with excellent potential for future growth.
The area was ideal due to:
- Vacancy rate for suburb below 0.5%, and for the region 0.26%
- Population over 30 000 with 18% rental population
- Average annual growth (10 year average) is about 7%
- 10 year rental trends were on a upwards trajectory
- Competitive rental market
- The Gross Regional Product for the area is $1.78 billion
- The Council has invested in an Active Transport Strategy to improve the transport infrastructure in the area.
- Multiple industries operating in the area and growth drivers in the area.
Land.
When sourcing land, we located a sloped block in the Southern NSW coastal town.
Having a sloped block (towards the street) meant that the units had elevated views in a quiet location, overlooking the ocean, but also close to amenities. The time to receive the development application was 5 months.
Cost of land: $405,000
Stamp duty and Government Fees: $13,290 (note: payable on land only)
Total: $418,290
