Not many people realise the results a small duplex project can deliver. We share with you another duplex project success story where our clients achieved over $220,000 in instant equity, where the total project cost was under $785,000.
Their Story
George & Sarah (not their real names) were both working full-time to make ends meet, earning enough money to just cover the bills and pay off their own home. With some equity built-up in their home, it was time to get smart and use this to create some further income.
They’ve been dreaming of having some extra cash to relax and go on a few holidays, as well as buying a few investment properties for their future – it was time for us to make their dreams come true.
When they came to us, we discussed a few different strategies and together decided that a duplex project will be the right strategy moving forward to help them achieve their goals. This will give them the quickest and largest return on their investment, in the shortest period of time.
By refinancing on their family home, George & Sarah were able to extract enough money to fund their duplex project which has been a life changing investment. Working closely with our client and their mortgage broker, we were able to ascertain their true borrowing capacity and this was crucial so that we could identify the most profitable duplex project within their budget.
The Location
Knowing the Newcastle property investment market very well, with some excellent results from our other duplex projects meant that we had real results to work with. The market was strong and growing, so we knew that it was the right time to continue building in this area.
We educated both George & Sarah on the Newcastle market and why we would choose this region for their duplex project. The educational facilities, planned infrastructure, rapidly growing market, low vacancy rates, population growth and so on, made this the ideal location to do a duplex project.
With high rental yields and the instant equity we knew this duplex project would create, meant that George & Sarah could hold on to these properties for the long-term as it would be positively geared.
Negotiations/Acquisition
Locating a suitable vacant block in the area was becoming more difficult to find. Property prices were rapidly increasing which meant vendors were either holding-off on selling their land or they were asking too much for them.
Not only did we have to find a vacant block, but we had to ensure a duplex project would be approved on it. After weeks of searching, we were able to locate an off-market parcel of land through a real estate agent we’ve previously worked with.
We were able to negotiate a reduced price on the land to save the vendor marketing fees. We then tendered out the build project to a few builders that have done work for us before (knowing their quality of work) and were able to get a great price with high quality inclusions.
The total project cost was under $785,000 including the land, build, subdivision/strata titling etc. The result was just over $220,000 instant equity in less than 12 months. With each unit returning $475 per week, meant that it was providing positive cash flow too. George & Sarah were able to book their holiday shortly after to enjoy some quality time together, before they started on their next duplex project.