DUPLEX CASE STUDY: $100-140K ‘INSTANT EQUITY’!

Armidale duplex 2 [APP 460x300].JPGPROPERTY: Armidale, NSW

LOCATION, LOCATION, LOCATION

After thorough investigation, Armidale got the nod for this project. It had the best rental yields, and a consistent capital growth rate of nine percent during the previous 10 years.

As a regional hub with a busy local airport servicing the Gold Coast, Brisbane and Sydney, it had a major hospital upgrade planned. And the University of New England is a steady driver of accommodation for students and staff.

The block was on a street corner in a new housing estate. A corner duplex can have entrances on different streets, an attraction that raises rental and selling prices. As prominent property investor Steve McNight says, "success comes from doing things differently".

PLANNING & CONSTRUCTION

The next task was to get the Development Application (DA) approved. After a few minor hiccups, such as revising the floor plan to satisfy the council’s town planner, the go-ahead was given in June.

The builder then had to obtain the Construction Certificate (CC) before commencing, but this time was used to order the materials.

THE BOTTOM LINE

Land & Construction purchase price     $612000

Stamp Duty (payable on land only)            $4100

Other purchase costs                                 $13000

Holding costs during construction           $15000

NSW Stamp Duty rebate*                            $5000

Total costs                                                  $639100

* The NSW government currently offers a $5000 rebate on stamp duty with the purchase of a new property. In this case, stamp duty was only payable on the land component as the dwelling had not yet been constructed. 

INDEPENDENT VALUATIONS (after construction)

VALUATION #1

Unit 1                                                           $365000

Unit 2                                                           $375000

Total value                                                  $740000

‘Instant equity’                                            $100900

VALUATION #2

Unit 1                                                           $385,000

Unit 2                                                           $395,000

Total value                                                  $780,000

‘Instant equity’                                            $140,900

COMPLETION & FUTURE INVESTMENT

With strong tenant demand for quality properties in Armidale, both of the duplex units were rented almost immediately.The combined weekly rent was $820, producing a gross rental yield (820x52/612,000x100) of just under seven percent. Shortly after completion, the units were strata titled and valued by two independent valuers as separate lots. With the purchase and holding costs taken into account, Project Duplex achieved ‘instant equity’ between $100,000 and $140,000 – almost enough on its own to purchase two more properties!

 

Lloyd Edge holds real estate licences in NSW and Queensland and has a thorough knowledge of the Sydney and Brisbane property markets as well as key regional areas in both states. Although a fully qualified real estate agent, Lloyd only works on behalf of the buyer.

Book a free Aus Property Professionals one-on-one strategy meeting in your home or office, or by phone or Skype. Call 1800 1 INVEST (1800 146 837) or send us an email today!

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