How to create equity by re-titling a Duplex property…
Dual income property is fast becoming the investment of choice for savvy property investors and it’s easy to see why.
As the name suggests dual income properties produce two sources of income – typically via two separate leasable homes under the one roof and on one single title.
The are a number of benefits with dual income property: they produce much higher rental yields; are cash flow positive from day one; have lower rental vacancies; and generate much higher depreciation allowances [tax deductions] – just to name a few.
Combined with the right location, dual income properties make an ideal investment, providing both positive cash flow and capital growth!
While dual income properties come in many shapes, sizes and configurations, it’s the larger style ‘Duplexes’ which are the most sought after by investors.
In simple terms a Duplex is composed of two similar sized homes connected by a central common wall – often with a symmetrical façade and configured in a way to make it feel as though there are two distinct homes.
What makes a Duplex special is that it can be ‘subdivided’ [as known as ‘re-titled’] into two separate properties. The end result is usually a sizeable increase in the value of the individually titled properties, in addition to being able to sell each home separately.
From a numbers perspective, you can usually buy a brand-new Duplex on one title for around $100k less than the value of the two separately titled homes. So after taking into account re-titling costs of approximately $15K, it’s possible to end up with an instant equity gain of around $85K, or even more in some cases.
There’s currently a lot of demand for good quality affordable Duplexes, particularly those located in the growing region of South-East Queensland. Fortunately we’ve been able to get a temporary hold on the below deal – a large 3 + 3 Duplex located in the highly sought after and rapidly growing North Lakes area.
3+3 DUPLEX PROPERTY:
Lot 1, Eden Brae, North Lakes, Moreton Bay QLD
A fixed price turn-key dual income property located in the Eden Brae estate of North Lakes, Moreton Bay QLD.
This cash flow positive 3+3 Duplex [6br/4b/2c] comes on one title, and can be subdivided after settlement into two separately titled properties potentially giving you an instant equity uplift.
Here’s how the numbers look;
|House Price:||$394,930 [266 sqm]|
|Land Price:||$325,000 [600 sqm]|
|TOTAL PRICE:||$719,930 [includes titling fees]|
|Rent:||$800 – 860 pw [5.78 – 6.21% yield]|
|CASH FLOW:||+$259 pw* [$13,468 pa]|
|Titling Fees:||Included in purchase price|
|Property 1 Value:||$380,000 – $420,000|
|Property 2 Value:||$380,000 – $420,000|
|Total New Value:||$760,000 – $840,000|
|EQUITY UPLIFT:||$40,070 – $120,070|
|10 Yr IRR:||44.05% [pre-tax return on all money invested over 10 yrs]|
|1 Yr RETURN:||$40,070 – $120,070 [equity uplift] + $13,468 [rent] + $50,395 [capital growth?]|
*based on borrowing 90% of purchase costs at a rate of 4.25% with tax credits calculated using an annual income of $80,000.
This property is cash flow positive $259/week [$13,468 pa] in the first year.
In total, including projected capital growth, there is a potential to make ~$104K – 184K after just one year.
To purchase this property, you will need approximately $110-180K in available equity or cash [depending on your loan size]
South-East Queensland – showing the Northern Growth Corridor of Brisbane including North Lakes
North Lakes is situated within the Moreton Bay council in South-East Queensland [SEQ], ideally located between Brisbane and the Sunshine Coast.
North Lakes accommodates all three of the economic and research fundamentals that make a sustainable suburb – Population, Infrastructure and Employment.
The suburbs accessibility is about to be radically improved with the opening of the new $1.5 Billion Moreton Bay rail link which is anticipated to have a highly stimulatory effect on both dwelling demand and values.
North Lakes is also projected to record one of the highest rates of population growth in the Moreton Bay Region, with more than 13,700 new residents expected to call the area home over the next 10 years. It is estimated that a total of 6,600 new dwelling will be required to service the needs of this growing population
When completed the North Lakes area will employ over 13,000 people, thanks to major employers such as Costco, Bunnings and the recently completed $130 million Ikea store – the first in Australia to be integrated into a Westfield Shopping Centre.
Close to schools, sporting facilities, parklands, major shopping precincts and transport hubs, the Eden Brae estate is not one to miss.
Northern Corridor Outlook Report – click here
Eden Brae Website – click here
Ikea North Lakes News Article – click here
Property powerhouse John McGrath says there’s only one place in all of Australasia to be buying real estate right now – and that’s in South-East Queensland. To read why he and many other experts are so keen on SEQ click here
TAKING THE NEXT STEP…
We’ll provide you with all of the details you need to make an informed investment decision. This includes a detailed Property Investment Analysis [PIA] report, property brochure, site plan, inclusions list, a rental and sales appraisal from local real estate agents, area research reports and any other relevant supporting information.
To secure this property you will need to complete a simple Expression of Interest [EOI] form and pay a refundable holding deposit [usually $1,000]. Your offer is also subject to finance and is not binding should you not be able to get finance approval.
>> If you would like to enquire about this property please call Sam on 0411 431 391
Unlike other property groups out there we don’t develop and sell our own property, instead we go to great lengths to ensure the properties and areas we recommend have the greatest chance of out-performing the broader market. That’s why we avoid inner city apartments, projects where there are too many investors, and areas that are reliant upon one industry, such as mining towns.
Instead we’ve built up a strong network of developers and builders around Australia and work hard to find you the right type of property in carefully selected hotspots which display the core fundamentals of high employment, infrastructure spend and population growth.
We only work with reputable builders who get the job done, so build times are less than 180 days. The properties are also 100% turn-key and ready for tenants to immediately occupy – standard inclusions are; air-conditioning, blinds, security screens, full landscaping, fences, antennas and letterbox. All council fees and charges [soil test and engineering] are covered by the builder and you get a 12-month maintenance period [for any defects] and a 20-year structural guarantee. There’s no hidden costs, surprises or extras for you to organise. We can also help you find an excellent local property manager and arrange to have a full depreciation schedule completed at the end of the build.
Since the Sydney and Melbourne property markets have peaked, SEQ has been getting more attention in the media – so the word is getting out… What this means is overall there is less available stock and the uptake is fast, with many properties selling within a few weeks of being released. So if you are interested in any of the deals we send through please contact us immediately so we can put a temporary hold on them for you.
The above information and service is provided by Urbantech Property Pty Ltd [ABN: 65 127 477 490] trading as Real Investar. Real Investar is the provider of generalised property investment education and advice, not financial advice or credit advice.
Real Investar | Urbantech Group
PS. Why are we promoting property in SEQ? – we explain here