Investment Strategy At A Glance
- Purchase of a block of land for $235,000. The land size is 1214m2.
- Buy Land And Build 2 Duplexes
- We have negotiated a client rebate of $30,000 on the build for the duplexes.
- Subdivide 600m2 block and sell for profit
- Hold Duplex for 12 Months
- Sell one or both
- Immediate Equity Gain of $107,000
- No Capital Growth Factored In
- 5% Rent Return
Land Location
Aitkenvale vacant block – 1214 sqm
Investment Highlights
- Data and preliminary research show that Townsville is currently in its recovery phase but has much potential for growth in the near future
- Mardent ran a few investment scenarios and found out that you could generate a sum total of $107,765 in equity over a 12-month period by employing this strategy in this recovering market
- Based on our research, owners can expect a Rent Return of 5% from this opportunity, leveraging strong rental demand amidst dwindling housing supply in the area
Introduction – Townsville Duplexes
Located in Aitkenvale, Townsville, QLD, this rare gem consists of two duplexes that will go through two stages of development:
Stage One – Construct Two 3 Bed Duplexes and Strata Title them
Stage Two – Sub-divide 600m2 Block and sell off for $150,000 to $180,000
In this article, we’ll discuss how unique this property is, the reasons why we think it’s a great investment opportunity, and how you can walk away (cash positive) from this investment with over $107,000 in equity in 12 months.
The Metrics That Matter
High DSR Increase In Aitkenvale From 56 – 62
The DSR (Demand Supply Ratio) is among the most important metrics that every property investor needs to know about. It’s a comprehensive metric that uses several factors of a property market to come up with a number on a scale of 0-100 (higher is better).
As you may have read from our previous article the DSR score encompasses 8 indicators that help mitigate property investment risk:
- Days on market
- % vendor discount
- Gross rental yield
- Auction clearance rate
- Market cycle timing
- Vacancy rate
- % renters
- Online Search Interest (OSI)
Based on Mardent’s research, the DSR in Aitkenvale jumped from 56 in March to 62 in April.
Suggesting a growing market that has a very promising future, it’s the best time to invest when the rest of the market is still generally unaware of this uprising star.
Increasing Vacancy Rates And Strong Rental/Purchase Forecasted
A sign of the potential growth that this investment has is the notable decrease in the Vacancy Rate in Townsville, which currently stands at 2.4%
In addition, the recent precinct planned building of the North Queensland Stadium in Townsville is expected to bring new increased workforce for construction of said builds, which strengthens demand for home rentals in the area.
Natural causes like flooding has also caused skyrocketing prices for housing in the Townsville for “rapidly dwindling housing stock”, with forecasted increased rental demand for the next 15 months.
The Mardent Insight
Our research shows that the end rent is approximately $360 per side per week, with 5% yield on net purchase price not including the balance of land valuation ($150K+).
Investment Numbers Breakdown
- The total cost of the development is $767,235
- After selling the land in stage 2 for $160,000 ($155,000 net after agent fees), the new cost basis lowered to $612,235.
- The valuation of the duplexes comes out to $720,000, creating $107,765 in equity over a 12-month period
Bottom Line: Why We Think This Investment Is Gold
Assuming an end cost of $612,235 against the valuation of $720,000 and with a Gross Rent of $720 per week, this property will be Cash Flow Positive, and ready to be sold in 12-18 months for a profit of $86,165 less tax or $107K equity if held.
Note: We’ve attached a simple chart below to show you the specific breakdown of this unit. Click on the button below to get the full report.
| Stage One Build and Split | ||
|---|---|---|
| Buy Land | $235,000 | Build Two Duplexes |
| Stamp duties | $7,235 | 3 Bed |
| Plans | $5,000 | 2 Bathrooms |
| Construction Costs | $550,000 | |
| Less Cash Back | -$ 30,000 |
Rebate Negotiated by our Wholesale Property Partners |
| Total Cost | $767,235 | |
| Stage Two - Sell Land | $160,000 | Battle-axe Land of 600m2 to be Sold |
| Less Agents Fees | -$ 5,000 | |
| Net Proceeds | $155,000 | Used to pay down debt |
| Net Cost Ater Land Settlement | $612,235 | |
| Valuation of Duplex @ $360K per side | $720,000 | |
| Equity Gain | $107,765 | Gain if held |
| Sales Cost of Selling Duplex | -$ 21,600 | |
| Net Cash When Sold | $86,165 | Net Proceeds if sold |
Get The Mardent Report Below