Thoughts On Duplexes as an Investment Strategy

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Are Duplexes a good short term investment strategy? Can you build a duplex and flip it for a profit?

Transcription:

Alex 0:00
Hi, guys, my name is Alex from Melbourne Victoria. Today I’ve got a question for you regarding duplex or dual occupancy as an investment strategy. I’ve learned that there are probably experts out there offering this sort of strategy, usually in the LGA is that offer dual occupancy capabilities? And what I’ve seen is that usually it’s not in the most blue chip area in metropolitan area. So just want to know what your thoughts are on the pros and the cons of a duplex, especially for someone who are just starting out in acquisition phase, or maybe even for someone at a later stage on the consolidation phase is duplex is an advisable strategy? Thanks, guys.

Ryan 0:58
Alright, so there’s two kind of ways that we can answer this is like, the first is the surface question, which is what do you think about duplexes? And then the the kind of underlying thing is really, like, why is this person? Why is Alex considering duplexes in the first place? And the fact that people choose property? And like making money in the short term and stuff over like a long term strategy? So how do you want to tackle work, then?

Ben 1:33
That’s exactly what I was thinking when I was listening to the question. It’s not so much what do you think of duplexes? Or what do you think of making money in the short term at the expense of making money in the long term? Maybe conversation is really, what is your property investment strategy? What do you need in the short term to achieve your long term goals, and what you need in the long term that is going to shape your next decision, because I don’t have any preference around any property that I buy, all I am buying, this is the thing that I wish I could shake into the property world in Australia, what you are buying does not matter. What you are buying is a capital gain is an ability to add value, and a rental yield. So I’m looking for a 6% capital gain, I’m looking to make at least 10, or 20%, on the way in from buying Well, I’m looking to manufacture value through building or through renovating of at least 10 to 20%, over 10 years. And I’m looking if I’m going to hold something for cash flow, I want a six and a half to 7% yield. So if every single thing that I look at when I’m thinking about that has those things overlaid on the top, it leaves about 0.1% of the Australian Property industry that’s going to tick that box. And within the box that it’s been ticked, you know, there’s probably even, you know, let’s say, for example, that box can be ticked in Brisbane right now for me, you know, he might leave me with two or three suburbs that I’d actually focused my time and attention on, and very small pockets of the suburbs where it’s possible. So I think so much of the conversation unfortunately revolves around what I’m looking at buying right now, as opposed to how does what I’m thinking about doing now actually linked me to financial independence in the medium to longer term. And so I like duplexes if they make you money, but not at the eggs. I don’t like making 100 grand today, if it’s going to cost me $600,000 in capital growth, because it’s in a non blue chip chip area. I don’t like targeting duplexes if they’re not going to give me the cash flow requirement that I need. Or if I can’t add value to them over time. Or if it’s not in the metro marketplace, it’s going to get me the capital gain that I’m after. So they’re they’re the things that I think about, like it’s less about product, and more about what you actually need to achieve your goals.

Ryan 4:03
Yeah, and I think you can reword that question rather than what do you think about duplexes? It’s like, you could ask what do you think about property? As I what property do you mean? Like there’s so many different types of properties out there, and it’s the same, as Ben was saying with duplexes. He likes duplexes that making money, but he doesn’t like duplexes that don’t make money or that cost him money in the long term. And so, obviously, within the world of duplexes, there are great duplex opportunities, and there’s also really done duplex opportunities that you wouldn’t want to invest in. And so asking, what do you think about duplexes is too big of a question to answer, because each specific duplex opportunity is going to be different. And I think when someone is asking this question, it could be what do you think about duplexes? Or what do you think about this suburb and generally they haven’t taken the time to go back and think about it. okay what are you trying to achieve financially so rather than just jumping straight to the strategy think about okay what do you want for your life is probably going to replace your income how much income is that how quickly do you want to achieve it 15 years 20 years what is it and then what sort of investment vehicles do you need to achieve that and as ben was saying property is not it’s not about what type of property it’s about what the property achieves for you financially and so what do you need a property to achieve for you financially to get you towards your ultimate goal of financial freedom or whatever that goal may be so by turning it into a numbers question and by saying what do i want to achieve financially and what’s what steps do i need to take to get there and then what’s my first step like what’s the first property i need to buy that’ll help me buy property number two that’ll help me buy property number three like what does that first property need to look like and then you go out and look at the market and then you go out and research suburbs because like as ben said once you overlay all this criteria on top of your properties then it cancels out a whole bunch of the australian property market and really narrows your focus to buy something that has the best chance of moving you towards your financial goals

Ben 6:16
buying property is so simple like once you know what you’re looking for but if you don’t know what you’re looking for properties the hardest thing ever so i spoke to a lady last night that finds a beautiful property in st leonard’s in sydney like right on the harbor and she bought that property 10 years and she’s you know made a lot of money but she didn’t she was now looking at the brisbane market because that’s what she’d identified and she had this spreadsheet where she was comparing 50 suburbs against each other and she didn’t have a strategy for analyzing those suburbs and she didn’t know what she was targeting she was looking at units she was looking at houses she was looking at everything and i just i asked her some of the suburbs that she’s looking at and all of these suburbs the suburbs that have been in the media for three years like the other places that have grown in brisbane where 40 or 50% in three years as opposed to the neighboring suburbs sitting next to them that have grown by you know 12% in three years so

Ryan 7:19
i guess people need to get away from what is the best suburb to invest in full stop to what do i need to invest in to move me towards my goal because everyone like is so scared of missing out on like the best opportunity that they do nothing whereas really they can just say okay what do what do i need to move me towards my goal and maybe you won’t buy the best suburb possible and get the best growth possible but you’ll get enough growth and you’ll get the growth that you need to move you on to the next step towards your financial goal so it’s not about like the best suburb and locking that down because that’s all speculation but when you get to a point you’re like okay what do i need to move me towards my financial goal then it starts getting clearer and then you can have like more realistic expectations and look at the capital growth sort of stuff but if you’re just looking at well what’s the best suburb that you can possibly buy in ever full stop it’s just too hard for people so hopefully that’s there’s no

Ben 8:17
you know i would ever be able to find the best suburb to invest in there’s always going to be somewhere better but i’m not looking for the best suburb anymore i’m looking to make a little bit on the way in a little bit from what i purchased through some adding value and i’m looking for a property that can double in 15 years which really only means the property growing in value by 4.8 per 7% per year some years it’s going to grind by 20% some years it’s going to lose 20% and most of the time it’s just going to take away so you don’t have to beat the market averages you don’t have to do anything except know what you’re looking for know what that property is to you at that stage of your journey and then making sure that whatever you do buy has the potential to do what you need it to do and if it takes 20 years to double in value instead of 15 then it still doubled in value in 20 years but you know if it takes 10 years to do it then you’ve sped up your journey at the end of the day it is a long term approach to doing this stuff and too much of the conversation is around the things that don’t matter and not enough of the conversation is around the focus things that i add the most actual value

Ryan 9:24
yeah awesome so we’re going to close this up now guys sorry for those in chat who still have a couple of questions but we do need to go now unfortunately so thank you so much to everyone that tuned in i had a blast today i know ben did as well we always love doing these so thank you guys so much for tuning in thank you everyone for asking questions as well we really appreciate it yeah like it ben is a buyer’s agent so if you’re looking at purchasing a property in a good area a good property in a good area but you feel like you need someone to help you you don’t want to do it yourself or you want someone that you can trust then ben is offering free strategy sessions to you guys today so if you head over to onproperty com au forward slash session you can read about that free strategy session over there and if that sounds good to you then you can book a time with ben or one of his team to really talk through your where you’re at and what your goal is and help you get clear on that so again that’s onproperty com au forward slash session if you’re interested thanks ben so much for taking your time out to answer people’s questions i know it’s been really helpful to a lot of people yeah i think that’s it guys we’ll leave it there is there anything you want to say before signing off ben

Ben 10:43
no just thank you for everybody’s attention and time today it was great to catch up and thanks for the chat man it was really fun

Ryan 10:49
no worries alright guys until next time stay positive

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