A Million Dollars in 5 Years. The Perfect Beachside Gem (That Everyone Else Overlooked)
Finding the perfect investment property : the one that delivers BOTH capital growth and rental return is the needle in the haystack. Here’s how to find those hidden gems.
How we found the perfect beachside property that made a million dollars in under 5 years. An investment property that delivers BOTH capital growth and rental return is the needle in the haystack almost every investor is looking for but rarely happens to find. Surprisingly, I seem to find these gems more often than not and on this particular Monday, it was my lucky day.
Transforming 1960’s flats into an income / capital growth machine.
In 2019 I was scrolling online property sites for what felt like the millionth time since Ben and I made the decision to continue expansion of our property portfolio.
Noosa, Caloundra, Perigian and Mooloolaba properties loaded my feed and I happened to notice a listing I hadn’t previously seen.
It was your typical drone photo that caught my eye initially — showing off the proximity to the beach and what appeared to be an old house set toward the front of the lot. I clicked on the listing and soon realised that what I had originally thought to be a house was in fact, four flats.
Perfect I thought!
In a previous real estate life, my mentor at the time was all about having flats as investment properties. “You get the double whammy”, he would say. “The income plus the capital growth because you own the land.” And he was bang on right.
I booked an inspection, dragged Ben up to Dicky Beach in Caloundra on the Sunshine Coast where the property was located, and it wasn’t long before we had a written offer submitted to the agent.
Well, we bought it AND we paid Full Asking Price.
What??!!
I guess your first thoughts are running to — why on earth didn’t we try to negotiate down?
But here’s the thing about finding a great property…
You need to lock it down fast before someone else realises it’s a great property. I know this because I’ve witnessed all too often buyers miss out on the perfect property because they played too many negotiation games or took too long to make a decision and pull the trigger on a strong offer.
Acting fast made us a million dollars.
I could see the potential that others clearly couldn’t and thankfully I did, because just 5 year’s later, it’s worth more than $2M and has doubled in value.
We secured the property for $1.2M in late 2019, just before the Sunshine Coast property market made a significant upward shift. You might even call it a boom. The covid boom.
Over the past 5 years, Ben and I have been slowly renovating each of the flats.
We focus on cost-effective cosmetic renovations that lift the appeal of the property and increase the rental return and tenant demand. I like to think of the term “bang for buck” when I’m renovating property. What can I do that will create a big impact (and possible value-add) without the hefty price tag.
Taking out walls to let the light in and open the living space.
THE RENOVATION TIMELINE.
Step 1 - remove asbestos and take out the internal wall to open up the living room.
Step 2 - fresh paint throughout.
Step 3 - new floors or (in some instances we were able to keep the original polished floorboards).
Step 4 - minor bathroom reno - new vanity, mirror, tiles and shower curtain to add some flair.
Step 5 - new lighting throughout - Freedom or Bunnings lights purchased on sale are the best.
Step 6 - fresh white curtains - blockout for the bedrooms and sheer curtains everywhere else to add that "beachy vibe". (They're also the most inexpensive curtains at just $20 a set!)
THE COST.
All up, each flat renovation cost around $10 - 12K.
We also painted the entire outside of the property in a lightish blue and I added some funky coloured letterboxes to jazz up the street appeal. (I have this thing about cool letterboxes!)
This also cost around $10K at the time.
A fresh coat of paint and the property is transformed from ugly duckling to funky beach shack.
THE RESULT.
In 5 years, the value of the property has risen by over a million dollars (according to CoreLogic and RP Data values) and the cosmetic improvements have seen the rental return double from where it originally was.
I have to say, out of our entire property portfolio, this would be our best performing investment.
When you look at the capital growth it’s achieved plus the rental return, we are definitely getting that double whammy my mentor was referring to. And this is why I can never understand why people want to haggle with price when they’re negotiating and risk losing a great property over a few thousand dollars.
What is $20K or even $50K in the scheme of things if the investment has the potential to outperform these figures ten fold?
And don’t get me started on buying a Dream Home.
If you love it, buy it. Don’t mess around trying to get tricky when your future is on the line!
Yes, we all want to do our best to secure properties for as least as possible (and my ebook Negotiate Like A Boss teaches you how to do this), but all in all, I’ve never had a client come back to me feeling angry we’d overpaid for the right property. You forget what you paid the moment you move the furniture in and crack that first glass of bubbles.
So, why THIS property?
Well firstly, I’m a believer in seeing potential. Others call it – upside. I can see past the dirty floors and messy occupants. I can see beyond the decrepit looking external and tired features. If the building is structurally safe and can be saved with a coat of paint and some minor renovations, the upside can be exponential. These types of value-add properties have always peaked my interest because I know there is an equity gain to be made if you’re smart about it.
But first and foremost - it's all about the right location.
Location is key and the number one thing you should prioritise if you’re buying an investment property for capital growth.
I knew this property would outperform because it was so close to the beach – just one street away.
Here’s what I look for in an outperforming property.
My eyes are peeled for an X Factor of some sort. I look for certain street pockets that present well and have a good vibe.
For example, I’ve named the pocket we’re in “the golden triangle”, because if you see it on the map, the streets that are on the “beach” side of the main road form a triangle and it is here that residents and home owners are knocking down and rebuilding mansions, or they’re doing up their homes via renovations. Many of these properties enjoy a water view (whether direct or obstructed), but it’s a no-brainer that properties located within a walk to the beach are always in high demand.
A house around the corner from us with direct beach access has a circa $10M value and a block of land recently sold for $6M just opposite our street. These are the pockets you look for – and then you buy the worst house (or block of flats) in the street. The idea is that over time, the other higher valued properties will pull yours up, just like it has done in our case.
Other X-Factors could be - city views, close to a popular entertaining precinct, within a good school catchment, or a property where there is something that is just so unique that it can't be replicated easily.
Need help selecting your perfect property?
Book a 1:1 Property Mentoring Session with me and I can help you map out a game plan for your next purchase.
MEET THE WRITER
Wendy Russell is an independent buyer’s advocate, investor and self-made businesswoman with a knack for spotting a great property.
