Duplex investments prove doubly successful for young investor

A young mum focused on a property portfolio that will allow her to travel and secure her financial future has invested in a pair of duplex properties to kickstart her real estate journey.

Woman at her investment duplex.
Building industry issues complicated Ms Mills duplex development strategy but she overcame the hurdles. (Image source: Sarah Mills)

When Sarah Mills decided she needed to prioritise her own financial future a few years ago, she couldn’t have imagined the perseverance she would need to exhibit to achieve her goal.

Back then, in late 2020, the 35-year-old embarked on a duplex development in the Hunter region of New South Wales with the help of property investment experts that would wind up being one of the plethora of projects that was impacted by material and labour shortages during the pandemic. 

However, before the construction challenges were apparent, and courtesy of her diligently saving a large deposit over the years, she signed a contract on a second duplex in the same region a few months later.

“Both of my projects have had some significant increases in building prices between when I signed the contracts and when building commenced and I've also been hit with rising interest rates increasing my monthly loan repayments,” Ms Mills said.

“It has been hard to find the extra money, particularly when there’s no rental income coming in yet to help but I’m really fortunate I had a good buffer going into the projects, which has meant I could just cover the increases.

“I think that is really important – make sure you have a good buffer, and then add a bit more just to cover the unexpected.”

Sarah’s duplex investments

Suburb, NSW Land Build Total Current market value up to Current rental value per week
Thornton $278,000 $720,800 $998,800 $1.44 million $1,240 to $1,300
Farley $208,000 $620,800 $828,800 $1.30 million $1,140 to $1,180

Ms Mills said there was an agreed price at the time of signing the building contracts but only for a 12-month period.

“Due to delays in the land being registered – caused by a combination of Covid disruptions and extreme weather events – the 12-month period was exceeded, and the builder negotiated a price increase.

“While this was difficult for me to absorb, I was confident the builder was doing their best to minimise the price increase they passed over and I felt it was better to work together so everyone came out in front – rather than forcing builders into a position where they are losing money and collapsing, and then you’re left with a half-built house that’s going to cost you more than the original increase to finish.”

Ms Mills’ fortitude has paid off with the projects achieving capital growth of $441,000 and $471,000 respectively, plus weekly rental values of about $1,260 and $1,160 as well.

Her portfolio is now valued up to $2.7 million combined in the space for less than three years.

Michael Pell, Managing Director, Propell, said it was a challenging time for anyone involved in the construction of new dwellings over recent years, but small scale and infill development projects had bypassed the brunt of the fallout.

“The ability to take smaller projects through to successful completion was paramount for us throughout this period, which meant that we sometimes had to have difficult conversations with clients that we hadn’t really had to have before,” Michael says.

“But the projected value uplifts – even with some increasing build costs – was still significant given we were focusing on areas, such as the Hunter region, that had strong future capital growth potential.”

Duplex price growth excels

According to realestate.com.au, the median house price in the suburbs of Ms Mills’ two duplex developments have increased about 40 per cent and 60 per cent since she embarked on the projects.

Working in professional services, her desire to help create a better financial life for herself and her daughter was the prime motivating factor to undertake two duplexes simultaneously.

“I want to be able to provide my daughter with opportunities to access great education, to travel and see the world, and to feel financially secure,” she says.

“As a single parent, you do feel more pressure to set yourself up right, as there's no-one else to rely on.

“I think that's why it's really important to recognise what you do and don't know, and to get the right advice from experts who work in this area all the time to find the best investments and the right strategies.”

Ms Mills says that the fact that she is now the proud owner of not one, but two, duplex investment properties has made the challenges over the past few years more than worth it.   

“I definitely wouldn't have done a duplex development without assistance,” she says.

“My team spoke to me to understand what I wanted to achieve, timing, and budget and they came back and presented some house and land options, and one of those was a duplex in an area I wasn't really familiar with.

“The numbers all made sense – and looking at the data for the area, I could see the opportunity was there to make a strong capital gain, and to generate a good income stream.”

Renvesting a key strategic component

Growing up in a typical hard-working Brisbane family, money was always tight, family holidays modest and localised, and her first overseas trip was at 18 years old.

Watching her parents get by with no investments outside of superannuation, she was determined that passive income from property investment would help secure her future while allowing the privilege of travelling more widely.

Now living in Adelaide, Ms Mills has opted to rent her residence and invest elsewhere.

“I have always focused on saving, and have chosen to rentvest first to establish my portfolio – although I want to buy a home to live in soon, as the rental crisis makes me worried about finding another rental with a child and a dog,” she said.

I had no real experience in property – my first property purchase was a unit that I sold a few years later with no real capital growth.

“I just love looking at realestate.com.au and watching The Block but I was happy to recognise my lack of knowledge and work with an expert team who have the time to research the right areas, have relationships with wholesale builders, can suggest options, and all that comes with property investing wisely.”

Looking ahead, she has her sights set on building a living wage through property.

“My minimum goal is a $5 million portfolio with no debt, generating a net four per cent return, which would give a conservative after tax and expenses income of around $100,000, but I’m hoping to exceed that if I can.

“I also want a portfolio that I can pass on to my daughter to help set her up for success.”

Editor's note: Sarah's actual surname has not been used due to confidentiality sensitivities associated with her employment.

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