The Trifecta Strategy
How a single investment can generate $200k in instant equity, plus monthly cashflow, plus growth
Despite Australia’s love of property, the number of Australian’s who actually invest is surprisingly low.
According to the ATO, only 16% of Australia’s own investment property. Of those investors, 71% only owned a single investment property.
So why is that the case? Well, the reason is quite often because of the type of investments people are choosing to make.
Going back to our investment property owners across the country, 76% of those properties are in-fact, negatively geared. Meaning they are costing the owners money to hold, every single month.
On the flip side, a mere 24% are positively geared. This means the owners are making more in rent then they pay in holding costs and property-related expenses.
Given that interest rates have officially fallen to 0.5%, this is really a staggering number of people who are losing money every single month, in a bid to try and eke out some capital gains at some point down the track.
With a largely negatively geared property portfolio, investors quickly reach a ‘glass ceiling’ where the bank will stop lending them any more money and they are stuck waiting for organic growth, while still being forced to pay interest each month.
By both identifying and creating positively geared property investments, award-winning Sydney Buyers Agent Lloyd Edge, was able to build a property portfolio to more than 16 properties, that is also able to generate a six-figure income each year.
“It’s what I call my property trifecta: instant equity plus cashflow and capital growth,” says Lloyd.
Lloyd encourages investors to focus on putting their money into properties that are going to generate income, rather than investing in properties that are negatively geared.
“Negative gearing will keep you in a job forever because you’re subsiding the mortgage through your income and waiting decades for capital growth,” he says.
“Just 10 years ago I was a full-time music teacher on less than $70,000 per annum, still paying off my first property – a negatively geared one-bedroom unit in Rockdale – when I realised I was never going to get that dream house if I kept doing what I was doing.”
Lloyd looked into ways to create a positive cash flow investment. He bought a high cashflow rental property in a mining town, which lost most of its value and tenants when the market bottomed out.
“I’ve never made that mistake again. Now I research the markets for high growth properties with good rental demand in areas with multiple stable economic drivers.”
“A cosmetic renovation can then boost the value of the property and the rental yield. Or you can find a dual income property that has a granny flat that you can rent out. And there are still properties available across the country that you can buy, subdivide and then sell-off the back yard or battle-axe. These properties can have a great cashflow injection to your portfolio.”
“But for me, the investment strategy that really skyrocketed my own property portfolio was when I discovered the power of building duplexes on vacant blocks of land.”
Micro developments = maximum investment appeal
Lloyd’s first duplex development was where the Trifecta of growth, cash flow and equity propelled him in a new direction and changed his life forever.
“When I built my first duplex and sub-divided it, the amount of equity I made was twice as much as what I was earning in a whole year from teaching.”
“This strategy boosted my lending power as well. I started to be able to do what became several properties a year just using equity. Manufacturing capital growth instead of waiting for capital growth organically.” “That means I was actually manufacturing growth regardless of what the market did. And thanks to this strategy, recently my wife and I were able to buy our dream house.”
Generating $240,000 in instant profit
When you build a duplex, you are effectively maximising the use of the land. Combined with building there is the ability to generate instant capital growth, by unlocking the full potential of the land.
Lloyd recently helped a Sydney couple with this exact strategy and was able to generate a very impressive $240,000 profit.
“The couple, a doctor and his wife had one Sydney property – their bustling family home. They wanted to start investing so they could retire early, so decided to build a duplex with me.”
“We managed the whole process for the time-poor couple. The development application (DA) and build went smoothly and we had the tenants lined up before completion and ready to move in.”
“The total cost of the duplex project was $650,000 and the duplex was actually valued at $890,000 straight after completion.”
“In less than 12 months from start to finish, the couple achieved an instant equity gain of $240,000 and positive cash flow from day one, with both units being leased at $420 per week each - $840 in total, which pays off their mortgage and then some.”
Lloyd says “The couple didn’t need to save another deposit to get a loan against that equity and do a second duplex project with me, this time in Brisbane.
Now, with a couple of duplexes under their belts in just a couple of years, the pair is moving quickly towards their goal of enjoying lifelong financial freedom.
“This is the power of being able to manufacture equity through a duplex development.”
The real power of Lloyd Edge’s Trifecta Strategy is that you’re able to manufacture instant equity and also hold both properties as they are earning you more money than you’re spending. By holding these properties over a long period of time, you’ll also be able to benefit from the ongoing capital growth.
And best of all, this is a process that you can rinse and repeat. By using Lloyd’s Trifecta Strategy you can very quickly accelerate your property portfolio and your income and before long you’ll find yourself in the 1% of Australians who hold more than 5 investment properties. And best of all those properties will be earning you an income in the process.
Where to start
It’s all about Strategy and goal setting, and Lloyd will be sharing more on that with API readers in the coming weeks.
Lloyd has also written a book about his strategies and process called Positively Geared, which you can order on his site auspropertyprofessionals.com.au. You’ll also receive a free eBook download: Duplex 101 - getting your development done within one year.