Overview
Investing in a dual key property can provide both strong rental income and capital appreciation. This case study explores the financial potential of purchasing a dual key property in Galloway Armidale with a purchase price of $730,000.
Property Details
Property Type: Dual Key
Configuration: 3+3 Bedrooms, 2+1 Bathrooms, 1 Garage
Total Floor Area: 148.0 m²
Lot Size: 557.0 m²
Land Price: $240,000
Land Registration Date: March 2025
Fixed Price - Full Turnkey
Financial Analysis
1. Rental Income and Yield
Estimated Weekly Rental: $930
Estimated Annual Rental Income: 930 * 52 = $48,360
Estimated Gross Yield: 6.62%
2. Estimated Annual Rental Costs
To determine the net rental income, we must account for estimated expenses:
Property Management Fees (8% of rental income): $3,869
Council Rates: $2,500
Insurance: $1,500
Maintenance & Repairs: $2,000
Vacancy Allowance (2 weeks rent loss): $1,860
Total Estimated Rental Costs: $11,729
3. Net Rental Income (First Year)
Net Rental Income = Total Rental Income - Total Rental Costs $48,360 - $11,729 = $36,631
4. Capital Growth Projection
The property is expected to appreciate at a 6% annual capital growth rate:
Property Value After 1 Year: $730,000 * 1.06 = $774,800
Equity Gain in First Year: $774,800 - $730,000 = $44,800
5. Loan Costs and Holding Costs
Loan Amount (80% of Purchase Price):
80% of $730,000 = $584,000
Interest Rate (Interest-Only Loan): 6.69%
Annual Interest Cost:
$584,000 * 6.69% = $39,090
Monthly Interest Cost: $39,090 / 12 = $3,257.50
Construction Holding Costs
Land Loan Interest (10 months at 6.69%):
Land Loan: $240,000
Monthly Interest: ($240,000 * 6.69%) / 12 = $1,338
Total for 10 months: $13,380
Build Loan Progress Payments (5-stage drawdown over 7 months):
Month 1: $98,000
Month 2: $196,000
Month 3: $294,000
Month 5: $392,000
Month 7: $490,000 (Full Amount)
Average Build Loan Interest (assuming progressive drawdown):
Approximate Average Loan Amount: $245,000
Monthly Interest: ($245,000 * 6.69%) / 12 = $1,366.38
Total Interest Over 7 Months: $9,565
Total Holding Cost (Land + Build Loan Interest): $13,380 + $9,565 = $22,945
Investment Summary
Initial Property Price: $730,000
Annual Net Rental Income: $36,631
First-Year Capital Growth: $44,800
Loan Interest Cost (First Year): $39,090
Construction Holding Costs: $22,945
Total First-Year Investment Return (Rental Income + Capital Growth - Interest Costs - Holding Costs): $36,631 + $44,800 - $39,090 - $22,945 = $19,396
5-Year Capital Growth Comparison
Conclusion
The Galloway Armidale Dual Key Property presents a compelling investment opportunity with:
Strong rental yield of 6.62%
Net rental income of $36,631 per year
Potential capital growth of $44,800 in the first year
Total projected first-year return of $19,396 after financing and holding costs
This dual key property is ideal for investors seeking cash flow and long-term capital growth. With fixed-price turnkey pricing, investors benefit from minimal upfront development risk while enjoying stable rental income and appreciating property value.