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Feasibility Case Study: A Smart Dual Key Investment in Condon, Townsville

Updated: May 17

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When Emma, a single mum from North Queensland, set out to buy her first home, she knew she needed more than just a place to live. She needed a financial plan. The answer? A dual key property in Condon, Townsville. By living in the main residence and renting out the attached granny flat, Emma found a way to both secure a home for her and her young son and generate income to support her mortgage.


Why Condon?


Condon, a family-friendly suburb of Townsville, currently boasts an ultra-tight rental vacancy rate of just 0.1%, indicating strong rental demand. Riding the wave of Townsville's property boom, Condon has seen solid capital growth in recent years, making it a hot spot for owner-investors like Emma.


The Property


  • Type: Dual Key (3-bed home + 2-bed granny flat)

  • Total Floor Area: 215 m2

  • Lot Size: 375 m2

  • Price: $759,800 (Land: $239,900 + Build: $519,900)

  • Structure: Fixed Price, Full Turnkey, 2-Part Contract

  • Estimated Rent: $1,000/week (Emma earns $450/week from granny flat)

  • Gross Yield: 3.08%


Emma occupies the larger 3-bedroom dwelling with her son and leases the 2-bedroom granny flat for $450 per week. This rental income helps offset her mortgage repayments and enables her to live in the suburb she loves.


Financing Breakdown (80% LVR Scenario)


Emma secured her home with an 80% loan-to-value ratio, meaning she provided a 20% deposit and borrowed the remaining cost:


  • Loan: ~$607,840 (Principal & Interest @ 5.6%)

  • Deposit: ~$151,960

  • Purchase Costs: $12,000

  • Total Borrowed: ~$607,840


Construction Timeline


  • Land Holding: 3 months

  • Build Period: 9 months with 5 progressive drawdowns


Annual Expenses


  • Property Management: 6.6%

  • Council Rates: $2,500

  • Maintenance: $1,000

  • Letting Fee: 2 weeks rent/year

  • Vacancy: 1 week/year

  • Depreciation: $8,000 (declining over 10 years)


10-Year Assumptions


  • Rent increases by 5% annually

  • Expenses increase by 2.5% annually

  • Interest Rate: Fixed at 5.6% P&I

  • Capital Growth: 6% annually


10-Year Capital Growth Projection

Year

Property Value

1

$759,800

2

$805,388

3

$853,711

4

$904,933

5

$959,229

6

$1,016,783

7

$1,077,790

8

$1,142,457

9

$1,211,004

10

$1,283,664

Year 1 Financial Snapshot (80% LVR Scenario)


  • Loan: ~$607,840

  • Monthly Repayment: ~$3,763

  • Annual Loan Repayment: ~$45,156

  • Other Expenses: ~$9,644 (PM: $1,544, Rates: $2,500, Maintenance: $1,000, Letting: $900, Vacancy: $200, Misc: $3,500 buffer)

  • Total Outgoings: ~$54,800

  • Rental Income (Granny Flat): $23,400/year

  • Annual Shortfall Before Tax: ~$31,400

  • Weekly Shortfall: ~$604

 

Scenario: Interest Rate Drops to 4.6% Post-Construction


  • Monthly Repayment: ~$3,404

  • Annual Loan Repayment: ~$40,848

  • Total Outgoings: ~$50,492

  • Annual Shortfall Before Tax: ~$27,092

  • Weekly Shortfall: ~$521


The Verdict


Emma's strategy isn't just about owning a home—it's about making the numbers work. She is able to own her home and a built in investment for $54 per week more than the rent she would have paid to rent the same dwelling she will live in. Her dual key investment in Condon offers consistent rental income, long-term capital growth, and a pathway to financial independence. While the property is not cash flow positive from day one, the rental income from the granny flat significantly reduces her financial burden, especially when combined with tax benefits and property depreciation.


Dual key isn't just for investors. For anyone looking to offset costs while building equity, it could be the smartest way to buy in 2025.

 
 
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