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Feasibility Case Study: Dual Key Investment in Caboolture QLD




Meet James and Olivia, a professional couple in their early 30s based in Melbourne. With strong dual incomes and no kids yet, they’re thinking ahead. While their peers are dipping into crypto or ETFs, James and Olivia are playing the long game — investing in real estate for steady cash flow and long-term capital growth. Their strategy? A high-yield, low-vacancy dual key property in Caboolture, Queensland.


Why Caboolture?


Caboolture, located in Moreton Bay just north of Brisbane, is riding a massive property growth wave. With a 10-year average capital growth of 9.5% and a razor-thin vacancy rate of 0.63%, it's become a magnet for savvy investors chasing both capital gains and reliable rental income.


The Investment: Dual Key Property


  • Property Type: Dual Key (two self-contained dwellings under one roof)

  • Lot Size: 607 m²

  • Total Floor Area: 240.79 m²

  • Pricing: Fixed Price, Full Turnkey

  • Purchase Price: $1,076,642

    • Land: $525,000

    • Construction: $551,642

  • Contract Type: 2-Part Contract

  • Expected Rent: $1,170/week (combined)

  • Gross Yield: 5.20%


This setup allows James and Olivia to rent out both sides of the property independently, maximizing their rental income.


Funding the Deal


They’re using 100% debt for the acquisition — a bold move, but it reflects their strong belief in leverage when the numbers make sense.


  • Land Loan: $525,000

  • Construction Loan: $551,642 (progressive drawdowns)

  • Total Loan: $1,095,642

  • Purchase Costs: $19,000 (stamped, legal, etc.)

  • Interest Rate: 5.75% (interest-only)

  • Land Holding: 3 months before build

  • Construction Period: 9 months


Expenses Breakdown (Annual)


  • Property Management: 6.6% of rent

  • Rates: $2,500

  • Maintenance: $1,000

  • Letting Fee: 2 weeks of rent/year

  • Vacancy Allowance: 1 week/year

  • Depreciation: $26,000 (declining 10% annually)


Cash Flow Analysis


Assuming a rent increase of 5% annually and expense growth of 2.5%, here’s how things play out over 10 years under two different scenarios:


Scenario 1: 100% Debt (Current Setup)


This approach carries higher interest costs but lets James and Olivia preserve capital.


  • Year 1 Net Cashflow: -$13,185

  • Year 1 After Tax Cashflow: -$3,565 (due to $9,620 tax refund from depreciation)

Over 10 years, the cash flow turns positive due to rising rents and tax offsets.


Scenario 2: 80% LVR


If they instead financed with a 20% deposit (~$215,328), their interest payments shrink significantly.


  • Year 1 Net Cashflow: +$289

  • Year 1 After Tax Cashflow: +$9,909

This scenario offers superior cash flow from day one, making it more attractive for investors prioritizing income.


Impact of Interest Rate Drop


What if interest rates drop by 0.75% post-construction?

  • New Rate: 5.00%

  • Annual Savings (100% debt): ~$8,217

  • Result: Transforms the first-year cash flow from negative to near-neutral — and significantly boosts every year thereafter.


10-Year Capital Growth


Even with conservative 7% annual capital growth (vs Caboolture’s historical 9.5%), the property value compounds powerfully:


  • Year 1: $1.15M

  • Year 5: $1.51M

  • Year 10: $2.11M


That’s a projected gain of over $1 million in equity — not accounting for debt paydown or future value-adding upgrades.


Conclusion: The Long Game Wins


For James and Olivia, this dual key investment in Caboolture isn’t just about rental yield — it’s a strategic move into a high-growth corridor. With vacancy rates under 1%, a booming population, and infrastructure improvements in the Moreton Bay region, they’re positioning themselves ahead of the curve.

By year three, their property starts generating positive cash flow. By year ten, they’ve potentially doubled their capital. Whether they stick with full leverage or switch to a more conservative 80% LVR structure, the numbers tell a clear story: this dual key setup is a wealth-building machine.

 
 
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