The best advice you’ll ever get on investing in apartments

investing in apartments

Smart real estate investing is a superpower. Master it and you can have an income to live off for life and enough capital growth to secure your financial future. Learn about investing in apartments for financial freedom in just 10 minutes with out top 8 investing tips.

Let’s hit it!

investing in apartments


  1. Living off rental income
  2. What to avoid in an investment property
  3. The problem with negative gearing
  4. How to quickly identify a cashflow positive property
  5. Our top tips for investing in apartments to live off the income
  6. The best advise you’ll ever get on investing in apartments – summary

Living off your rental income

Living off rental income is part of the property investing holy trinity.

It’s when your rent covers all of your costs to hold the property, and then some. In investing terms, this kind of property is known as ‘cashflow positive’. Once your investment is cashflow positive, you get money in your pocket each month. Money you don’t have to earn from a day job. Huzzah!

There are a lot of moving parts to this equation playing out, on both the expense and the income side of your investment.

Firstly, let’s examine your holding costs. Many folks make the mistake of thinking it’s just your mortgage. Without a doubt your mortgage will likely be your largest cost and the biggest determinant of whether a property is cashflow positive. But remember, holding costs also include rental agent fees, city taxes or rates, accounting costs, fixed water supply charges (in Oz), tax accounting costs, advertising costs, vacancy allowances, and repairs and maintenance!

The last three on that list can be a cashflow killer if you haven’t factored them in.

On the income side the most important factor for cashflow is your ability to maximise rent, often by going above and beyond what the average investor is willing to do, or does.

What to avoid in an investment property

The opposite of ‘cashflow positive’ property is ‘negatively geared’ property. Negative gearing is a fancy term to try to make it sound strategic for your property investments to take money out of your pocket each year. You are ‘negatively geared’ when your property produces a loss which can then be used to offset your income tax at the end of the year (producing a tax saving).

Negative gearing may reduce your income tax bill, but that saving is premised on you making a loss on your cashflow at the end of the year! So the question is: why o why would you buy and hold an asset to lose money on it each year? Let’s look at why people buy negatively geared property.

1. Capital gains

The main argument for negative gearing is that the value of the property will grow more than your loss to operate it each year, leaving you net better off. Here’s a demonstration:

Single story home mortgaged at 80% LVR
Cost to purchase (excl. stamp duty & other fees)$500,000
Median annual growth (5 years)$20,000 (4% / yr)
Rental income$18,720
Mortgage costs (3.85%)$22,512
Agent fees (8.5%)$1591
Total operating cost per year$31,303
Owner’s cost to hold-$12,583
Tax deductions on loss (@ 37% tax rate)$4655
Total operating loss-$7928
Total return after capital gains$12,072 ((-$7928 + $20,000)

You can see in this example that he owner is $12,072 better off at the end of the year if the property grows by its 4% historical growth. This is after costing $12,583 out of pocket to hold the property over that time. That’s a BIG IF in our view and there are much smarter ways to invest in property & build a property portfolio.

2. Time in the market

The second reason people buy negatively geared property is because they believe by paying down the mortgage and increasing rents, the property will become cashflow positive over time. Over 40% of Australian investment properties are said to be paying their owners an income after holding costs.

But if you dig deeper, many of these properties have been held for at least a few years, most for more than 5. The investments have become positive cashflow over time.

For their first years of ownership however, the vast majority of Australian investment properties are negatively geared and actually cost their owners money! And a lot of first time investors can come unstuck in this period, especially if their personal income, rental income or mortgage situation changes!

3. Depreciation

Depreciation is an additional tax deduction on building, fittings and fixtures. Depending on the age and condition of your property, depreciation gains can be significant (but generally decline over time). For example, one year we received around $5000 in depreciation benefits on a 1970s brick and tile property we held until recently. To claim depreciation benefits, you need to engage a professional to do a deprecation report. Not all properties are eligible for benefits.

Deprecation lowers your taxable income, so it further reduces operating losses in negatively geared properties. In some cases, depreciation benefits can turn a negatively geared property into a positively geared property. This can happen if your depreciation benefit is > cost to hold – other tax deductions.

In the example above, if your depreciation is > $7928 (-$12,583 + $4655) then the property would be ‘positively geared’ at the end of the year.

In this example, you will have money in your pocket at the end of the year after tax. You will still be out of pocket during the year to hold the property. One problem with depreciation as a strategy is that you don’t know what your deductions are at the time you buy the property (unless you fork out for a report).

The problem with negative gearing

Where to start! We’re not fans of negative gearing as an investment strategy for so many reasons. Here are some of the biggest:

  1. The out of pocket cost. Can you afford $12,000 out of pocket ($1000 per month) to hold an investment property during the year? A lot of families trying to get ahead just can’t.
  2. The risk. Your losses can blow out easily – particularly if rents decline, vacancy rates increase or mortgage interest rates go up.
  3. It’s reliant on historic property market trends. Ever heard the line ‘past performance is not an indicator of future growth’? What if your investment doesn’t grow by 4% per year over the time you hold it?
  4. It’s harder to grow an investment property portfolio. Losing cash each year will impact your ability to service additional loans, if you want to add to your investment portfolio.
  5. There are smarter ways to invest in property!

How to quickly identify a cashflow positive property

Cashflow is important in property investing because it helps you hold the property without stress, minimise financial risk, and grow your portfolio. If you’re aiming for financial freedom, a positive cashflow property or two can be a game changer and speed up the time it takes to get your financial freedom.

But how do you quickly identify whether an investment will be cashflow positive?

In Oz, we apply what we call ‘the 10% rule.’ You can apply the 10% rule to a property’s gross rental yield when you’re out looking for your next investment. But it is just a rule of thumb. It’s always best to use it that way and do full due diligence before you invest.

As you do your research, what you will find as you scour through real estate ads and data, is that very few areas (at least on Oz) have rental properties returning a gross yield of 10%!

And this is exactly where apartments come in!

Why invest in apartments?

Firstly, we’re not talking about investing in just any old kind of apartments. We’re talking a specific type of apartment, in certain areas with certain features. If you follow our tips, investing in apartments can definitely be cashflow positive and pay you at the end of each month. They can also appreciate in value and provide options to take equity out of your investment over time.

We know all of this because we invest in these types of apartments and live off the income.

So lets get to the juicy bit 🙂

Our top tips for investing in apartments to live off the income

We’re about to run through the type of apartment investment that we hold and that pays us an income each month Before we start – this is not a straight forward or a passive investment strategy. If it was easy, everyone would be doing it….

So here’s our best advice you’ll get on investing in apartments:

  1. Buy multiple apartments on a single title
  2. Go regional
  3. Buy ‘walk-up’ apartments
  4. Buy brick or cement
  5. Find a cosmetic renovator
  6. Buy occupied apartments under market rent
  7. Supercharge your income
  8. Buy in a trust with a company trustee

Now let’s break down what exactly we do and have learned from experience:

1. Buy multiple apartments on a single title

This is critical, so we’ve made it number 1 on the list.

Buy multiple apartments on a single title, ideally on one registered parcel of land (or Lot). We’re talking about investing in a Duplex, a Triplex or Fourplex. Buying multiple apartments on a single title increases your rental and value add opportunities. We’ll get into this further below. It also lowers your buying and holding costs compared to buying single or multiple apartments, each on their own title.

We recommend stopping at four apartments. Anything over four apartments and you start entering the realms of commercial lending (at least in Australia), which can complicate the loan process and make loan criteria harder to meet.

Four key benefits of a single title apartment block

  1. It’s cheaper to buy – buying multiple apartments on a single title incurs lower buying costs than a block of separately titled apartments. Since buying costs such as title registration, mortgage insurance and stamp duty are all attached to property title, you pay these fees once for multiple properties. Buying multiple apartments on a single title can save tens of thousands of dollars in the buying process.
  2. It’s cheaper to hold – expenses such as water bills and council rates (city taxes) are much lower with a single title apartment block. Rates are attached to land parcels (lots) in Australia. A block of units on a single title over one lot attracts much lower council rates each year. You also pay less in fixed water charges, which landlords foot the bill for here in Oz. Multiple titles equals multiple water connection points, each with a separate water bill.
  3. Multiple rental streams – high vacancy rates can kill a good property investment dead in the water. Dual income properties help you manage this risk through diversified income streams. When one is vacant, you have rent from the other and so on.
  4. House hack and live for free: You could even live in one apartment and have tenants pay your mortgage. A $500,000 duplex with $400,000 loan gets you $1213/month rent. Your principle and interest repayments are $1876/month. Your rent is $153/week! You’d need to be onsite manager to realise this outcome but it’s doable.
  5. Subdivide – You can subdivide the right duplex, triplex or Fourplex. Subdividing is the process of putting each apartment on a single title (often called ‘strata title’). This allows you to sell one or all apartments separately if you want to. Why would you do this? Firstly, to increase a valuation on your investment. Three separately titled apartments will often reach a higher book valuation than a triplex on a single title. A higher valuation allows you to draw equity and keep investing…. Secondly, to access capital from your investment. If each apartment is on a separate title you can sell one or two apartments and take some cash off the table.

Note, there are certain features a property must have if want to subdivide in the future for a profit. But that’s a whole different article right there 🙂

Together, these 5 factors increase your potential for positive cashflow, organic growth and manufactured value – the property investing ‘holy trinity’.

2. Go regional

Property markets have experienced some pretty wild growth in 2020 and 2021. If you’re looking for an investment property right now, it’s highly likely that Duplex, Triplex or Fourplex apartments in tier one cities are out of reach. Unless you have a cool $1.5M…

The good news is, people still need a place to live in regional areas! Regional areas offer a lower buy in price for these types of properties. A LOT lower! You can still pick up Dduplex or Triplex in regional areas with sound local economies for around $650,000.

Add to that new remote working trends, and you may find that rents in regional locations are on the rise and are even outpacing city rental increases in some areas.

All of this bodes well for your chances of getting into the duplex or triplex market and of achieving a decent rent. In our view, regional areas with diverse and growing economies are great markets for investing in apartments as unit blocks.

3. Buy ‘walk-up’ apartments

A lot of folks were turned off apartment living during the pandemic. Apartments with shared lifts, facilities and common spaces definitely had a stink about them. People wanted distance from their neighbours. This is where ‘walk up’ apartments come in. A ‘walk up’ apartment is an apartment accessed by stairs or located the ground floor, with its own private entrance and facilities. This means they work for social distancing – ‘pandemic proof’ in a sense.

Walk up apartments were mostly built in the 70s in Australia, at a time when there was just more ‘space’ around and less people. They’re often larger internally than contemporary apartments. Updated walk up apartments can be appealing to renters for this reason.

Look for walk up apartments with minimal common areas. Individual rather than shared laundries, parking and outdoor areas is what you’re after.

4. Buy brick or cement

Earlier we mentioned that maintenance and repairs can blow out to your costs to hold a property. Multi-unit properties can exacerbate this as there are more kitchens and bathrooms, which is where the bulk of maintenance and repairs occur. So when you’re looking to buy, opportunities to reduce maintenance and repair bills are the same as money in your pocket.

One way to lower these costs is buy brick veneer properties instead of timber buildings, which require far more maintenance for wood rot, painting etc. Brick buildings typically require less up keep, making it easier to cashflow the property. You’ll also have a greater chance of retaining tenants with brick construction because shared timber walls can make for very noisy living.

5. Find a cosmetic renovator

Cosmetic renovations involve simple upgrades like cleaning, paint, flooring, window furnishings and tidying or landscaping gardens. Cosmetic renos are a great way to add value to an investment property for relatively cheap. They can also lead to higher rents and better cashflow.

When you renovate a Duplex or Triplex, there can be economies of scale in the renovation cost as well as a multiplier affect on rental increases. Win win for both value and cashflow! Just remember you need to have some extra money left in the bank for renovations after buying the property! Also, talk to your account about the timing of your renovation before you buy. According to Upside Accounting you need to be really careful what work you do to a property in the first 12 months of owning it as ‘initial repairs’ are not tax deductible!

6. Buy occupied apartments under market rent

You have to do some market research to get this tip right, but it can be worth it. What we’ve observed is that some landlords are reticent to raise rents on long term tenants that ‘look after the place’. We’ve also found that somewhat dated properties can also be rented at below market rates.

These are exactly the kind of duplexes or triplexes we love! You’re looking for an opportunity to raise rents significantly, without spending a lot extra to do so.

Tips 5 and 6 go hand in hand many times, and can turn a borderline investment into a cashflow positive one. Something to note is that you may need to move existing tenants on for this strategy. Firstly, to renovate. Secondly, because in many states there are limits to rent increases at lease renewal. These limits don’t apply to new tenants and leases. Instead, you’re free to find a new tenant and set your rent at or above market rates.

7. Supercharge your rental income

Renters will pay more rent for certain amenities. Understanding what these are, and the mark-up for them in your area, presents opportunities to supercharge your rental income. Examples include providing furnished rentals, renting to students by the room, or installing amenities like air-conditioning. You might also consider opportunities for short term rental accommodation, which for us has been the ultimate supercharge strategy and helped us get to financial freedom!

8. Buy in a trust with a company trustee

This is a no brainer if you want to build a property portfolio, protect yourself legally, and minimise tax. A properly structured trust with company trustee can help lower your tax bill significantly, protect you from legal liability, and help with estate planning if you want to transfer asset ownership among family members. Be warned, you will need to lodge separate tax returns for the trust. This will cost extra in accounting fees, which you should also add to the cost of holding the property!

For us, the tax advantages of using these vehicles have produced at least a 10x return on our accounting costs… Wooorrth iiiit!

The best advise you’ll ever get on investing in apartments – a summary

To recap, if you want to live off rental income then investing in apartments may be the strategy for you. But you’re not looking for just any apartments. You’re looking for multiple ‘walk up’ apartments on a single title and lot, located in regional areas. Properties that are: brick construction, in need of cosmetic update, and currently rented below market rates. You’ll need to have some money on the side to update the property and the gumption to move long term tenants on as part of this strategy. Oh, and don’t forget to buy in a trust and look for every opportunity available to supercharge the rent!

Always do your own research into the local rental market and economy. Always crunch the numbers before you buy!

We own a triplex in our investment portfolio and live off the income it provides. It’s almost doubled in value in 10 years and we still have the option to subdivide with pretty minimal cost if we want to sell.

This is active investing but if you want above average results, you can’t just do what the average investor does (buy negatively geared property).

We genuinely feel we’ve that this is some of the best information about investing in apartments on the internet. We hope it helps you on your investing journey to financial freedom! If you feel the same, you can help us out by sharing it around. Oh, and happy hunting!

Until next time financial freedom seekers – have fun, be happy, do good!

We bought a new home with cash!

We bought a new home with cash

Here’s the first of our updates on our personal assets, income and savings. Our big news for July? We bought a new home with cash!

So here we are in July 2021…we’ve pulled it off!

When we decided to sell up in Brisbane move to Tasmania in mid 2020 we had one thing on our mind. Financial freedom. We cooked up a plan during the lockdowns of 2020 to pimp our home with some clever DIY renovations and sell up. Our aim was to take our profit and our savings and buy a house for cash.

It’s a strategy called geo-arbitrage and you can use it to bring forward your financial freedom date, just like we have.

We worked out that Tasmania was a viable option for us to pull off some crafty geo-arbitrage. Tassie also provided the sustainable living, self-reliant lifestyle we were after. We wanted no neighbours, a spectacular view and some room to grow food. Most of all, we wanted to lower our living costs.

After three months of careful searching, we’ve pulled it off!

Views to the mountains over our back fence

How geographic arbitrage smashed our housing costs

In many cases homes are not assets (an asset puts money in your pocket at the end of the month). This is generally dependent on the type and cost of housing. When we moved to Tasmania we wanted to buy a home that we could count as an asset. Let me explain how we’ve found exactly that.

Our cost of housing in Tasmania will be around $3500 per year.

Here’s the breakdown.

Typical housing costsOur new home
Mortgage$0 – owned outright
Water$0 – two tanks and pumped creek water
Sewage$0 – Septic
Grey water$0 – pumped grey water system
Power$1900 – grid but soon to have solar PV
Heat / cooling$800 – daytime from solar + wood heater
Council Rates$874

The way we’ve wrangled it, as long as our home appreciates in value by >$3500 per year, we can count it as an asset. We figure that’s likely given the strapping pace of inflation, at least in the near term. We also calculated our Brisbane housing costs by way of comparison. Here’s what that looks like:

Housing costBrisbaneTasmania
SewageSee Rates$0
Grey waterSee Rates$0
Heat / coolingSee power$800
Council rates$1420$874

What this means for us is that we have to make $23,000 less in income each year to live in Tassie. And that’s just housing costs. It’s not living costs.

Geo-arbitrage is an underrated weapon in the arsenal of any financial freedom seeker because you can use it to cut one of your biggest living costs – housing.

Our net worth

As at July 2021, our net worth is north of $1.5M. Just goes to show you don’t need millions to be financially free! You just need to kick ass crafty about it. 🙂

Our good debt position

Our net worth is calculated after debt is deducted.

We hold (indirectly) good debt on our investment properties. I say indirectly because we have company and trust structures in place. So the debt is not on our personal balance sheet. These mortgages are paid by other people, through the property investment and management company we run. These investment properties are assets not liabilities because they put money in our pocket each week as you’ll see when we get to “Income’ down below.

Our bad debt


We have zero bad debt at the end of each month (bad debt takes money out of your pocket). That’s right. Zero. The only bad debt we carry is credit card debt, which is cleared in an auto sweep of the card. Every. Single. Month.

We do use our credit card to give us free stuff. We direct all of our expenses through the credit card to earn cash rewards, which we use to buy groceries. So far this year we’ve earned roughly 77,000 points or $350 worth of free food.

Credit cards can make you money if you use them the right way.

Our July income

About half our income this month was rental income. We worked 4 to 5 hours a week for this income. We’re still keen to save and invest so we had earned income in July as well. Our capital gains is mostly from shares we own. We also had a small bit of income from cryptocurrency. Our profit income covers things we like to do on the side – retail arbitrage (reselling), cash rewards, and other online income. We’re working on diversifying our income streams further in the medium term.

Our July savings rate

75%. Huzzah!

Our next asset investment?

A solar PV system.

We’re still a bit too heavy in cash so we are looking for new investments. (Cash is trash). We’ll likely buy a solar power system, which we expect will produce an ROI of 23% year-on-year, with a payback of 4.25 years. Not a bad outcome.

We’re also busy building digital assets that will pay us an income in the future. More about that later….

How to make passive income from property, double your money & pocket a 15% annual return

make passive income from property

If I said you could make an extra $9360 a year passive income from property with just $60,000 invested, would that get you to read this post?

It should, because you can.

And I know you can because we did. As first time property investors. We also doubled our initial investment while doing it.

In this post we’ll share how we created an a cool passive income stream and 15% annual return from our first investment property using just $60,000 of our own money. We’ll also share how we doubled that initial investment in just 12 months and reveal just how much our $60,000 initial investment will make us all up.

The wealth building potential of dual income property

This is the second article in our property investing series on the wealth building potential of dual income property.

To get the background you need for this post to make sense, check out our first post in the series which covers what a dual income property is. The second post explains how to buy the right dual income property.

For now, we’re going to assume that you’ve had a read through the series and already know why dual income property can be a great property investment strategy for financial freedom. We’re also going to assume you know what sort of dual income property we recommend investing in. As a quick recap, here is a photo of our dual income property taken from when we bought it in 2012. The property is a triplex, which means it is made up of three apartments on the one title.

make passive income from property

Why not all property investments are equal

Step 1 – buy the right dual income property

This is where it all starts with manufacturing capital gains making passive income with property – you need start out buying the right property. So what are you looking for exactly?

We started with by apply what we learned from Robert Kiyosaki’s Rich Dad education – An asset is something that puts money in your pocket.

A lot of property investors don’t realise this and so are actually buying liabilities when they invest in property. Liabilities take money out of your pocket. This is also where a lot of people fail at property investing – they buy, then find out they don’t have the cashflow to hold the property and have to sell. Sometimes for a loss.

So we knew we were looking for a property that could produce enough income to cover its holding costs and put a little money in our pocket. If you’re read part 1 in our dual income property series, you’ll know to end up with money in your pocket each month you need a rental yield of around 10%.

That knowledge led us to to start looking at dual income property because of the multiple rental income streams.

How to make passive income from property using a dual income property strategy

As we were looking at dual income property we found that most were advertised with a gross rental yield of around 6%, which was not enough to put money in our pocket after holding costs. So we had to improvise. We needed to find a way to increase the rent of any property we invested in, for as little outlay as possible. Here’s what we started looking for:

  1. A dual income property with apartments or units that are rented at below market rates. This means becoming familiar with the rent prices for similar types of properties in the local area.
  2. Apartments that were tenanted with upcoming lease end dates if possible. We’ll reveal the reason for this later.
  3. A structurally sound building with cosmetic renovation potential.

Our triplex investment

Our triplex has two x 2 bedrooms apartments and one x 1 bedroom apartment. At the time we purchased it, two of the units were rented with one approaching its lease end date in 3 months. The third had just come out of a rental lease and was vacant. The rents were:

  • Unit 2 – 2 bedroom 1 bath 1 car – $190/week
  • Unit 3 – 1 bedroom 1 bath 1 car – $160/w
  • Unit 1 – 2 bedroom 1 bath 1 car – vacant but was rented for $190/w

Total rent – $540 per week.

So we went onto the local property rental app and researched exactly what similar properties (but more up to date) were renting for.

We found that similar 2 bed 1 bath 1 car walk up apartments were renting for $240 per week.

1 bed 1 bath 1 car apartments ranged from $180 – $210 per week.

Based on this, we knew that if all of the apartments were modernised we could achieve a weekly rent of at least $690 per week. $150 per week better than what the current owner was getting. We also knew that vacancy rates in the area were tight, hovering at around 1%. Given anything below 3% means that rental demand is higher than supply, we were confident of being able to raise rents further in the near future.

So, Box 1 and 2 ticked and high fives all round…

The triplex we ended up buying was also structurally sound with PLENTY of renovation potential. The brick footings, walls and timber framing was all as solid as a rock but each of the units were like time capsules back to the 1970s.

Box 3 – ticked also..

Here are some photos and yes, this is really what the units looked like in 2012!

Step 2 – use other peoples money

We had a promising property on our hands so the next step was to make sure that we invested in the asset in a way that would allow us to pull off our passive income and capital gains plans.

The property was listed for sale at $438,000. We had roughly $140,000 in the bank and knew we needed some of that money to renovate. We also wanted some of our savings to stretch to a deposit on a home to live in.

We needed to make our cash go as far as we could. So we offered $400,000 and applied for a bank loan on that basis, with a 90% loan to value ratio (LVR). This meant we were required to put in $40,000 plus the buying costs of around $14,000 (thanks to stamp duty – or property taxes for non-Aussies).

Our offer was accepted so we invested $54,000 of our own money into the initial purchase. This left us with cash of around $40,000 to renovate and a $45,000 deposit on a home.

Step 4 – vacate and renovate one apartment at a time

The lease arrangements on a dual income property are critical when you’re buying. Existing leases provide proof of rental income for the bank, which is good for your loan application. But the timing of leases is especially important if you know you’re going to renovate the apartments. This is because renovations take time and you still need to cashflow the property (make your loan payments) while you do those renovations.

The rental agreements in place across our triplex were ideal as we could renovate Unit 1 immediately and still have the rent from Units 2 and 3 ($350 per week) to help pay the $360,000 mortgage we had just taken on. The lease on Unit 2 was due to expire within 6 weeks of us owning the property, which meant we could renovate the two 2 bedroom units back to back.

Multiple rental income streams provide one of the biggest benefits of investing in dual income property – income diversity. This helps you manage investment asset risk overtime.

The rent we were getting was not enough to cover all of the property’s holding costs, so make sure you budget some holding costs out of your own pocket over the period of the renovation. You should also factor in a reasonable time to advertise and rent out the newly renovated apartment. We allowed 10 weeks for in total for two back to back unit renovations and listing of both. This was a short and ambitious timeframe, but the builder was fine working with us to this schedule.

Our Triplex renovation

We started the renovation of Unit 1 immediately after the property settled. We had negotiated access to the empty unit during the purchase period to get builders quotes and signed a contract with the builder who was available and reasonably priced.

The most critical part of the renovation piece? Not to over capitalise.

We could have gone nuts with the renovations on these apartments given they were straight out of the 80s. But we didn’t. The target market research that we did was critical here. Our target tenant was a new renter or young couple, looking for affordable but modern accommodation. We’d also looked at what similar rental properties were offering to achieve the target rent we wanted for each unit.

What we didn’t spend our money on was just as important as what we did.

We didn’t install aircons, dishwashers, new built in wardrobes, high end fittings or a high end kitchen. We went for a functional but affordable kitchen and a paint and repair on existing wardrobes. We spent most of our renovation budget on a solid, long lasting bathroom and on bringing up a ‘hero piece’ in each of the units that would get renters to rent the place. In this case, it was the polished timber floors that we found under the disgusting 40 year old carpet…

Here are some before and after shots for your viewing pleasure 🙂

Bathroom before and after

The one bedroom unit before and after…

One of the 2 bedroom units before and after

The renovations cost $20,000 per unit with around half of that being spent on gutting and installing new bathrooms. We also moved some walls in the 1 bed unit to improve the design by providing a more open living dining space and access to the bathroom from the living instead of through the bedroom.

Step 5 – re-list each apartment with new photos and higher rent

The renovations of units 1 and 2 were completed within 8 weeks. We then had the real estate agent take new photos and re-list the properties. They took around 3 weeks to rent. As we expected, the market had moved a little since we put the triplex under contract. We rented both units out for $245/week. We were able to increase the rent further to $255 per week within 12 months.

The one bedroom unit was not renovated until the lease ended – which was around 10 month later. We achieved a rent of $220 per week for that unit.

Our $9360 a year passive income stream

By renovating each apartment our total rental income went from $540/w to $720 per week. So within 3 months we had created a $180 per week passive income stream from the renovation. Annualised, we made an extra $9360 passive income from property with this strategy. Thats an annual Return on Investment of 15.6%.

If you consider the upgrades we did have use life of 15 years for the kitchen and probably 20 for the bathroom that’s a payoff of $140,000 on a $60,000 investment over that period.

And that’s only half the story.

How we doubled our initial investment

The other equally important aim for this, our first asset investment, was to be able to leverage it into other assets. That’s why we chose a dual income property. It helps with future loan servicing requirements of banks because of the cashflow. Value creation strategies like renovating can also increase the value of the property allowing you to take out equity for future investments.

After renting the property out for 12 months we had it revalued by the bank. The valuation came in at $520,000, which meant we had created $120,000 in equity from the renovations. In addition to the extra passive income we had doubled our initial investment of $60,000.

Our total capital gains and passive income profit on the $60,000 we spent? Somewhere in the vicinity of $200,000.

The final word – passive income takes work (at the start)

As is true of all passive income, this investment took work. It took time and research to find the right property and plan the right kind of renovation.

It also took financial literary – particularly in how to invest in good real estate assets. We got that literacy through a Rich Dad education and you can too – it literally costs just a buck to start!

It took sweat equity – we did all of the painting and installed the blinds and some of the fittings ourselves, spending holiday leave from our wage-earning jobs hard at work

It took risk too. But as we’ve explained, we calculated and took steps to manage that risk.

To us, the pay off for all of that hard work has been and continues to be worth it. You see, the story doesn’t end here and neither does our profit. In part 3 of this series we’re going to explain how we were able to double down on the capital gains from this one property.

For now, I hope you got value from this post where we step out, in a way that you can replicate, just how we made $9360 extra passive income from property within 3 months and turned $60,000 into a $200,000 profit.

Til next time have fun, be happy and do good!

Oh, and by the way we did get that home with our $45k 🙂 More about that later… please give us a like if you want more content like this!

How to buy the right dual income property

Dual income property

This one property investing strategy can make you financially free.

We’re not kidding. We’re talking about the wealth building potential of dual income property.

Dual income property has been a foundation stone of our financial freedom strategy so far. It’s a super wealth building strategy if you know what you’re doing. And the good news is you don’t need to stumble through.

Here’s the intro to this series to get things started.

Today, we take you through how to buy the right dual income property for financial freedom. At the outset, you’re going to want to know what your investment strategy is and what your investment objectives should be, because if you don’t how’re you going to meet them right? So let’s get started.

The dual income property strategy

Your initial investment strategy is buying low and upgrading the property for short term cashflow and capital growth, so you can continue your property (or other) investing journey. This is not the end of your plans for this property, but it IS how you’ll leverage it into another investment and keep on with your wealth building plans.

Buying low means you can preserve your own capital and will have some spare cash for upgrades. This bit is critical peeps! The value creation strategies we talk about below will help you take out equity as quickly as possible for your next investment venture.

Our full dual income property strategy will emerge over the course of this series .. I can just tell you are on the edge of your seats with anticipation 🙂

dual income property
Investing in dual income property can supercharge your wealth building strategy but you have to buy the right property

Investing objectives for dual income property

Positive cashlow

In our intro to this series we talk about the main benefit of dual income property being cashflow. So cashflow is going to be one of your main objectives because it’s relatively easy to achieve when you’ve got dual income. A cashflow positive property is when your annual rent covers all annual expenses and you have a little left over in your pocket.

So how do you work out if it’s cashflow positive when you don’t know what all your expenses are?

The 10% rule

The first thing you’re going to need to do is work out the gross rental yield for the property. From our experience and as a rule of thumb, with older properties you are looking for at least 10% gross rental yield to achieve a marginally cashflow positive property. One caveat – your yield percentage can really live or die on the condition of that property and its occupancy rate. We’ll get to that later….

Your gross rental yield calculations should follow this formula:

Property yield = annual rent / property price x 100

So for example, a $400,000 property with a gross rent of $40,000 will give you a gross rental yield of 10%.

This is a nice rule of thumb because it’s easy to work out when you’re hitting the pavement inspecting potential investment properties.

Properties that are less than 10 years old may have some worthwhile depreciation benefits for both the building and its fittings and fixtures. You can also use these benefits as a strategy to achieve a positive cashflow outcome. BUT peeps, the depreciation thing only works if you have complementary income you’re paying high tax rates on – like a high earning wage. If you’re looking at an investment that on the surface doesn’t meet the 10% rule, consider whether depreciation tax offsets against your personal income might get you across the line. If you want to learn more about this strategy, we recommend reading 7 Steps to Wealth by John L. Fitzgerald.

Newer dual income properties will come at a higher buy in price. This will mean a larger deposit, which may eat into your portfolio investment plans. It’s also hard to know with certainty before you buy whether this strategy will work with the specific property you’re targeting, unless you get a depreciation report done before purchase. Last we had one done it cost about $600…

Find property with low operating costs

We mentioned before that your holding costs and occupancy can really put a spanner in the works when it comes to positive cashflow. So if you want to find a property that is not going to kill your wealth building strategy with ongoing expenses. Here a checklist of things you want to see in a good property:

  • Brick veneer – external timber requires heaps of paint, maintenance and repair
  • Structurally sound with solid roof and stumps / slab
  • Hard wearing flooring – tiles, timber, laminate or planks. Tenants trash carpet and that becomes expensive.
  • Separate electricity meters for each unit or apartment – so the tenant pays their own power bills
  • Separate plumbing and good quality water efficient tap ware – if you have these you can pass on variable water charges, lowering your ongoing costs
  • A property on a single title – so you’re only paying the one city rates bill and not a rates bill for each unit. This one factor can literally save you thousands a year.
dual income property
Our dual income property – low maintenance, brick veneer on a single title, separate entrances, and separate electricity meters.

Capital gains

Now we’ve covered what to look for to land yourself some healthy cashflow, let’s talk capital gains. Your objective is always to get good growth no matter what kind of property investing you’re into right? But how do you know with a dual income property what growth might be on the table?

Organic growth – find the right location.

The right location will give you some good organic growth if you hold the property as part of your portfolio and look to leverage it as a financial freedom strategy. Now, there are a gazillion cities, towns and suburbs across Australia or America or even the UK and finding the right area is going to be up to you. Sorry!

Once you do get to a shortlist of locations, take a look at historic data over the last 10 and 5 years. You want a location with strong long term capital growth over at least 10 years. Strong is anything above 7% per annum. Depending on your time horizon, you also want that growth NOT to have all rolled out in the 3 years prior. This is because growth in property can be lumpy – where you might get a really good 24 months of capital growth and then a slow period of 3 years. If you jump in at the beginning of that slow 3 year period, you’re going to be waiting a long time to recycle any equity from your dual income property into your next investment.

Manufactured growth – find the right property

Manufactured growth strategies for dual income property differ massively from single family homes. Here is a checklist some of the things you want to look for, with a dual income property, based on your growth objective.

Cosmetic renovation opportunity – think purple, pink or orange wall paint, lace curtains, moth eaten carpet, overgrown garden. This is gold when it comes to easy to manufacture equity. A internal cosmetic renovation of paint, flooring, window coverings and some simple landscaping can help produce a higher valuation on the property AND increase your rent and your cashflow position.

Structural must haves – there are also somethings that the property must have to take advantage of manufactured growth opportunities longer term:

  • Carports or space for off street parking for each unit or apartment.
  • Firewalls between each apartment, usually constructed of Besser brick. You can check by poking your head into the ceiling cavity – they should extend up to the roof between each unit.
  • Separate entrances for each apartment or the ability to create them.
  • The potential to create separate and private outdoor spaces for each apartment.
  • Adequate (for the size of the building) stormwater drainage from the roof to the street.
  • You also want to make sure that each apartment in the property has separate electricity meters and separate water meters, or the ability to inexpensively separate them, and that you a buying a property on a single title.

We’ll cover why these things are important in part 3 of the series, but for now you’ll have to trust us – these are the thing to look for if you want a super charged strategy for financial freedom.

Where to find a low buy-in dual income property?

So if you’re still following along we’re at the bit in the story where we talk about where. Where do you find dual income property that lets you buy low and leaves you some cash to do upgrades, without blowing all of your savings on the one deal?

One of the major hurdles to dual income property investment for folks trying to build their financial nest egg is the buy in price or affordability. In tier 1 cities in Australia – like Sydney, Melbourne, Brisbane, Perth and even Adelaide – a dual income property comes in at a whopping $800k plus so you’ll need $100k plus in your pocket to buy. This just isn’t an affordable investment for a lot of people. It’s probably the same in the States or the UK… In some cases these price tags have already spilled over to tier 2 cities like Newcastle, the Sunshine Coast (well its not a city but you get the picture), the Gold Coast and Geelong

But.. in tier 3 cities (more like regional towns) you can still find dual income properties at affordable prices within a reasonable buy-in range. And the good news is that since the pandemic, tier 3 cities have become a lot more attractive for renters because of the lesser disruptions and impacts from shut downs, and for their affordability. We’d be looking specifically at towns within a 2 hour drive of a major city and with a population of 80,000+ as well as some diverse industries behind them to prop up employment. Think Cessnock in NSW, Toowoomba in Queensland, Devonport in Tasmania, Bendigo or Ballarat in Victoria. In these locations, dual income properties are still a possibility for many folks with a buy in price of $400 – $500k.

The final word – hey, hey you’re underway

In this post we’ve kicked off our dual income property planning with how to buy the right dual income property. Adding value peeps! We’ve set out:

  • a clear initial buying strategy – to buy low and upgrade so you can manufacture immediate cashflow and capital growth.
  • a checklist of what to look for when you buy – to maximise your property investment income and eventually the money you’ll make
  • some pointers on where you will find these types of properties.

Not all dual income properties are equal in the game of money financial freedom seekers. Buying a dual income property with these things in mind should help get you on the right track and on the fast track to crushing your financial freedom plans.

NFA – which stands for not financial advice (as opposed to NFI which stands for No F*cking Idea and is the opposite of what we’re all about here at the LLP).

Intro – The wealth building potential of dual income property

Part 2 – How to make passive income from property, double your money and pocket a 15% annual return

Til next post – have fun, be happy, do good!

The wealth building potential of dual income property

Dual income property

This is the intro post in our series ‘The wealth building potential of dual income property’. We own dual income property and it’s been a fundamental strategy in our financial freedom plan. We’re going to take you dear readers through the wealth building potential of dual income property using a bunch of different value creation techniques. You’ll get the real story, warts and all – not the BS sales pitch that real estate developers want you to believe. You’ll also get our tips from the trenches; we’ve made the mistakes so you don’t have to!

So if you’ve been wondering whether a duplex or triplex investment is right for you, read on financial freedom seekers.

What is dual income property?

To start you off, check out this little intro to dual income property on our Traditional FI page. In short, a dual income property is multiple apartments or town houses in one property, giving the owner more than one rental income stream. You’ll often hear dual income properties referred to as duplexes, triplexes or multifamily properties.  These are typically in a small complex or are semi-detached in that they share a common wall and some common areas. At the big end of town, they’re entire multilevel apartment buildings.

Dual income property
Our first property investment was this dual income property

Picking the right investment property for your financial freedom plan

There are two things about property investment that make it attractive as a financial freedom or wealth building strategy – capital gains and cashflow. When you’re looking for an investment property, it often boils down to a choice between the two.

Capital gains are the increase in the price of the property over time as the market moves (not all property increases in price while you hold it, we’re just saying that this is what you’re aiming for). If you’re aiming to build a property portfolio you can live off, you need capital gains to fund your deposit for future property investments.

Cashflow is generated from the rent your tenants pay you. You need this to be able to service future bank loans to leverage your deposit into more property.

There are also a couple of generalisations in the property market (which itself is a generalisation!) to know about when picking what property to invest in and where:

  1. City properties are capital gains properties – they tend to be more expensive, grow in price faster over time, and because of this they produce a lower yield
  2. Properties in smaller regional towns are better cashflow properties – they’re cheaper to buy and the yield is better, but there’s not the market demand to drive high price increases.

We’ve observed these generalisations in real life across different property markets around Australia, although there are always exceptions. Investment properties that give you both capital growth and cashflow FROM THE OUTSET truly are the holy grail of real estate investing. We say from the outset because if you hold an investment property long enough and pay down the mortgage it will inevitably produce some capital gains and you’ll be cashflow positive with rental growth and smaller loan payments….

Anyway…This is all good context to understand where you are at in your investments and your financial freedom planning, what you need to take the next step (cashflow or capital growth) and how dual income property it might fit in to those plans.

What is the benefit of investing in a dual income property?


Dual income properties are typically labelled a ‘cashflow play’ in property investment – because you get more beds, baths and kitchens than in a single-family dwelling. That leads to more rental income. Cashflow is seen to be the major benefit of dual income property investing and it’s what we focussed on when we were looking for a dual income property.

Income diversity

Dual income property gives you a couple of independent income streams. This is an important advantage over single family properties especially if you have a sizeable loan against the property. The thing with rental properties is, tenants vacate them. And when they’re vacant, your rent stops. With dual income properties, you can spread out the rental leases and the natural vacancies that occur between tenants and you always have rent coming in. Huzzah!

Value creation opportunities

The benefits so far are all around income generation. But dual income properties also have massive value creation opportunities and this is why we’re devoting an entire series to exploring how dual income strategies can catapult your wealth building and financial freedom! In terms of a property investment, multifamily properties are extremely versatile and can be a real blank slate opportunity for the motivated, active value creation type investor. Once you’ve set them up, they can also become low risk passive investment – all depending on how they’re run.

Building wealth from dual income property

So how do you leverage this type of property to build wealth? In our dual income property series we’re going to take you through the killer wealth building strategy that we used to pour rocket fuel on our dual income property investment – step by step dear readers.  Over the coming weeks, we’ll post about:

  1. How to buy the right dual income property
  2. How we turned a $60,000 investment into a $180 per week income and doubled our money in 12 months
  3. How to explode the equity in a dual income property – twice!
  4. How we’re killing it with our secret dual income strategy  
  5. Options to cash out from a dual income property

We’re going to take you through what we did, all of the numbers, our tips from the trenches at each stage, and we’ll even share photos along the way. We’ll also reveal some traps for the uninitiated and things we wish we knew BEFORE we got started.

The final word – is dual income property a good investment?

You’ll have to make up your own mind dear readers, once you read through this series and have weighed up the pros and cons yourself. Only you’ll know whether it’s right for you.

One thing to note upfront – dual income property is not an advanced investor strategy! Our first property purchase was a dual income property – before we bought our home! We were property novices – so if we can do it, you can too!

Stay tuned!

Part 1 – How to buy the right dual income property

Part 2 – How to make passive income from property, double your money and pocket a 15% annual return

Until next post – have fun, be happy, do good!

5 steps before selling your house privately for big dollars

sell your house yourself
how to sell your home privately
We marketed and presented our home to suit the target buyer

In March 2020 we made the decision to not engage a real estate agent and to sell our home privately instead. We didn’t rush into it. We weighed up a bunch of things before taking the plunge. In this post we explain our top 5 steps before selling your house privately for big dollars. We sold our home in Queensland, Australia. But our top 5 tips apply equally to South Australia, Victoria or other states. And if you are not in the land down under, the concepts we go through are pretty universal so our tips should help you too.

If’ you’d like know what we did to sell our house privately for a price $40,000 above real estate agent appraisal and $55,000 above bank valuation, read on.

Why consider selling your house privately?

For the money it saves you financial freedom seekers! If you’re on your financial independence journey with us, every dollar counts. Real estate agents routinely charge commission of between 2% and 3% of the total sales price here in Queensland. Plus, they charge you for ‘marketing costs’. These are the cost of photos, online listings, flyers and features in agency direct marketing and other publications.

In commission alone, selling privately saved us over $20,000. 

Sell your home yourself websites

In our experience, marketing can cost you anywhere from several hundred to a few thousand dollars. Listing agents often make money on their marketing packages as well. But there are other services (at least in Australia) that can offer the same online exposure for a lot less. We used For Sale by Owner. Our total cost for this service was around $700 and that got us listed on, full control over the listing, as well as a message forwarding service for direct inquiries.

Just know, these types of services are purely online. No print ads in the paper. But these days if you’re in a major city selling a middle or a lower income property most of your leads will come from online. In some regional towns print ads in the newspaper still make up a large proportion of sales leads in the local property market. These ads can cost a couple of thousand dollars to run depending on size of spread.

Will an agent always get a better price?

Some folks might say a real estate agent will always get you a better price, and this more than covers what you pay them in commission. Not necessarily peeps!

Is the agent working for you or for themselves?

Here’s an anecdote from our experience to demonstrate why it’s worth understanding the different motivations of agent and owner. Friends buying in our area at the same time we were selling placed an offer on a home that was selling through a listing agent. Although there ended up being multiple offers on the property, the listing agent didn’t even bother to take the process to a multi offer situation.  A multi offer situation is when all offerors are informed they have one last chance to put their best offer on the table and are given a deadline to do so. It can build a sense of strong competition among buyers and is designed both for transparency and to push the price up. Good for sellers. Fair for buyers some would say.

It’s important to understand that even if you pay a real estate agent to sell your home, the agent does not share the same financial incentive as you, the owner. For the agent, the extra time and effort involved in a running a multi offer situation may outweigh the few hundred bucks in commission extracted from pushing the price $10,000 higher. Sometimes, they’re better off just churning through the sales instead. But 10 grand is a lot of extra money to put towards our financial freedom cause! In this case, our friends had more money but were not given the chance to show their hand. What a shame for the owner…

Do these 5 things before selling your home privately

So you’ve read through the why you might sell your home yourself. But what do you need to do or know before heading down this path? Here are our top 5 tips:

Know what type of market you are in

The best time to sell privately is when you’re in a seller’s market. We made the decision to sell ourselves after watching the local property market for 6 months. We noticed that there were fewer and fewer homes coming on the market and that new homes in the middle-income bracket went quite quickly under contract. We also noticed that listing prices were rising over this period and that listing tactics changed from nominating a ‘for sale’ price to advertising as ‘offers over’. There were also few listing to choose from.

These are all indicators you’re in a seller’s market, which is the best possible time to sell your home yourself. A seller’s market is simply when there is more demand than supply, or more buyers than there are homes for sale.

So if you’re looking for information about your market, watch For suburb market data such as demand levels for homes in your area, we recommend checking out the little-known investor resources on – here is a link. Start watching listings for your suburb on Realistically, 6 months before you want to sell but 3 months at a minimum. Count how many listings there are each month. Notice many are under offer at any one time. Pay attention to how they are advertised.

how to sell your home privately Queensland
Do these 5 things BEFORE deciding to sell your home privately

Understand the market value of your property

Getting to a value is pretty subjective until you actually put that question to the market. You can get a valuation done or you can look at comparables in your area to form a view yourself.

You can get a desktop valuation which is cheaper but less accurate. You simply buy a report online from one of the major property data providers. A report by a valuer will mean a visit to your home so this is more expensive but arguably more accurate. Beware though peeps, a valuer will be conservative in their valuation to avoid issues of liability. So in a seller’s market you could reasonably expect a valuer to come in under the true market value.

If you research value yourself you’ll need to look at ‘market comparables’. These are properties in your area like yours that have sold recently. The best way to find free market comparables if you are in Australia is doing a property address search on or or on onthehouse. These sites will give you an estimated value for your home based on recent property sales data. You can also look up your neighbour’s homes, especially if they’ve sold recently. If you do this yourself make sure you are comparing like with like. We’d suggest looking for similar properties on your street with a similar aspect.  The property features, condition and aspect can make a big difference to value.

Understand the process and paperwork to sell your home privately

If you sell your own home you will be in control of the selling process so you need to have a good idea of the process in your state. Each state has its own peculiarities and legal requirements. Engage a solicitor and have them take you through the steps and things to watch out for. We recommend a solicitor rather than a conveyancer if you’re selling your own home as you may need to call on the legal expertise. A solicitor will also help you with the paperwork to sell your home yourself. They can provide a standard property contract (these are generally not available for free), help you fill it out and take care of title transfer paperwork. If you’re confident you understand the process and paperwork after you’ve done this, you’re good to sell yourself. If it’s still a bit of mystery, you’ll probably need a listing agent to help you through.  

Work out whether you have the skills needed to sell well

By sell well we mean for a great price. There are some skills involved and if you don’t have all of them, you’ll need to find folks that do to help you.

sell your home privately Queensland

Strategizing – Are you confident that by selling yourself you can get a good price? If you have no idea what your selling strategy might be before you start the process, it’s probably best to use an agent.  A strategy to sell your own home should cover how you present and market the property, how you price it, how you run your open homes and any private inspections. All of these things should be informed by your market research and knowledge of the target buyer.

If you don’t have a strategy in mind to maximise your price, then you probably won’t end up there. Run through your plans with your solicitor first to make sure its all legal.

Interpersonal skills – ultimately you’re selling something and to do that you’re dealing with people. Can you connect with others, build rapport and trust quickly and keep calm in tense situations? Are you good with people? If you don’t have these skills then it will be tough to run great open homes and private inspections, and to do the follow up phone calls agents would normally do to talk up the price or seal the deal.

Copy writing & design – can you write emotive copy that promotes your home’s selling points and appeals to your target market? This is key to converting traffic into inspections. You also need to make your own marketing collateral when you sell your own home. Can you use apps like Canva to design your own professional flyers for open inspections?

Negotiation skills – these will also come in very handy when the offers come rolling in and contract process starts. Also, when things get tense, as they often do in property sales.

The final word – should you do it?

We say go for it, if the market conditions are right and you have the skills. If you can tick these 5 boxes it’s absolutely worth it.  If you are in a buyer’s market however, this is when the real estate agent buyer databases and their sales experience is worth the commission they are paid.

‘Til next time have fun, be happy, do good!

Can you still make Airbnb profit in 2021? Know before you list

Airbnb profit

If you’ve read our Fat Stacks blog you’ll know we are Airbnb owners.  We have been Airbnb hosting 4 properties for a couple of years now making Airbnb profit. Fat stacks of passive Airbnb income people! Listing your investment property or home on Airbnb or other short-term rental websites is not a small decision.  But Airbnb income can be much greater than other passive income from property (yes, Airbnb really can be passive. Stay tuned to our Fat Stacks blog to discover how). So how do you know before you list whether Airbnb will be profitable for you? In this blog, we’ll share some answers.

3 things you must do before making Airbnb profit

Want to make Airbnb profit? How do you know you'll make make money from becoming an Airbnb host? 3 things you should do before you invest in an Airbnb property.
Would this property make you Airbnb profit?

Doing the right lead work will tell you whether you can make Airbnb profit before you put your hard-earned cash into the deal. Who wouldn’t want to know, before spending a few or even hundreds of thousands of bucks, that their investment will earn a good return?

Not every property makes a good Airbnb house or short term rental. You need the right property in the right location and market. Here are 3 things you must do before you can list your property online and make Airbnb profit.

1. Examine your property condition and amenities – will they be competitive with other Airbnb rentals?

At a minimum your property needs a renovated or modern bathroom and kitchen, fresh paint and no old carpet. Is it clean top to bottom? Like professionally cleaned…? Space and light are also highly valued. Do you have these? Not all properties on Airbnb are flash or brand new. But to make money with an older property requires an awesome outlook, a prime location or super cool uniqueness. Like a rustic treehouse.

Amenities matter to guests and to Airbnb. The more you have, the better you will rank in the Airbnb algorithm and the more bookings you’ll get. We’re talking things like aircon, heating, outdoor areas, work spaces, security, car parking, washer dryers, and the all-essential lightning speed WiFi. So, jump onto Airbnb at this point, open a listing in your area and click on the amenities list. Check off the ones you can offer. If it’s not a long list you have, this is money you’ll need to spend to make your place competitive.

2. Airbnb research – get onto the Airbnb app!

Given you’re already searching on Airbnb, it’s time to check out the local listings. By local, I mean local area. You’re looking in your suburb for properties that are similar to yours. A similar number of bedrooms and bathrooms, size, condition, location (by street), and amenity. Can you find properties like yours listed in your suburb?

If not, then your risk in being the first is greater. Jump on down to part 3 for next steps.

If so, then it’s time to get into the detail. On the Airbnb app, do a search to stay in your suburb but don’t put in any stay dates. Instead, click ‘I’m flexible’.

Open each listing near you and look up the booking calendar for each one. What level of bookings do they have? You can’t look at past months, but you can look at the current month and into the future and this is what you’re looking for.

  • If you’re in the first week of the month look at that month’s bookings. Are there at least 15 days out of 30 booked?
  • If you’re in the last week of the month, look at the next month’s bookings too. Are there 8-10 days booked for that next month?

This will give you an indicator of demand for stays in your area in properties like yours. From our experience, this level of occupancy for that time of the month will lead to more bookings and Airbnb profits by the end of the month for any well-run Airbnb. If you can’t see evidence of bookings at this level, then you may have to get deeper into the data. It’s sounds scary but it’s totally not. Next, we’ll tell you how.

3. Airbnb market research – done for you

There’s a great website called AirDNA that has unpaid and paid market data on Airbnb listings all over the world. It also covers VRBO, which is a popular booking platform for holiday destinations in particular.

We’d suggest you start with the AirDNA Airbnb Rentalizer. It’s free and will tell you what property like yours could make on Airbnb, based on other similar properties in the area. Put in your address, bedrooms, bathrooms, carparks and bobs-your-uncle! Remember, the figures are gross not net. We’ll explain what reasonable Airbnb profit margins you can expect in a future post.

The Rentalizer is a great tool and exactly where we started. But it’s very high level and just enough to get you to the next step but not enough to base your investment decisions on.  AirDNA also have paid monthly subscriptions to a service called Market Minder for those that need more detail before jumping in to Airbnb hosting.

We used Market Minder before we took the plunge and highly recommend it. You can subscribe monthly to suburb reports that give actual earnings, number of listings, types of amenities and listing links for other Airbnb accommodation in your area. You can also see actual occupancy data, forward demand estimates and recommended nightly pricing data, which is critical to your ROI calculations. Here’s a link to subscribe to Market Minder.

The beautiful thing is you can turn your subscription on and off as you need it. So it still works if you’re on a budget because you can jump back in once a quarter to get market updates for a small one-off fee. Huzzah!

We used Market Minder to work out our Airbnb strategy and to determine our budget to set up each Airbnb. It gave us peace of mind on our ROI and stopped us from over capitalising on set up. If you want to know exactly how we applied the Market Minder data to our decision making about whether to invest in Airbnb or not, take a look at our Airbnb profit calculator. Also, pop back in a few weeks to check out our upcoming blog on profitable Airbnb business models and setting up an Airbnb business.

If you’ve done your due diligence, the numbers look good and you want to join us as Airbnb hosts, here is a link to the platform where you can start to create your listing. You can easily kick things off and it saves your work as you go.

The final word

These aren’t the only things to consider before jumping into Airbnb hosting. But if you’re buying an investment property or already have one, with a little due diligence like this you might be surprised at what it could earn you in pretty passive income. I know we were and haven’t looked back.

(Oh, and if you wanted to check out our Airbnbs or even book with us in Toowoomba, QLD just click the link in the footer 🙂 )

Until next post – have fun, be happy, do good!

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