Maximising your options with duplex developments, with Drew Evans – Ep. 87
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In this episode of the Geared for Growth podcast, Mike is joined by seasoned developer Drew Evans, Director of Caifu Property, to talk through the benefits of duplex developments and how investors are generating cashflow whilst paying down debt.
Drew Evans is passionate about duplex developments. He believes they offer a multitude of options – keeping both properties and building your portfolio, keeping one and selling the other to pay the bank, or selling both and recycling the capital on your next project.
In this episode, Mike and Drew do a deep dive on the numbers, using Drew’s client “Phil” as a case study. Drew takes us through the whole scenario and demonstrates in detail how lucrative a duplex development can be. They also step through the variety of costs of which to be aware, including section 94 contributions, and how the subdivision works in practice.
Drew explains why the 12-month CGT exemption period is not as long as it may seem in the world of development, and how novice investors can find ways into the market. A big believer in educating yourself, Drew espouses the benefits of really understanding an investment before you dive in and leveraging off expert knowledge.
This conversation is full of practical tips and advice on a topic that can seem intimidating to the beginner investor or anyone new to development. It also serves as a timely reminder of why the fundamentals are important in these uncertain times.
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Mike is joined by seasoned developer Drew Evans, Director of Caifu Property, to talk through the benefits of duplex developments and how investors are generating cashflow whilst paying down debt. Drew Evans is passionate about duplex developments. He believes they offer a multitude of options – keeping both properties and building your portfolio, keeping one and selling the other to pay the bank, or selling both and recycling the capital on your next project.
What we cover in this episode
What Drew loves about duplex development
The first thing to do if you’re feeling interest rate pressure
Crunching the numbers on leveraging a duplex
Finding opportunities that are under market
Controlling the margin
Covering the cost of subdivision and section 94
Speeding up the CGT exemption
The best strategy for beginner investors
“A lot of our clients are actually looking at duplex development as a strategy and essentially what I love about duplex development is the options that it gives you so essentially on completion you can sell one and keep one you can sell both or in fact you can keep both” Drew 2:17
“This is a great strategy if your cash flow is a little bit tight because it does two things, you get to pay down debt which improves your after tax cash flow but it also frees up your borrowing capacity to then potentially look at another project and repeat the process” Drew 8:02
“You need to increase your income or you need to decrease your debt and for me that’s what I love about developing is you do have that option to take profit off the table pay down the debt and then free up borrowing capacity to redeploy the capital and keep growing and moving forward” Drew 9:44
“The way that the rules are written is the 12 months actually starts when you go unconditional on the land contract so not when you finish the project, not when you registered the subdivision on the land contract and so the best thing with all the duplexes that we do if you hold them in your personal name the reality is the 12 months is probably already up by the time it gets to completion” Drew 18:44
“You need a good borrowing capacity and you need a good buying power and if you don’t have that you can always join venture with people that do” Drew 21:12
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The Geared for Growth property investing podcast was created by Mike out of a desire to provide value to his property investor clients. The idea is to source Australia's leading property investment experts and find how they and their clients are achieving exceptional results. The podcast is open to anybody interested in learning how to invest and the strategies you can apply to achieve exceptional results. You'll hear from buyers agents, mortgage brokers, strata managers, accountants and other professionals all sharing their insider knowledge.