How you could quietly make $1m in 10 years

The idea of buying a two-bedroom unit in an Australian capital for $210,000 seems impossible. But it can happen, and it can make you money.

Here’s a trivia question. I just bought a two-bedroom apartment for $210,000, just 6km from the CBD in a capital city … what year is it?

Answer: 2023.

A few months back, I was looking to buy an investment property at the affordable end of the market with a solid rental return so it would pay itself off.

I assumed I’d be looking at the regions, as you’d surely need a time machine to buy a capital city apartment for below $250,000.

Sold in August 2023, in Wembley WA, a 2 bed unit for $240,000.

But my buyer’s agent found a number of two-bedroom apartments in Perth at that price point.

And not on the outskirts, either. I ended up securing my unit just 6km from the CBD.

PropTrack data shows Perth has been lagging behind for growth, with a unit median of $395,000- by far the cheapest of all the major capitals.

Adelaide’s $445,000 is the next cheapest. Meanwhile, Perth’s rental yield of 6.85 per cent is the highest by more than a whole per cent. It also has the nation’s tightest vacancy rate of 0.5 per cent, according to SQM Research, meaning finding a tenant was not going to be a problem.

After engaging a property manager, we listed the unit for rent and were able to command $450 per week due to the competitive market. That’s a rental yield of 11 per cent, or put more simply, rental income of $23500 per year.

Paying interest only of around 7 per cent on my loan of $168,000 will cost me under $12,000 a year. So, even after subtracting my tax deductible property management fees, I am still about $10,000 a year better off than if I hadn’t bought the property.

And the market is already on the rise. This month an almost identical two-bedder in my block sold for $270,000. The next time I refinance I could potentially access more equity to invest elsewhere.

My experience taught me the value of a buyer’s agent.

I would never have thought to look at Perth and the deal he sourced me was $30,000 cheaper than anything listed online. Buyer’s agents’ fees can set you back more than $10,000, but you can end up saving much more than that on the deal.

It also showed me a different way to build wealth.

This property is now earning me $10,000 a year, and if it doubles in value in the next 10 years, I’ve earned a total of more than $300,000. If I did that with two or three similar properties, I could create between $600,000 and $1m wealth in 10 years.