Sydney couple to make $50K a year after buying 11 unit block for $575k

Feeling like there was no hope to break into the brutal Sydney market, the Millennials used this genius hack, which will net them $50k a year in profits.

Most people wouldn’t expect to have 27-year-old landlords in charge of 11 apartments, but that’s exactly what Daphne Labour and her boyfriend Jayke have done to break into the property market.

The couple, who have been together for eight years, found with property prices shooting up it was almost impossible to find a good deal, let alone their dream home in Sydney.

But with a goal to be more financially stable before moving in together the Sydneysiders decided to look for an investment property and stumbled on a genius idea.

“When looking at the investment properties around Sydney the rental rate was just so low for what you purchased, you were looking at 3 to 5 per cent, but then we saw blocks of units … and the rental rate is returning 15 to 17 per cent so that means we would have surplus money,” she said.

They uncovered a toggle on realestate.com.au that allows you to search for blocks of units and armed with a deposit of over $170,000 they searched for a year, including in states like Queensland.

Daphne Labour and boyfriend Jayke. Picture: Supplied

Finally, they nabbed an apartment block in Broken Hill for $575,000 with 11 units and an apartment used as a communal laundry space.

However they never physically saw it in person due to lockdown, with the settlement going through earlier this week.

“A 12 unit block is kind of rare. I haven’t seen a 12 unit property for half a million dollars, if ever, especially in the last year of looking for a property,” she said.

“So I think that was a rare find but if you have a look in Queensland there was two unit lots for $230,000. And a few in Tasmania as well that was a good return, but we worried there were a few mines closing there and there was no better return than Broken Hill.”

Their property search took a year. Picture: Supplied

But the couple almost missed out as it was first put on the market back in June and was snapped up in just a couple of days, with their offer knocked back.

“Then a month later the agent emailed me and said it’s back up and we put in another offer and we thought we might as well put in a slightly higher offer and that’s how we got it,” she said.

“It was a risk because it was only up on the market for four days and that’s not really long, so we had a quickly look at the floorplans and photos and did a building inspection and pest inspection as well and all the checks were ok.

“It’s a risky move but it might be the best thing I’ve ever done or worst thing I’ve done. I’ll find out next year.”

The flats that the couple bought. Picture: rea.com.au

Inside the flats. Picture: rea.com.au

But with nine of the apartments currently tenanted, they are set to rake in almost $50,000 a year in profits after making the loan repayments.

Its made Ms Labour wonder why more people aren’t embracing the idea, which came from her boyfriend listening to an American investor called Grant Cardone.

“It’s a scary thing to have so many units to look after but if they are returning good money why aren’t more people doing it?” she asked.

“I’m not worried. I have already made my calculations that even if five units are leased out we would still make our repayments and if we have a sixth one that’s our surplus.”

She added that Broken Hill was a particularly good location with a new mine opening next year while the movie Mad Max will be filmed there.

“There is a lot of funding going into Broken Hill because we have researched all this,” she noted.

“Basically the government wants to put more money into mining towns, so people are staying there as opposed to fly in and fly out, which is what’s happening now and the vacancy rates are so low. I think its been the lowest this year or last year in the past decade.”

The couple did their calculations before buying the property. Picture: Supplied

But she admitted there is a catch for others who might be looking to go down the same path. The couple were forced to take out a commercial loan, meaning they had to put up a hefty 30 per cent deposit to be paid over 15 years, as only blocks with four or less units qualify for a residential mortgage.

Ms Labour admits she had a helping hand with saving for the deposit as she lives at home and doesn’t pay rent.

She also already owns a two-bedroom unit in Campbelltown, which she purchased at just 21 for $450,000, but said she doesn’t feel it adds much to her investment portfolio.

“I have some equity on it but don’t think I have that much as with my repayments I get rental income of $410 a week and I get an extra $10 a month after paying the mortgage,” she said.

Daphne also bought a two-bedroom apartment when she was 21. Picture: Supplied

In fact, Ms Labour said she is “turned off” by the idea of buying a forever home and being lumped with a 30 year mortgage and instead is thinking about renting long term and using investing instead to grow their wealth.

“It’s not a big deal for me right now buying my forever home. I don’t have kids, I’m not even married and I don’t think that was a priority for me. A priority for me was being financially stable and having that surplus to have financial freedom,” she said.

“It’s about investing into different things like there’s crypto and there’s the property market and I think dipping your feet into a bit of everything is a financially good decision.”

The market research consultant said their two year plan was to get a block of 10 units but now they have already done it, so they are looking at securing 10 more by the end of next year.

The kitchen inside the apartments. Picture: rea.com.au

A view of the bathroom. Picture: rea.com.au

Ms Labour added their plan isn’t “greedy” but a smart financial decision.

“The blocks of units they are cheaper than what you can get in Sydney and I am looking at $300,000 blocks of units. I’m not looking for million dollar units in Sydney,” she said.

“It’s a cheaper option and as well it makes it easy for us as Millennials to afford whereas Baby Boomers are living on equity right now from when they bought there houses 20 years, and I don’t think it’s a greedy at all.

“It’s a cheaper option and it’s a smart decision and if you can afford $300,000 for a three unit block and have to pay a 20 per cent deposit, it’s more affordable than buying something in Sydney.”