Oceanfront Existing Residential Renovation turned bankroll

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As a surfer, I’d dreamt of living in my own long term beachfront house since I was a teen. Not being a great morning person (until kids, ok still not!) the ideal was waking up to check the surf from my bed, by juuuuust lifting my head from the pillow. This was that house. I purchased it in 1998 for $308,000 as my property activities started to accelerate. I didn’t move in straight away, as by then I knew the tax and stamp duty advantages (the maths) were better to rent it out first but also, I was living in a beachfront unit at Alexandra Headlands that I owned, and it was more central primarily to my weekend haunts. 

Then, in 2000, Stockland released an estate called Kawana Island. I knew it was coming as I did some consulting to them on other projects, but I always watch the big guys for market leads and opportunity. Because let’s face it, their research budget is bigger than ours. The estate turned a mangrove swamp into an inland island by creating lakes to access fill (soil) in order to build up the sites to be sold. It was west of Nicklin Way, but only four streets to the beach and was to include extensive community spaces such as a walkable waterfront, which was new. I was a believer, just look at what happens to land that close to the beach at any beachside region; it wasn’t rocket science! I got excited and expressed interest in five lots (See also Believe? Get in Early) and told everyone I knew to get on board; no one listened at first. The dry sites (non-waterfront) average cost was $70,000 approx., while the canal front block was $170,000. My initial plan was to build on all dry sites and hold the homes long term as rental properties, while possibly flipping the waterfront site down the track as its supply was far more limited. 

As the estate grew, I knew the subsequent average land price in each release would too, and my valuations would increase while getting rental from the homes. In other words, as the sheep lined up, demand increased which would push up prices. This and other market dynamics, such as the introduction of GST, saw the land prices double and double again in just a few years. There was one catch though; the bank and valuer weren’t as convinced and so to secure funding for all these I had to sell my beachfront dream home to access the created equity but also match the serviceability criteria – a never-ending tussle to this day. It sold for $450k, which was a nice gain, though it’s now worth around $1.5 million. In my defence, the five homes at Kawana Island have increased their equity above costs (on mass) over double the dream home. Even still, I don’t think this is as simple as a right or wrong analysis, what’s done is done, but man, I wish I still had that house!