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How to beat the banking blues

By Michael Knights, CEO of Horizon Property Alliance

While there are always opportunities to profit in the property market, there’s no denying the current finance landscape has created a tough environment for many investors.

Every week I hear tales about how APRA’s moves to slow investor lending growth seriously overshot the mark. Hot on the heels of these regulations came the banking royal commission which saw financiers tighten their lending policies even before the official findings were tabled.

On top of this, banks have also decided to flout the RBA and implement out-of-cycle interest rate rises.

I’ve heard it said some things are no fun if they’re too easy, but I seriously don’t think trying to get a loan should fall into the realm of adventure sport!

It’s now taking borrowers a lot longer to get finance, and the level of scrutiny financiers are applying to household balance sheets would make Sherlock Holmes proud. I’ve seen credit departments demanding proof from applicants on the cost of gym memberships, restaurant meals and shoe purchases. Brokers are telling their clients to keep their bank statement ‘squeaky clean’ or risk being knocked back on their application.

Now is most definitely the time to be strategic with your portfolio so you can secure finance and take advantage of the opportunities presented.

As I see it, it’s all about the ability to service your loan repayments and I believe there’s a solution for investors looking to beat the banks.


It has never been more important for investors to start paying attention to the potential of positive cash flow investing in their portfolio. It’s a smart move because positive cash flow allows owners to have excess funds each month that help offset borrowing costs. They also paint your profile as a good risk to lenders making the chance of securing dollars much easier in the future.

You can go the traditional route and look for houses and units in higher yield locations to help maximise every dollar outlaid in purchase price.

I, however, believe the smart investor will look at property types and approaches that will supercharge their income even more.


There are some very smart strategies I’ve spotted that are helping my clients really ramp up their returns.
The foundation of this approach is about exponentially increasing the number of potential tenancies on offer. Best of all, it’s a strategy that works really well for all sorts of buyers who are looking to boost their income, or might normally struggle with loan servicing.

First up, nothing beats dual-key and duplex designs when it comes to cash flow.

These have always been income winners because twice the tenancies across the same allotment means you are making more income than the single-use neighbours.

But there are ways to drive your rent even higher with dual-key and duplex.


The primary idea is to rent out rooms on an individual basis like a flatmate or boarder arrangement.

Firstly, this structure appeals to tenants who want more flexible accommodation and if you’re strategic in your approach, you can attract the right type of tenant at an excellent price.

Start by thinking about the type of by-the-room boarder you’ll get in your location. It could be a student or a transient worker. It might be a FIFO professional who need a crash pad for weekdays only. There’s a huge number of tenants in the Aussie market who don’t want to be tied to a long-term lease.

Think about their needs around utilities and security. It doesn’t take much to furnish these rooms, arrange internet access and provide individual door locks.

The upside for you is substantially higher yield for your investment.

In my experience, the sweet spot price range throughout Queensland is $180 to $220 per week for ‘flat mates’. I’ve even seen some properties on the Gold Coast which are achieving $230 to $250 per week for a room. For those owners – whether a first homebuyer or a retiree – putting a TV, bed and wardrobe into a room while providing clean and functional kitchen, bathroom and laundry facilities has seen them yield $880 per week instead of $450 per week.


If you want to ramp the return up even further, consider short-stay as an option.

The new online accommodation economy is bringing in mighty yields for those holding multiple rooms in duplex and dual-key dwellings. If you’re worried that extended vacancy periods present a risk, then there are ways to mitigate this. Well selected locations with the right sort of attractions for holidaymakers rarely see empty rooms.


For those who want to live in their purchase, maintain privacy and take advantage of per-room tenants, then dual-key and duplex construction is a goldmine.

If you’re a young couple looking to make a start in the market, consider a two-plus-three duplex. You can live in the two-bedder and come and go as you like but lease out the three-bedroom side on a per room basis.

This approach can see you earn 7% to 10% return on the property you’re living in! 
That’s an extraordinary outcome for a new property owner!!!

Put the extra dollars into a loan offset facility and drive down the interest repayments too. Document your excellent income too, because banks look favourably on high-yields when it comes time to borrow again.

Here’s the really cool part of this strategy.

Eventually, you will look to move on. It might be you’re starting a family, need a house upgrade or just feel it’s the right time to shift. Whatever the reason, retaining your duplex will provide you with a spectacular foundation for growing a multi-property portfolio.

Think about it. Your first investment will most likely provide a yield of more than twice the rent than a traditional single-lease home.


For those who want to supplement their income, creating positive cash flow is even better when you go regional – particularly for retirees. Anyone who’s found post-work life a strain on their finances can still ‘get out of town’ for that long wished-for sea-change or tree-change and come up a winner. Regional dual-key construction costs in the low-$400,000s, while strata duplex builds can be completed for around the low $500,000s. The chance to rent out those additional rooms means you’ll have plenty extra money at your disposal each week.

Multi-tenancy properties with positive cash flow are a great way to secure income and keep loan servicing in check. The key is spotting the right type of property. If you want to save time and effort, don’t hesitate to contact us so we can walk you through the process and show how this type of holding makes perfect sense.

So, if you love talking about property investing as much as myself… contact us!

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