---
title: "We Bought 131 Houses This Year. Here Is Exactly How They Performed."
description: "A full transparency report on 131 house acquisitions across Melbourne in 2020. Average 660sqm land, 12.75% capital growth, 5% rental yield. Suburb picks, strategy breakdown, and 2021 outlook."
author: Yan Zhu
date: 2023-08-31
category: Guides
url: https://premiumrea.com.au/blog/melbourne-property-portfolio-results-2020-annual-review
tags: ["portfolio results", "Melbourne", "capital growth", "rental yield", "annual review", "property investment", "transparency", "suburb picks"]
---

# We Bought 131 Houses This Year. Here Is Exactly How They Performed.

*By Yan Zhu, Co-Founder & Chief Data Officer at PremiumRea — 2023-08-31*

> At the start of 2020, I was the first person publicly saying to go all-in on Melbourne. Twelve months later, it is time to open the books. 131 houses purchased, all on 500-plus square metres of land, averaging 12.75 per cent capital growth. Here is the full breakdown.

At the beginning of 2020, I made a call that went against the consensus. Melbourne was underperforming relative to Brisbane, Perth, and Adelaide. The media narrative was firmly anti-Melbourne. Pundits were telling investors to chase the cities that had already run up 20 to 30 per cent.

I said the opposite. I said go all-in on Melbourne. Buy the dip. Target the supply-constrained corridors where population growth was accelerating but no new land was being created. Ignore the headline numbers and focus on the micro-market fundamentals.

Now it is January 2021, and it is time to show the receipts. No cherry-picked winners. No vague claims. The full portfolio data, every acquisition, every result.

## The headline numbers

In 2020, our team purchased 131 houses across Melbourne. Every single one sits on a minimum of 500 square metres of land. The average land size across the portfolio is 660 square metres.

Average capital growth across all 131 acquisitions: 12.75 per cent. That figure is based on bank valuations and comparable sales data, not our own internal estimates.

For context, Melbourne's overall median house price growth over the same period was considerably lower. Our portfolio outperformed the broader market because we were not buying the median house. We were buying specific properties in specific corridors with specific characteristics.

The suburb picks we made at the start of the year — Frankston and surrounds, the far southeast (Cranbourne, Hampton Park, Narre Warren), the northwest growth corridor, and Geelong — almost universally outperformed the Melbourne average. Several individual properties achieved growth rates that exceeded Brisbane and Perth's averages for the year.

So if you are still chasing Adelaide or gambling on Darwin and Tasmania, I would genuinely encourage you to look at the data. Those markets may have already peaked. Melbourne is where the value sits right now.

I want to add some context to the performance numbers that makes them more meaningful. When I say 12.75 per cent average capital growth, I am quoting growth from the date of purchase to the most recent bank valuation or comparable sale. This is not a calendar-year figure. It is a purchase-to-current figure annualised across the hold period.

Some of our 131 acquisitions were made in January and have had a full 12 months to season. Others were made in November and have had only two months. The fact that the portfolio-wide average still sits at 12.75 per cent when many properties have had less than six months of hold time tells you something important: the growth is front-loaded.

This front-loading is not an accident. It is a direct result of our acquisition methodology. We buy below bank valuation. Every single property in our portfolio was purchased at a price below the independent bank valuation at the time of settlement. On average, our clients achieve an immediate uplift of 5 to 8 per cent between purchase price and first bank valuation.

How? Through negotiation leverage (unconditional offers, short settlement periods, cash deposits), off-market access (40 per cent of acquisitions never hit public listing), and asymmetric information (our team's street-level knowledge identifies properties with unpriced characteristics like subdivision potential, granny flat feasibility, or incorrect zoning classifications).

The remaining growth comes from genuine market appreciation in our target corridors. But the initial below-valuation acquisition means our clients start their investment journey in a positive equity position from day one. That is fundamentally different from buying at auction where you are statistically likely to overpay relative to independent valuation.

## Rental yield: the number that actually pays your mortgage

Melbourne's average rental yield sits at around 3.5 per cent. Our portfolio average in 2020 was 5 per cent. That is a 43 per cent premium above the market average.

The slight decline from our previous year's 6 per cent average is actually a positive signal. It reflects strong capital growth — when your property value rises faster than your rent, the yield percentage compresses even though your dollar income has increased. The denominator grew faster than the numerator. This is the definition of a quality problem.

The second factor driving the yield adjustment is strategic. This year, we introduced several new service lines — land subdivision, granny flat additions, and whole-property leasing strategies designed to maximise negative gearing benefits. In some cases, we deliberately structured lower rents to optimise the client's overall tax position. A property renting at $700 per week with full negative gearing benefits can put more after-tax money in a landlord's pocket than the same property at $800 per week without those benefits. Every client's situation is different, and good property investment starts with good financial planning.

Our granny flat program expanded significantly this year. We now offer 18-square-metre, 24-square-metre, 30-square-metre, and 60-square-metre configurations. Average cost is around $110,000 for the build, with rental yields on the granny flat component averaging approximately 18 per cent ROI. The combined yield for properties with granny flats sits around 5 per cent on total investment, which includes the main house purchase price plus the granny flat construction cost.

Rooming house configurations — where we legally subdivide internal living spaces to create multiple independent tenancies — continue to deliver yields around 6 per cent. These are not for every investor, but for those with the right risk appetite and the right property, they are exceptionally powerful.

Let me break down the rental yield methodology because I know people will question whether 5 per cent is real or manufactured.

We calculate yield on total invested capital, not just the purchase price. If a client buys a property for $620,000 and we invest $15,000 in light renovation — new paint, new carpet, fixture upgrades — the yield is calculated on $635,000, not $620,000. This is more conservative than many buyer's agents who quote yield on purchase price alone to inflate the number.

Even with this conservative denominator, our yields significantly beat the market. The renovation spend is what makes this possible. A $620,000 property in its existing condition might achieve $500 per week in rent — a yield of about 4.2 per cent. After $15,000 in targeted renovation, the same property achieves $650 per week — a yield of 5.3 per cent on total capital. The $15,000 investment generates an additional $7,800 per year in rental income. That is a 52 per cent return on the renovation spend alone.

Our granny flat program takes this further. A property purchased for $650,000 with a granny flat built for $110,000 produces a total investment of $760,000. The main house rents for $550 per week. The granny flat rents for $320 per week. Combined rent is $870 per week on a $760,000 base — a yield of 5.95 per cent. The granny flat component alone generates $16,640 per year on a $110,000 investment — an 18 per cent ROI.

These numbers are not outliers. They are the standard outcome when properties are selected correctly (80 per cent land ratio, 600-plus square metres, supply-constrained suburb) and improved intelligently (targeted renovation, not over-capitalisation).

## How we pick suburbs (and what to avoid)

Our suburb selection methodology has not changed in 2021. We look for three things.

First, demographic sweet spot. We target suburbs where the dominant age cohort is 30 to 40 years old. These are working professionals and young families at the peak of their earning and household formation years. They drive rental demand, they drive purchasing demand, and they underpin sustained price growth.

Second, supply constraint. We only buy in suburbs where the supply of new land is approaching zero. No greenfield development. No master-planned estates. No suburbs where a developer can release 500 new lots next year and crater your capital growth. We want established suburbs where every transaction involves an existing house changing hands, not a new house being added to the stock.

Third, the 80 per cent land rule. The land component of every property we buy must represent at least 80 per cent of the total value. Buildings depreciate. Land appreciates. If you pay $650,000 for a property where $520,000 is land and $130,000 is the dwelling, the depreciating building is a small percentage of your investment. If you pay $650,000 for a new house-and-land package where $250,000 is land and $400,000 is the building, you have a much larger portion of your capital sitting in a depreciating asset.

What to avoid in 2021: master-planned growth areas with unlimited land supply, any suburb where the word 'precinct' appears in the marketing material, and any property where a developer or real estate agent is offering you cashback incentives, free furniture packages, or rental guarantees. These are red flags that the property cannot sell on its own merits.

A specific caution on street-level selection. Even within the right suburb, two houses sitting side by side can have completely different investment profiles. Flood overlays, easements, high-voltage powerlines, traffic exposure, and orientation all affect value. We conduct deep due diligence on every single property, which is why we employ full-time on-the-ground scouts who inspect dozens of properties per week.

On the street-level selection point, I want to share a concrete example. Last year we looked at two properties on the same street in Cranbourne, listed within two weeks of each other. Both were three-bedroom houses on 600-square-metre blocks. Both were priced around $600,000.

Property A was on the quiet end of the street, backed onto a reserve, had no easement, and faced north. Property B was at the end closer to the main road, had a 2.5-metre-wide easement running through the back third of the block, and backed onto a commercial property.

To an untrained buyer, these looked identical. Same street, same size, same price, same number of bedrooms. But Property A was worth $650,000 and Property B was worth $550,000. The easement on Property B prevented granny flat construction, the commercial neighbour created noise issues that would affect tenant quality, and the road proximity reduced both capital growth potential and tenant demand.

If you bought Property B because 'it was on a good street' without understanding these micro-level differences, you left $100,000 in value on the table on day one. And you eliminated the future option to add a granny flat, which would have generated an additional $15,000 to $20,000 per year in rental income.

This is why we employ full-time scouts — Steven and Edward — who inspect dozens of properties per week. They know every street in our operating corridors. They can identify easements, flood overlays, high-tension powerline proximity, and orientation issues from the street before they even enter the house. That ground-level intelligence is irreplaceable by data alone.

## The team behind the numbers

Our team grew from 11 people at the start of 2020 to 35 by year end. That growth was not about empire-building. It was about maintaining quality as our transaction volume scaled.

The team now spans four core functions. Data analysis and suburb research. Property search and acquisition. Renovation and construction supervision. Rental management and ongoing property care.

We are the only practice I am aware of in Australia that operates a genuine end-to-end service: buy, renovate, rent, manage. Most buyer's agents hand you the keys and disappear. Most property managers have never been inside a negotiation room. We do both, and everything in between.

Our property management division operates at a 1:50 manager-to-property ratio. The industry average is 1:170. That difference is the reason our average vacancy period is measured in days, not weeks. It is why our landlords are not spending their evenings chasing late rent or dealing with maintenance emergencies. And it is why our tenant retention rate consistently beats the market.

The new year will bring more content. I will continue producing videos and articles sharing the strategies, data, and insights that drive our results. I will also be running live sessions where I answer questions in real time — including topics my business partner would probably prefer I kept internal.

I am actuary Yan. The numbers do not lie.

I want to close with something about transparency that matters to me personally. This industry is full of buyer's agents and property educators who claim extraordinary results but never publish their aggregate data. They show you one property that grew 25 per cent and imply that is the norm. It is not. It is the outlier.

We publish our full portfolio performance — every acquisition, every growth number, every yield — because we believe investors deserve to make decisions based on real data, not curated highlights. Our 12.75 per cent average growth includes every property, including the ones that grew only 5 per cent. Our 5 per cent average yield includes the properties where we deliberately structured lower rents for tax optimisation. The numbers are real, unfiltered, and available for scrutiny.

If you are evaluating any buyer's agent or property service, demand the same level of transparency. Ask for their full portfolio data, not a selection of best cases. Ask what their worst-performing acquisition achieved. Ask how they calculate their growth figures — is it based on bank valuations, comparable sales, or their own internal estimates?

The answers to these questions will tell you more about a service provider than any marketing material, testimonial, or social media video ever could. Numbers do not lie. But people presenting numbers can be very selective about which ones they show you.

Our books are open. Always have been. Always will be.

## References

1. [CoreLogic Australia, 'Annual Property Market Review — Melbourne Metropolitan', December 2020.](https://www.corelogic.com.au/research)
2. [PremiumRea portfolio data, December 2020. 131 acquisitions, average land size 660sqm, average growth 12.75%.](#)
3. [Domain Group, 'Quarterly Rental Report — Melbourne Metropolitan', Q4 2020.](https://www.domain.com.au/research/rental-report/)
4. [REIV, 'Annual Median House Prices — Melbourne by Region', 2020.](https://reiv.com.au/property-data/residential-median-prices)
5. [Australian Bureau of Statistics, 'Regional Population Growth — Greater Melbourne SA4s', Cat. No. 3218.0, 2020.](https://www.abs.gov.au/statistics/people/population)
6. [Reserve Bank of Australia, 'Statement on Monetary Policy — Housing Market Assessment', November 2020.](https://www.rba.gov.au/publications/smp/)
7. [SQM Research, 'Residential Vacancy Rates — Melbourne by Postcode', December 2020.](https://sqmresearch.com.au/graph_vacancy.php)
8. [Victorian Planning Authority, 'Land Supply Reports — Established Suburbs vs Growth Areas', 2020.](https://www.planning.vic.gov.au)
9. [PropTrack, 'Melbourne Price Growth by Suburb — Annual Rankings', December 2020.](https://www.proptrack.com.au)
10. [Real Estate Buyers Agents Association, 'Industry Benchmarks — Transaction Volume and Outcomes', 2020.](#)
11. [Australian Taxation Office, 'Rental Property Deductions — Negative Gearing Overview', 2019-20 Financial Year.](https://www.ato.gov.au)
12. [City of Greater Geelong, 'Population and Housing Forecast — Demographic Analysis', 2020.](https://www.geelongaustralia.com.au)

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Source: https://premiumrea.com.au/blog/melbourne-property-portfolio-results-2020-annual-review
Publisher: PremiumRea (Optima Real Estate) — Melbourne buyers agent