$110,000 of Day-1 Equity in Werribee: How the Numbers Actually Stacked Up

In April 2026, CQB Partners recommended a client proceed to contract on a freestanding four-bedroom house in Werribee, VIC at a negotiated price of $700,000.

Our independently assessed fair market value was $810,000. That is $110,000, or 13.6%, of day-1 equity captured at settlement rather than waited for over a growth cycle.

The recommendation was prepared by Sarah Dawes, Director and Licensee-in-Charge at CQB Partners, and issued as a five-page written recommendation before any contract was signed.

The asset

The $700,000 was secured in the lower quartile of the asking range. The equity position came from negotiation leverage against a time-pressured vendor, not from a compromise on asset quality. Newer stock, no body corporate, low flood risk, currently tenanted.

Why day-1 equity matters more than the headline discount

A $110,000 gap between price and value is a number that photographs well. What it actually does is compress a timeline.

The client's brief was five properties in five years. That target lives or dies on how fast usable equity rebuilds to the next deposit trigger of $100,000.

On the modelled assumptions, usable equity reaches $126,880 by Year 1 and $168,093 by Year 2. Without the day-1 position, the same trigger sits roughly two growth years further out.

Borrowing capacity told the same story. The $560,000 loan draws 85% of the client's $660,000 effective capacity, leaving approximately $100,000 of headroom for the next acquisition.

Buying at $810,000 would have consumed that headroom and the Property 2 timeline with it.

The ten-year model

Assumptions: 80% LVR, $560,000 loan, interest only for five years then P&I reversion, 6.20% pa interest, $520/week rent escalating at 3% pa, 6.00% pa capital growth, 3% vacancy allowance, 37% marginal tax rate, building depreciation of $5,820 pa.

After-tax Year 1 cost lands at $815 per month, improving to approximately $562 per month by Year 10 as rent reversion catches up. Modelled ten-year after-tax IRR of 10.8%. Equity multiple of 3.2x at a Year 10 exit.

What we told the client not to like

This is the part most case studies leave out. Four items were flagged in writing before contract.

Yield sits below our own screening threshold. Gross yield of 3.86% is under CQB's 4.00% baseline. It tracks the Werribee suburb median, so it reflects a growth-weighted submarket rather than a mispriced property, but it is below our line and we said so.

Cashflow sits outside the stated strategy tolerance. The pre-tax annual top-up of $18,939 is nearly double the $10,000 Small Negative tolerance in the client's profile. It is absorbed inside a weekly surplus of $2,288, and the plan is to restore portfolio balance with a higher-yielding Property 2. That is a deliberate trade, not a rounding error.

Post-settlement reserves are thin. Modelled reserves of $680 against a broker-recommended buffer of $20,000. Flagged for confirmation against the client's risk tolerance before proceeding, not after.

Rate sensitivity was stressed, not assumed away. A +1.00% move adds approximately $5,600 pa to debt service. A +2.00% move adds approximately $11,200 pa, lifting the annual pre-tax top-up to approximately $30,100 at a stressed DSCR of 0.34.

The point

The return profile on this deal is growth-dependent. We said that in the recommendation, in the same document that carried the $110,000 headline.

A buyer’s agent who only shows you the equity number is showing you half the analysis. The reason we could bypass some of the metrics on this asset was purely on equity play alone. The day 1 equity figure out-performed the missed yield threshold and this was highlighted upfront. The next play is for a higher net yield to create balance.

CQB Partners is an independent buyer’s agency operating nationally across Australia. Every recommendation we issue carries the assessed value, the modelled cashflow, the ten-year projection and the risks, in writing, before you sign anything. Steven Carroll (Managing Director) and Sarah Dawes (Director, Licensee-in-Charge) sign off on the analysis.

If you want your next acquisition modelled this way before you commit, start with a discovery conversation.

CQB Partners holds an Australian buyer’s agency licence. We do not provide financial product advice or tax advice. All figures in this case study are estimates based on information available at the date of preparation and are specific to one client’s circumstances. Final acquisition costs, holding costs and tax outcomes depend on individual circumstances and may differ from those modelled. This does not constitute a guarantee of property performance. Property values, rental income, interest rates and tax legislation can and do change. Past performance is not an indicator of future returns. Investment decisions should be made in consultation with your accountant and legal adviser.