How to make money from dual occupancy properties
In a more sophisticated property market, many investors are looking for ways to increase their holdings in the smartest ways possible.
And one of those ways is dual occupancy developments, which are commonly called “dual occs”.
What’s a dual occupancy property?
Well, it’s literally two properties on one block, so think of a duplex, for example.
A duplex is the equivalent of building one large property and splitting it in half, with each of the halves being completely self-contained.
Or more simply, it’s any property that provides an investor with multiple sources of income – such as two attached villas.
Dual occs can make good starter projects for small developers as they can be relatively simply to design, project-manage, and construct, with the right team behind you.
Before we go any further, however, let’s take a look at the pros of developing a dual occ:
- There can be stamp duty, rates and up-keep savings if you keep both properties on one title.
- There are two rental income streams if holding the pair in your portfolio.
- Its land content generally outperforms apartments or units.
- They can produce higher yields than a comparable house.
- No expensive ongoing body corporate fees like you would in a large strata or body corporate scheme.
It should be noted that if you’re developing a dual occ to sell, you’ll need to strata them so that each dwelling has its own title, which adds to project costs.
Ideally, given you can achieve two rents from one property, it’s a better wealth creation strategy to try to hold the properties in your portfolio.
But if the duplexes each have their own title, you can sell one and hold the other, potentially owning it outright from the outset.
Dual occs can make solid investments given their cash flow potential, but location – like all property investment – is imperative.
Duplexes can provide a better rental yield than standalone houses in the same location, which of course is a big benefit for investors.
How to choose the best dual occupancy sites?
As long as the local zoning permits dual occupancy developments, it’s always best to consider sites that are close to infrastructure and amenities and the types of buyers who want to live in these types of dwellings.
Of course, the site will also have to be large enough for a dual occ development to be approved, which varies depending on its location.
This is where you must complete a comprehensive feasibility analysis before signing a contract of sale.
You don’t want to end up with a site that’s no good to build a dual occ on!
A corner block is perhaps one of the simplest ways to make money from property, especially if the block is zoned for development.
That’s because corner blocks allow two-street access and therefore have more development options, which can significantly add to its appeal and value.
On a corner block site, for example, it might have an old house that you intend to demolish but which you continue to rent out while you obtain development approval to construct a dual occupancy dwelling on the site.
That way, your holding costs can be drastically reduced while all the paperwork and planning is being finalised.
Well-designed and well-located dual occupancy properties have the potential to provide strong cash flow through two rents from one property.
And holding the properties over the long-term can result in solid capital growth from two properties, instead of just one, on a single site.
Of course, with any type of property development, it’s vital that you get expert advice and guidance before proceeding to ensure your investments ideas can become a profitable reality.
If you’re ready to create a dual occupancy development, get in touch today!