How to profit from dual occupancy properties
When markets are transitioning, savvy property investors and small developers consider alternative ways to increase capital growth over time.
And one of the options is constructing a dual occupancy (or dual occ for short) property.
Not only does a dual occ provide opportunities for greater profits and yields, for some people it gives them the option of housing an elderly relative, or even young adult children nearby.
Why build a dual occupancy development?
One of the main benefits of a dual occ is that you can build two properties on a single block of land, which you can sell individually once the lot has been strata titled.
Subject to council approval and appropriate zonings, a dual occ – which is usually a duplex or two properties in tandem that share common property such as a driveway – can be constructed on a piece of land that you already own or have purchased.
Perhaps it’s one with an old property, which it makes more financial sense to knock down and build two new dwellings than it does to keep it and significantly renovate or remodel.
Of course, one of the advantages is that while you will end up with two new properties in your portfolio, there will be one building and design team working on the project for you at the same time.
The best sites to consider for a dual occ are those that are close to infrastructure and amenities as well as the areas that are attractive to the type of buyers who want to live in dual occ dwellings.
Why do dual occupancy properties make financial sense?
Dual occupancy sites provide the opportunity for long-term investors to profit from two new properties on one site.
Plus, instead of building one property on the site that is earning you one weekly rent, you now have two properties earning two lots of rents, which can be substantially more because of the higher yields usually achieved through new dwellings.
Say, for example, one property might attract a weekly rent of $750 per week, but each of the dual occ dwellings might earn $600 per week, that means $450 more in rent every single week!
Likewise, if both properties are investments, then the land component of the site is likely to increase in value faster than a standard apartment in a large complex.
Dual occupancy strategies
Some investors opt to construct a dual occ to sell after completion, which means more dollars in their bank account to develop something bigger and better.
Likewise, others decide to keep the property over the long-term, so they can make the most of its capital growth upswing and stronger cash flows.
Others, still, simply choose to live in one of the properties and rent out the other to tenants or perhaps to provide a roof over the heads of their elderly parents.
Last, but certainly not least, some people decide to sell one of the dwellings, and live in the other, which often results in them having no – or a very small mortgage – from the outset.
Whichever is the best strategy for you, dual occupancy builds can produce strong profits – as long as the site selection and build expertise is optimal.
Like anything in real estate, quality is key.
Of course, that is one of our strengths, having helped many homeowners and investors achieve strong results from dual occ builds over the years.
And whether they decided to stay, rent, or sell, they all learned that these types of property developments might be considered small scale, but they sure can produce big results if done with the right team.