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Dual Occupancy – your key to investment success?
As homeowners look to unlock equity in their land, and others look to downsize their living arrangements, dual-occupancy residences are becoming more prevalent. In recent years, the price of land has appreciated markedly more than the houses that sit on them. This has meant there is significant potential for financial gain and building wealth in subdividing land and creating a second dwelling, thus separably-keyed homes, granny flats and studio homes above existing houses have risen in prominence.
Often, the motivation for homeowners to entertain dual-occupancy is because it allows them to gain close to the maximum financial yield they can from their property without having to wait for the housing market to allow them to sell at a much higher price than normal. In doing so, they can maintain residence in their own home at their own address, and either build a separate residence behind, or renovate to create a split home with different keys. With this, they can sell the other part of the property (requiring a different title); rent out the area they are not using, or even move family into the other part for the sake of proximity.
Higher rental yields
One major drawcard of dual occupancy is that it can provide a much more attractive rental yield than one singular home, as in investment property owner is charge rent equivalent to that of two separate houses. For illustrative purposes, consider a 4×2 family home which may be available for $480 p/week rent. However, renovating such a home (or building it as a dual-occupancy home in the first place) can give you a 3×2 home with a smaller 1×1 dwelling attached to it. This then provides the opportunity to rent out the 3×2 at $430 p/week, while also bringing in $300 p/week for the smaller attached dwelling. This increased yield in situations where both dwellings are rented out creates remarkable value for the owner of the property, thus making dual-occupancy an incredibly attractive option for investment purposes.
Factors to consider
If you are building a home specifically for dual-occupancy purposes, it is important to consider all the factors that can add value to such a property. An example of this is to design the elevation of the home in such a way that it resembles in part that of a single-occupancy dwelling, whilst still maintaining the functionality of a dual-occupancy dwelling. For example, this can include positioning a single garage for the smaller dwelling next to the double garage for the larger dwelling, thus appearing like a triple-garage for a single occupant. These design inclusions make the outward appearance of this type of home much more seamless and in keeping with homes around it, whilst not losing any of the functionality a dual-occupancy home brings.
If you’re thinking about getting started on a dual-occupancy project for your own home or an investment property, it’s smart to engage with the experts. At McKinley Plowman, our property experts are market-proven property and development experts, so you know you’ll be in very capable hands.
For a free consultation, visit https://www.mckinleyplowman.com.au/services/property/
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