Dual Occupancy Guide for beginners

There's lots of hype for Dual Occupancy properties these days, but what exactly are they and why are the becoming so popular?

A dual occupancy property is two units on one or two titles that can be rented out separately to different tenants. Each unit is fully self sufficient meaning it has its own kitchen, bathroom/s, living area and metered services such as electricity and water. They also have separate entrances as opposed to a dual key property which has one common front entrance. Dual occupancy properties are council approved and are built to code to ensure fire regulations are met.

Dual occupancy properties have been around for sometime however only became mainstream as a type of property investment with the introduction of NSW SEPP Legislation in 2009 that allowed the the fast track approval of complying developments in 10 days. This allowed property investors to build a secondary dwelling or granny flat on their existing property and greatly increase the rental income generating yields in excess of 6-7% when combined with the existing income on the property.

Duplex packages followed soon after with huge popularity particularly in major regional areas such as Toowoomba and Newcastle where investors made 5-20% equity on their investment once the properties were constructed and strata titled. That's right, you read that correctly 5-20%. So if you paid $600,000 for a duplex package (land price + build price combined), built the duplex pair and strata titled upon completion then each unit would be worth $315,000 to $360,000 per side.

There are basically two types of dual occupancy properties - based on whether you can strata title them on completion. Once separate title has been completed you have the choice of selling or refinancing them individually.

Duplexes which can be strata titled on completion can only be built following the approval of a development application through council.

Duplex properties are further characterised by:

- Each dwelling usually similar in size e.g 2 x 3 bed 2 bath SLUG

- Most often attached sharing a common wall which is fire rated

- Both dwellings have their own car parking with a shared driveway

- Both dwellings have their own fenced off yard space

- Entry point of $600,000 with land and build contract in Brisbane region

- Corner allotments allow each dwelling its own street frontage with separate driveway

- Unusual in land estates close to capital city areas therefore mostly available in regional areas

- Council headworks (infrastructure) charges and strata fees apply of around $40,000-$50,000 depending on each council

CONCLUSION: Duplex properties are the perfect way to get into your first small development with the experience of constructing 2 units and getting potential equity uplift on completion.

Dual occupancy properties that cannot be strata titled are called dual living, granny flat or associated dwelling properties. They are also approved through council but usually much faster as complying development.

Dual Living properties are further characterised by:

- A primary and secondary dwelling

- State based legislation in NSW and WA

- Car parking on site not always required for secondary dwelling i.e. NSW

- Can be purpose built as two attached dwellings or alternatively the secondary dwelling can be built on the same lot as the existing dwelling (granny flat)

- Entry price point of $475,000 with a land and build contract in the Brisbane region

- Secondary dwelling additions start from $110,000

- Higher yields than duplexes as there are no council headworks (infrastructure) charges or strata fees in most cases

CONCLUSION: Dual living properties are ideally suited to a cashflow strategy with a lower price point than a duplex.

For more information about which dual occupancy property is right for you - contact The Property Room team.