THE DEVELOPER’S GO-TO: DUAL OCCUPANCY
Subdividing a block of land so that it can hold more than one single property may seem like a daunting task, especially if you are not an experienced property developer. So it may be surprising to discover most property developers’ experiences of dual occupancy builds are they’re one of the simplest ways to increase equity, pay off home loans sooner, and/or generate a rental income – all with relatively low associated risk.
A reasonably sized block of land is the ideal starting point for property developers looking to build a dual occupancy home, but there are many considerations and available options when it comes to subdividing land. To get an understanding of all of the dual occupancy basics first, take a look at our article Dual occupancy property – simplified. It gives you a quick outline of key advantages, what land types work best, and property market appeal. Our recent article, Live-in investors and dual occupancy also outlines the different sale and rental options commonly associated with dual occupancy investments.
Dual occupancy’s low risk reputation
If you already know all of the basic fundamentals about dual occupancy and want to know more about why dual occupancies are the go-to investment option for experienced and first-time property developer alike, well it often comes down to how low risk it can be. For example, property developers intending to rent both properties generally means the serviceability of the home loan is immediately improved. That is, if one tenant moves out you still have the rent of the other to service the home loan, which is something the banks (and property developers themselves) appreciate.
Another reason dual occupancies are seen as low risk investments is property developers can double the equity without doubling the investment – taking a single block of land to potentially yield two income streams (whether through renting or up-front sales). This reduces the immediate cost usually associated with buying two blocks of land, and also improves the likelihood of achieving positive cash flow sooner. Plus, this means a single block of land achieves a higher return, either immediate or ongoing, than the particular suburb it is situated in would usually be able to offer. This is a particular benefit to property developers building on land they already own.
Loan serviceability and positive cash-flow aside, the low-risk reputation of building dual occupancy homes also stems from the current property market. Newcastle, Maitland and the Hunter Valley are currently experiencing a very healthy market in relation to the appeal of dual occupancies. Demand for properties is high, and buyers and renters are increasingly seeking medium density living situations. These particular characteristics of the market drive up potential returns on investment and increase security.
Experienced dual occupancy builders help maximise gains
If you’re thinking of building a dual occupancy home, but would prefer to manage the entire process and build it yourself, you should be aware that as per the NSW Government Fair Trading ‘Major changes to home building laws’ announcement, since 2015, “Owner-builders are prohibited from getting a permit for a dual occupancy except in special circumstances.” You will also need to comply with the extensive dual occupancy checklist issued by your local council.
This is why we recommend getting the right team behind you who can take care of the technical details, navigate the many building requirements, and deliver a quality build. Researching your local area to find out what builders have a great reputation for delivering on time, sticking to the budget and streamlining the process is vital for property development success. If you can secure a builder who can tick all of those boxes, you will stand the best chance of maximising on your investment.
We’re the real deal for dual occupancy developers
Valley Homes has an experienced team, local know-how, and a network of reliable tradespeople to get your development dreams off the ground as simply and stress-free as possible – but more than that we have a host of flexible design options with premium materials and inclusions, all sourced from a wide range of quality suppliers. What does this mean for your property development? With Valley Homes your investment will be a sound investment, stand the test of time and have great market appeal.
Whether this is your first foray into property development and want to know more about how to build on your own land, or if you are an experienced property developer and want to discuss the ins-and-outs of our dual occupancy terms of service, we’re ready to help. Please give us a call, send us an email or pop into our Head Office.
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