DUAL OCCUPANCY PROPERTY – SIMPLIFIED
As inner-city land, particularly around Newcastle and Maitland, becomes more valuable the demand for dual occupancies are increasing. Dual occupancy is essentially a development where you subdivide a block of land, creating two attached or freestanding homes. The appealing aspect about a dual occupancy investment is that it usually doesn’t cost much more to build two average sized properties, than building a single large home – and by using a single block to do it means equity is created by essentially halving the land cost. It is a great way to create value, boost your income or even improve housing affordability. Dual occupancy properties are particularly appealing to three groups of buyers:
- Investors: who see the potential to turn a reasonable profit by building two homes on a subdivided block and selling or renting both.
- Owner-occupiers: who own a large block and have the space and means to build a second home on the land. Often they are rented for an ongoing income, or sold to boost their retirement nest egg.
- First home buyers: who either join together with family or friends to buy a large block to subdivide between them, essentially halving their land price.
Here’s what to look for when buying a new block to subdivide:
If you are buying a block with the intent to subdivide one of the most sought-after options is a wide street frontage. A wide block allows the new properties to stand side-by-side with separate driveways, which is very appealing to buyers if you wish to on-sell one or both properties. Another popular option is a corner block, which creates the opportunity for the driveways to be on separate streets. Whatever block style / size you are seeking, make sure you research the area and check with local council regulations to ensure it is zoned to allow dual occupancy dwellings.
Already own a large block of land?
Subdividing a block of land you already own is a relatively low risk investment. It creates equity in your land, plus it means you can yield a rental income. Or you can sell the new property to either help pay off your mortgage or to put towards your retirement plans. Many owner-occupiers may be situated on large, narrow blocks. While these may not be the first choice for investors they can usually accommodate a battle-axe solution – with the second property sitting behind the front / existing property. The only change to the frontage is often a second driveway visible from the street.
Planning to rent or sell – know your market
Before you do anything it pays to get to know the local market. Talk to experienced dual occupancy property developers like our team at Valley Homes who manage the entire process, including surveying, planning and liaising with council. It is important to speak to your financial lender and know what fees you are up for including stamp duty and land rates. Also speak to your local real estate agents for advice on rental rates and tenant agreements. This will help you gauge the types of properties you can build, the return you can achieve from your investment and whether or not you will be better off selling or renting your second property.