Can You Sell Dual Occupancy?

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    Probably the first thing that comes to mind when you think of a property developer is a person with considerable financial means. However, entering the realm of real estate investment is far more achievable than you may initially believe it to be.

    You are in possession of a sizable piece of land and have been giving some thought as to what you should do with it.

    It's possible that you have a lot of unused space behind or next to your current house, that you want to stay in the same place but don't require a big house, or that you want to release part of the equity in your land. After doing some study into the various options available to you and determining how to complete the task in the most time- and money-efficient manner, you have come to the realisation that adding on might be the most appropriate course of action.

    In today's more complex real estate market, many investors are searching for strategies that would allow them to grow their portfolios in the most astute ways imaginable.

    And one of those ways is through the construction of dual occupancy buildings, which are more frequently referred to as "dual occs."

    They believe that if you double the size of your home, your income will also increase. But does that hold up as a plausible explanation? In today's lesson, we're going to walk you through one of the ever-more-popular investment strategies that people in Australia are beginning to adore.

    Dual Occupancy Properties are a one-of-a-kind sort of property in which the same piece of land is registered under two separate titles. On the other hand, there are now two homes built on the property. These may be attached or detachable at your discretion. The following are some instances of properties that have dual occupancy:

    • The home contains five bedrooms and three bathrooms, but it can be safely partitioned such that one section of the home has three bedrooms, two bathrooms, the kitchen, and the living areas. The other section of the home has the remaining two bedrooms and the living areas. Additionally, there are two bedrooms, a kitchenette, and one bathroom located on the opposite side of the property. The two'sections' of the building are able to function independently of one another despite sharing a common roofline.
    • A granny apartment is built adjacent to the main house and features a studio-style living layout along with a kitchenette and a bathroom. Living spaces that are partitioned off from one another, but yet attached to the main house by way of an addition or just off it. If you're looking for a high-quality, affordable builder in Melbourne, you're in the right place! Check MJS Construction Group!
    • A house that features a sleepout or carport section can only be reached through the main house. However, the sleepout or carport space has been rebuilt to accommodate a kitchenette, bathroom, bedroom, and living area.

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    These kinds of living arrangements offer independence and flexibility to investors, while also maximising the potential returns that can be obtained from property values.

    You have the option of living there while also renting out the other unit to bring in additional income to help pay the mortgage. They are completely suitable for use as investments and may accommodate two distinct tenants within the same building, so producing two distinct streams of revenue (often highly profitable). They can be perfect for families with older children, as they provide some degree of separation and freedom for the older children in the family.

    The Economic Advantage

    There are several different reasons why dual occupancy development is considered to be one of the most cost-effective types of property development. To begin, if you have dual occupancy, you have the option of constructing new buildings on property that you currently own and control. If the requirements of your local council permit it (see point 2 below), and if your block is large enough, you could subdivide your property and build another entirely independent home on the block. This is provided, of course, that the block is large enough.

    Then, depending on the way you choose to live your life, you have the options to: rent out the new property; upgrade by moving into the new location yourself and renting out your old house; or sell one of the houses and use the proceeds towards your retirement or other long-term financial goals.

    Dual occupancy is another fantastic alternative to consider if you adore where you live but are unable to afford the upkeep on your current residence now that you are getting closer to retirement. You will be able to afford to live in a brand new home with the profit from the sale of or rent from the lease of the other home if you choose to build a dual occupancy property rather than demolish your current home and build a new one instead. This brings us to the second economic advantage of building a dual occupancy property.

    Two For The Price Of One

    Second, if you've recently purchased a plot of land, you should seriously explore the possibility of constructing a brand-new dual occupancy structure, such as a duplex, on the property. A duplex is a more cost-effective alternative to purchasing a single large property since it allows the buyer to effectively get two residences for the price of one. Again, you have a number of choices available to you, including renting or selling the property; the decision is yours to make.

    When it comes to constructing a dual occupancy residence, such as a duplex, you should not let the size of the block deter you, regardless of whether you are contemplating a knockdown rebuild or you have purchased an empty block. Whether you have a sloped block, a block that is narrow, or a block that is in the corner, a reputable builder like Valley Homes will have a variety of single-family house and duplex floor plans available for you to pick from. For instance, when it comes to duplexes, if you have a considerable amount of street frontage, a design such as the Myall makes the most of the available space and maximises the amount of privacy you have, with the only shared wall being the one that separates the garages.

    Or, if you are looking for a home with two stories, the Baybreeze offers plenty of room for a family, since it places the living areas on the ground floor and the bedrooms on the upper level. These are just two of the many designs for duplexes that are offered by Valley Homes.

    In addition, you always have the option of selecting a bespoke design for your dual occupancy, which enables you to construct residences that have all of the features you want.

    Tax Incentives

    The tax benefits of dual occupancy are conditional on whether the second home is sold or rented out as a rental property.

    Sellers: You can avoid paying capital gains tax and the goods and services tax (GST) if you sell your old home, build a new home on the land you already own, and then move into the new home. If you are interested in learning more about this choice, the ATO is a good place to turn to.

    Renting: Deciding to become a landlord and renting out the second house gives additional financial benefits in the form of tax credits provided by negative gearing. In a nutshell, negative gearing occurs when the return on an asset that produces income, such as a new home, is less than the amount borrowed to invest in the asset. An example of this would be if the return was less than the amount that was borrowed. Again, if you're not familiar with any of this, your best bet is to start with the ATO to learn the fundamentals of the tax benefits and drawbacks associated with owning a residential investment property.

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    What Factors To Consider For Dual Occupancy

    Under typical conditions, the creation of dual-occupancy buildings could represent an excellent business opportunity.

    Knockdown an existing property and rebuild two new dwellings could be an option if:

    • You own a sizable parcel of property in a region where the value of land is expected to continue to rise.
    • You no longer require a sizable home but choose to remain in the area where you are now living. This can be the case once the children have reached adulthood and moved out of the family home.
    • You have decided to cash out a portion of the equity in your property.

    Building a new residence behind an existing residence could be an option if:

    • There is free space available on your block, such as a backyard or an area on the side.
    • Your family can comfortably live in the home that you already own on this street.
    • You have built up a substantial amount of equity in your home, and you would like to access part of it.

    Build two new residences on a greenfield residential block could be an option if:

    • You have family members, such as your aged parents, who wish to live close by but not in the same house as you do.
    • Because of the great value of the land, it would be appropriate to construct not one but two homes on it. Some greenfield estates have restrictions that prohibit the construction of multi-family homes, which implies that only single-family homes can be built there.Options once you’ve built a dual occupancy home.

    If you decide to build a dual occupancy home, there are a range of options available:

    • If you put the two houses on separate titles, you will be able to sell one of them while keeping the other as your primary residence.
    • You may establish a new stream of income by living in one of the homes while renting out the other. This could be especially useful in regions where there is a limited supply of rental housing and where rents are rather high.
    • You have the option of selling both houses.

    Due to the fact that land values have climbed more rapidly in recent years than the value of houses, this indicates that a significant amount of equity has been built up in the property that many people's homes are situated on. The equity that you have built up over the years may be released for your use through the use of a home that has dual occupancy. Planning to build a home? MJS Construction Group brings your building project alive!

    The Good and Bad of Dual Occupancy Properties

    The landlord only needs to pay one set of council rates for both properties, which results in a lower rent for tenants. Additionally, the landlord only has to pay one set of maintenance costs for both properties.

    The revenue that can be earned with a dual occupancy can be tremendous, which is helpful for investors working on a strategy to generate positive cash flow from their investments. Nevertheless, investors need to be aware of a potential drawback before making any decisions.

    When it comes to bank appraisals, dual occupancy buildings might be challenging because they are not particularly widespread at this level. The value of the property is determined by both the value of the structure and the value of the land. Therefore, even though there is a high perceived worth (two different streams of income, two separate houses), valuers do not take this into consideration. For illustration's sake, the house with the five bedrooms and three bathrooms that we discussed earlier would be valued just like that. Whereas in actuality, it is meant to be two separate properties, one with three bedrooms and two bathrooms, and the other with two bedrooms and one bathroom, which is anticipated to have a greater value.

    New houses designed for dual occupancy are frequently built by contractors as two independent dwellings, each with its own set of utilities such as an electric metre, a water metre, and a hot water system. Because of this, the construction process will take longer and demand more resources.

    As a result of this mismatch, in order to obtain financing, it may be necessary to give a larger deposit or more equity than was originally anticipated.

    However, this additional expenditure is likely to be recouped over the years of ownership by an investor in the form of improved cash flow if the investor is able to afford it. We may anticipate that by the time they sell the property, the true worth of properties with dual occupancy will have been acknowledged all across the market, and that they will be able to get a sale price that takes this into account.

    Why a Dual Occupancy Project?

    Those wishing to make an investment in real estate should consider purchasing a piece of property in this kind of development for a number of reasons.

    To begin, you are already ahead of the competition if you already hold a large number of lands that are appropriate for subdivision. You might, for instance, possess a sizable family home that sits on a sizable piece of property. It appears to be in disrepair and might use some tender loving care. Or, you may already have an investment property in your portfolio; however, the returns you receive from the rental yield may be modest, and you may be dependent on the property's appreciation in value. Gains on investment are known by this term.

    Gaining capital requires patience, and due to the volatility of the real estate market, this strategy does not always result in a profit. On the other side, a dual occupancy has the potential to bring in a significant amount of additional income.

    Let's imagine you want to undertake a normal dual occupancy and create a pair of duplex properties. What would you do? This indicates that they are adjacent to one another or that they are located one behind the other and share a wall.

    When the properties are finished, you will have a number of options to choose from. You might make one of the homes your primary residence while renting out the other. There are some people that rent out both of them. You also have the option of selling them both. You may expect a healthy return on your investment regardless of the path you decide to take.

    Some people would even team up with their relatives or closest friends in order to purchase a home in a more expensive area that they would not be able to afford on their own. They start by purchasing a run-down home in the suburb they want to settle in, then demolish the structure and construct a home with space for two occupants on the land where the original home once stood.

    How Do You Choose The Best Dual Occupancy Sites?

    Those wishing to make an investment in real estate should consider purchasing a piece of property in this kind of development for a number of reasons.

    To begin, you are already ahead of the competition if you already hold a large number of lands that are appropriate for subdivision. You might, for instance, possess a sizable family home that sits on a sizable piece of property. It appears to be in disrepair and might use some tender loving care. Or, you may already have an investment property in your portfolio; however, the returns you receive from the rental yield may be modest, and you may be dependent on the property's appreciation in value. Gains on investment are known by this term.

    Gaining capital requires patience, and due to the volatility of the real estate market, this strategy does not always result in a profit. On the other side, a dual occupancy has the potential to bring in a significant amount of additional income.

    Let's imagine you want to undertake a normal dual occupancy and create a pair of duplex properties. What would you do? This indicates that they are adjacent to one another or that they are located one behind the other and share a wall.

    It is usually best to evaluate locations close to infrastructure and facilities as well as the types of buyers who wish to live in these types of residences. As long as the local zoning supports dual occupancy developments, this is something that should be considered.

    Of course, the site will also need to be big enough in order for a dual-occupancy building to be permitted, and the size requirements for this can change depending on where it is.

    Before you can move on to the next step and sign a contract of sale, you are required to finish a detailed feasibility study first.

    You don't want to wind up with a site that can't support the construction of a dual-occupancy dwelling, do you?

    It is possible to make the most money off of real estate by purchasing a corner block, which is especially true if the block in question is zoned for construction.

    This is due to the fact that corner lots have access to two streets and consequently have additional development possibilities, both of which can considerably increase the property's charm and value.

    On a corner lot, for instance, you might have an old house that you plan to tear down, but in the meanwhile, you keep it rented out so that you can get the necessary approvals to build a home that can accommodate two families at once.

    In this manner, you will be able to significantly save your holding costs while all of the necessary paperwork and preparations are being finalised.

    Profit Potential

    Dual occupancy properties that are both well-designed and well-located have the potential to offer excellent cash flow because they collect rent from two separate tenants simultaneously.

    Additionally, investing in the properties with the intention of keeping them for an extended period of time might result in substantial capital growth from the presence of two properties on a same site rather than just one. Check this list of Melbourne builder services to help you make an informed decision for your treatment.

    Before moving forwards with any kind of property development, obtaining professional counsel and direction is an absolute must if you want to make sure that your plans for investments have a chance of materialising into a lucrative reality.

    Get in touch with us as soon as possible if you are prepared to build a development with dual occupancy.

    Frequently Asked Questions About Dual Occupancy

    The development costs for any dual occupancy project will vary between $80k – 120K*. Building costs will depend on the type of duplex construction. Average figures on top of the development are: 2 x 4 bedroom with high-end finishes around $1m.

    Most homes in inner Melbourne don't have the width to allow for a duplex. However, it is possible to build a duplex one behind the other, with the driveway on one side. The downside of this is that the back home doesn't have street appeal, which counts for something when considering resale.

    A dual occupancy property is when you build two or more separate properties on the same block of land. Or, it can mean building a whole new house next to or behind your existing home. It essentially means that you have two or more homes on the one title of land that will ultimately get subdivided in the future.

    An upmarket luxury build could set you back by $3000/sqm for a double storey dwelling. In a typical suburban dual occ or two town house development allow $1350+ per sqm for a double storey home or around $1700 including site costs.

    As adjectives the difference between double and duplex is that double is made up of two matching or complementary elements while duplex is double, made up of two parts.
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