With the housing market overheated in Australia – particularly in our major capital cities – many Australians are looking at alternatives to the traditional quarter-acre dream.
A property solution growing in popularity is dual occupancy, also known as DualOcc. DualOcc involves maximising a block of land by building two (or more) properties instead of one. It can unlock opportunities for people looking to live affordably in an area they love or for the savvy investor.
Dual occupancy is when you have two dwellings on a single block within the lot boundary. It can also be called ‘multi-dwelling’, ‘duplex’, or ‘side-by-side’ development. Dual occupancy can be a range of configurations. This could be two side-by-side dwellings that are attached and have street frontage. It could also be one house behind the other that includes driveway access on one side to access the property.
How To Profit From Dual Occupancy Properties
When markets are transitioning, savvy property investors and small developers consider alternative ways to increase capital growth over time.
And one of the options is constructing a dual occupancy (or dual occ for short) property.
Not only does a dual occ provide opportunities for greater profits and yields, for some people it gives them the option of housing an elderly relative, or even young adult children nearby.
Why Build A Dual Occupancy Development?
One of the main benefits of a dual occ is that you can build two properties on a single block of land, which you can sell individually once the lot has been strata titled.
Subject to council approval and appropriate zonings, a dual occ – which is usually a duplex or two properties in tandem that share common property such as a driveway – can be constructed on a piece of land that you already own or have purchased.
Perhaps it’s one with an old property, which it makes more financial sense to knock down and build two new dwellings than it does to keep it and significantly renovate or remodel.
Of course, one of the advantages is that while you will end up with two new properties in your portfolio, there will be one building and design team working on the project for you at the same time.
The best sites to consider for a dual occ are those that are close to infrastructure and amenities as well as the areas that are attractive to the type of buyers who want to live in dual occ dwellings. Check out our range of dual occupancy builder for your dream house.
Why Do Dual Occupancy Properties Make Financial Sense?
Dual occupancy sites provide the opportunity for long-term investors to profit from two new properties on one site.
Plus, instead of building one property on the site that is earning you one weekly rent, you now have two properties earning two lots of rents, which can be substantially more because of the higher yields usually achieved through new dwellings.
Say, for example, one property might attract a weekly rent of $750 per week, but each of the dual occ dwellings might earn $600 per week, that means $450 more in rent every single week!
Likewise, if both properties are investments, then the land component of the site is likely to increase in value faster than a standard apartment in a large complex.
Dual Occupancy Strategies
Some investors opt to construct a dual occ to sell after completion, which means more dollars in their bank account to develop something bigger and better.
Likewise, others decide to keep the property over the long-term so that they can make the most of its capital growth upswing and stronger cash flows.
Others, still, choose to live in one of the properties and rent out the other to tenants or perhaps to provide a roof over the heads of their elderly parents.
Last, but certainly not least, some people decide to sell one of the dwellings, and live in the other, which often results in them having no – or a very small mortgage – from the outset.
Whichever is the best strategy for you, dual occupancy builds can produce strong profits – as long as the site selection and build expertise is optimal. Like anything in real estate, quality is key. Of course, that is one of our strengths, having helpedmany homeowners and investors achieve strong results from dual occ builds over the years.
Why Opt For Dual Occupancy?
DualOcc is a canny option for would-be new builders at all stages of life, as this versatile development gives property owners and buyers more options when compared with traditional buying. Those who already own land might opt for DualOcc to optimise their block, and those looking for the property might choose a block to optimise a DualOcc development specifically. Dual occupancy is all about making the most of a parcel of land – be it to live on, or for financial return.
If you own a home on a decent-sized block, dual occupancy gives you the option to knock it down and rebuild two (or more) modern homes. You might opt to live in one, maintaining a connection to a beloved neighbourhood, while selling the other or opening it up to rental income. You might also choose DualOcc to bring elderly parents or adult children closer to you while maintaining privacy and independence.
Many savvy property owners choose DualOcc for the investment potential it offers. Using existing land, or strategically buying a new block of land for multiple homes can provide income and rental returns if done thoughtfully with sound advice.
How Does Dual Occupancy Work?
There are two types of dual occupancy developments – the traditional side-by-side option, also known as a duplex, or stand-alone townhomes, generally tucked one behind another.
Duplex developments usually require separate driveways, whereas detached townhomes may be able to share one. There’s no magic number when it comes to ideal land size for a dual occupancy development. The appropriate land size will depend on your development objectives and the rules and regulations of your local council.
As a rule of thumb, if you’re on the hunt for land for a DualOcc development, look for blocks where the slope is no more than three metres. Otherwise, it may complicate the build and increase costs.
What Are The Benefits Of Dual Occupancy?
The benefits of a DualOcc, when done right, are many, with both emotional and financial gains on offer. For some people, simply being able to live affordably in an area they love is the biggest attraction, while for others, meeting investment goals is front of mind.
Melbourne resident Wayne Ritchie opted to build dual occupancy with Metricon. “Initially I wanted to build a big house on a single block in Bentleigh,” he says. “But we couldn’t find anything that was ticking all the boxes.”
Purchasing a run-down brick home in this sought-after Melbourne suburb, he decided to knock down and rebuild instead, subdividing the land and building two properties, one to live in and one to rent. “The return is almost the same in terms of capital growth and depreciation benefits, times two,” Wayne says.
It went so well, and the family has just completed their second dual occupancy build. “This time around it was familiar,” he notes.
Are There Any Drawbacks?
Deciding to build a new home for yourself or as an investment is one of the most significant decisions you’ll ever make, so it pays to do your homework.
Most importantly, make sure your council will allow you to build dual occupancy. You’ll also need to get your head around zoning and planning schemes in your area.
Get the right advice early on, or you can end up wasting a lot of time and money on plans that won’t fly.
Feasibility is important. Can you afford the development, and will any prospective rental or sales returns cover costs?
Know your goals and get an expert builder like Metricon, with 40+ years’ experience, onboard. Planning for a new look for your house? Look no further! MJS Construction Group is here to help in your dual occupancy builder Melbourne
What Factors To Consider For Dual Occupancy
Dual occupancy development could be a great opportunity under many common circumstances.
Knockdown an existing property and rebuild two new dwellings could be an option if:
- You have a large block of land in a location where land prices are increasing.
- You don’t need a large house anymore but want to stay in your current location. This could be the situation when children are grown and left the family home.
- You want to release some of the equity in your land.
Building a new residence behind an existing residence could be an option if:
- Your block has vacant space, such as a backyard or space on the side.
- Your current house on your block is large enough for you.
- You want to release some of the equity of you built up in your property.
Build two new residences on a greenfield residential block could be an option if:
- You have family members, such as aging parents, that you want to live near, but not in the same dwelling.
- The value of the land is high enough to justify building two dwellings on it. Some greenfield estates have single dwelling covenants, which means you can’t build a dual occupancy dwelling on it.
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 homes on separate titles, you can live in one of them and sell the other.
- You could live in one and rent out the other to create a new income stream. This could be especially beneficial in areas where the rental market is tight, and rents are high.
- You could sell both houses.
As land values have increased in recent years more than the values of houses, it means that many people have a large amount of equity built up in the land their house sits on. A dual occupancy home can be the right way to free up the equity that you have built up over the years.
Points To Think About When Building A Dual Occupancy Home
Each council will have different rules when it comes to approving dual occupancy developments. Zoning is also an important factor that will determine whether dual occupancy is an option. This can include the block frontage width, block dimensions, house footprint coverage, and driveway crossovers. Given the complexity of the approval process, it’s important to work with an architect or builder who will manage the council approval process.
Service Options For Dual Occupancy Development
There are several options for developing a dual occupancy project. Once you have a block of land or a single occupancy dwelling, you can hire an architect to design the project and then work with a town planner to get council approval. We work with many clients who have completed and approved plans which we build from. This includes dual occupancy and multiple occupancy developments.
Suppose you have a block of land or dwelling and need to advise and. In that case, to consult Silverline Homes can provide the full service, from determining feasibility, getting the project design, managing the council approval process, and building the dual occupancy residence. MJS Construction Group has the best range of dual occupancy builder services to help you create your dream house.
The Steps Involved In A Dual Occupancy Development Strategy Are:
- Finance preapproval. It’s important before you start looking at development sites or any property, that you have a preapproval from a lender in place.
- Understand the council requirements for dual occupancies in this area. Read the council’s local environment plan (LEP) and development control plan (DCP). This will let you know the size of land you’ll need for your dual occ and what is permissible.
- Focus your attention on the area you want to develop in, making sure the location is correctly zoned for dual occupancies. But even if it is zoned for this type of development, there may be covenants on the land preventing it. It’s important to narrow down to one or two suburbs based on your research. This is a really important stage, and you need to understand the area well.
- Search for land that meets the dual occupancy criteria. Size – look at the frontage and know what the minimum width is for your dual occ. If it’s a duplex site, you may need a minimum of 18-20 metres frontage – it will depend on the duplex design you want to use. Look at the depth and size to ensure the land is large enough to meet the DCP requirements, look at the aspect and if there is enough area to meet the minimum outdoor private space requirement. Make sure there are services to the site; electricity, sewerage, gas. Then ensure the land is relatively flat with a slight slope to the street unless there is a drainage easement at the back.
- Check the planning certificate to see if it is in a bushfire or flood zone. You can still develop in these areas, but it will add to your build costs.
- Have your builder look at the site. This is very important as the builder will look at the land from a different perspective.
- Run your feasibility to ensure the project will be viable. You will need to find recent comparable sales references then you can base your end value estimate on this. Talk to agents about the current rental market and what rent could be expected then work out the projected yield on completion. Most importantly, you need to have a good understanding of the build costs. The build costs will evolve over the design and planning process. Your builder can give you an estimate once a concept plan is available. Still, as the full development application (DA) plans and documentation is available, the builder will then need to run a full tender. You can cross-check this against your original estimate. If it’s in line, lodge the DA if it’s not, go back to the design and look at areas where you can reduce costs. Once the plans are approved, the builder may run a second tender if the council asked for any changes. If not, then the last tender will be generated once the engineer’s plans for the construction certificate (CC) are available.
- Secure the dual occ site and try for a long settlement period with permission to lodge a DA from the vendor. You can get all the design work and perhaps even have the DA and CC approved before you settle on the land, this will reduce your holding costs. Make sure you include the subdivision on your DA.
- Once you have the DA and CC approvals, you can then go back to your lender to obtain your unconditional construction loan. As soon as this is in place, the builder can start.
- The build phase for a dual occupancy should be around three to four-month or so, depending on the weather. You need to be on-site each week to check the builder’s progress and put out any ‘fires’ that may arise as you are under construction.
- Once the building works are completed, an occupation certificate will be issued. You can now have your villas tenanted. Don’t forget to order a depreciation schedule; this is simple, email the plans and builders tender and any other cost details to your quantity surveyor.
- You can now apply for the subdivision certificate and once the council issues this, and you can register the subdivision (after your lender has signed off on it). There is no need to register immediately if you are planning to hold and not planning to refinance as you may find costs such as rates maybe a little less if the villas are kept on one title.
And whether they decided to stay, rent, or sell, they all learned that these types of property developments might be considered small scale, but they sure can produce big results if done with the right team.
I’ve summarised the process very quickly, it’s not that straight forward, and you do need the time to work on this development strategy closely as mistakes can be costly when developing the property. But you can have your cake and eat it too by using an experienced property development project manager. You will learn so much from the process, can still keep your day job and know that you are in the hands of a professional. Then you may find you will be ready to do the next project on your own.