As a direct result of the overheated property market in Australia – particularly in our primary cities of capital – a sizeable number of citizens of the country are contemplating options other than the traditional "quarter-acre dream."
One real estate strategy that is gaining popularity is known as dual occupancy, or more often as DualOcc for short. DualOcc is a strategy to make the most of a plot of land by building it in such a manner that it can house not just one home, but two or more residences at the same time. This maximises the amount of living space that can be utilised on the site. As a consequence of this, fresh opportunities may present themselves to savvy investors as well as those who are seeking for a place to live that is not too expensive and is located in an area that they enjoy.
The term "dual occupancy" is used to describe the situation in which one piece of property is home to two distinct residential units that share the same lot boundaries. It is also possible to refer to this sort of development as a "multi-dwelling," "duplex," or "side-by-side" development. All of these terms are used interchangeably. There is a large number of different configurations that can work for dual occupancy. This might refer to two houses that are located next to one another, are linked to one another, and have frontage on the street. There is also the chance that there will be one home positioned behind the other, with the entry to the driveway being situated on one side of the land.
How To Profit From Dual Occupancy Properties
Intelligent real estate investors and small developers think about alternative strategies to maximise capital growth over time when markets are in a state of change.
One of the options that might be chosen is to build a property that can accommodate both residential and business tenants. This would be a mixed-use building.
A dual occupancy not only offers the possibility of improved profits and returns, but it also enables some people the opportunity to house an elderly relative or even young adult children who reside in the neighbourhood. Dual occupancy provides a substantial advantage in this regard.
Why Build A Dual Occupancy Development?
Dual occupancy allows you to create two separate homes on a single piece of land, and after the lot has been given a strata title, each of the properties can be sold independently. Dual occupancy can be used in a number of different real estate scenarios. Utilizing a space with a dual occupancy provides this as one of the key benefits.
You should be able to construct a dual occupancy, which is also known as a duplex or two residences in tandem that share common property like a driveway, on a piece of land that you already own or have purchased, provided that you have clearance from the local council and that the site is zoned appropriately. In most cases, a dual occupancy can be built on a piece of land that you already own or have purchased.
It may be an individual who owns an older property and has determined that it would be more beneficial from a monetary standpoint to demolish the current structure and build two new residences in its place rather than to keep the present property and fully restore or rebuild it.
The fact that you will end up with two new homes in your portfolio while only having to deal with one building and design team working on the project for you at the same time is obviously one of the advantages of this option. You will also only have to deal with one building and design team working on the project for you simultaneously.
Those potential locations for a dual occupancy that are located in close proximity to both the infrastructure and the amenities of the area, as well as those that are located in areas that are appealing to the kind of buyers who are interested in purchasing dual occupancy homes, are the ideal potential locations for a dual occupancy. Check out our collection of dual occupancy builders to see if any of them fit the bill for your construction project.
Why Do Dual Occupancy Properties Make Financial Sense?
Through the utilisation of dual occupancy buildings, long-term investors have the opportunity to create income from two newly constructed properties that are positioned on a single piece of land.
You now have two properties on the site, each of which is bringing in its own set of rents, and each of which has the potential to be significantly higher due to the higher yields that are typically achieved through new dwellings. Both of these properties have the potential to be significantly more profitable in the future. In addition, rather of constructing a single house on the land and collecting a single weekly fee, you have now built two houses on the land and are collecting two weekly rents.
If, for instance, one of the properties brings in a weekly rent of $750 per week, while each of the dual occ dwellings brings in $600 per week, then the total amount of rent received is $450 greater each and every single week!
If both of the properties are being held for the purposes of investment, then it is probable that the value of the land component of the site will rise at a rate that is greater than the rate at which the value of a standard apartment in a big complex would increase.
Dual Occupancy Strategies
Some investors decide to construct a building with dual occupancy with the goal of selling the finished product after it has been completed. This makes it possible for them to keep more money in their bank account, which in turn makes it possible for them to invest in something that is even more lucrative.
In a similar vein, some people decide to keep the property in their possession for an extended period of time in order to reap the benefits of both the enhanced potential for capital growth as well as the better cash flow that the property offers.
Still others choose to live in one of the properties while renting out the other one to tenants or maybe utilising it to provide a roof over the heads of their elderly parents.
Finally, but most certainly not least, some people decide to sell one of their homes and live in the other, which frequently results in their beginning the process with either no mortgage at all or a mortgage that is a significant amount smaller in size. This choice is made by some people, but it is most certainly not the least popular option.
If site selection and construction expertise are optimised, dual occupancy buildings have the potential to create considerable profits, regardless of which strategy is most suited for you. This is the case regardless of which approach is most suitable for you. In every facet of the real estate industry, quality is unquestionably the most important factor. Naturally, this is one of our strengths, as we have assisted a large number of homeowners and investors in achieving successful outcomes from dual occupancy builds over the course of our company's history. In other words, we know what it takes to make a successful build that includes both residential and commercial space.
Why Opt For Dual Occupancy?
The DualOcc development gives property owners and purchasers with a wider number of alternatives when compared to conventional purchasing; thus, it is a good choice for prospective new builders at all phases of life. Those who already own land may choose to maximise the potential of their parcel by going the DualOcc route, whereas those who are in the market for property may choose a lot in order to maximise the potential of a DualOcc development. Those who are in the market for property may select a lot in order to maximise the potential of a DualOcc development. Dual occupancy is a strategy for maximising the potential of a piece of real estate, either for residential use or for the generating of rental revenue. This strategy can be applied to either residential usage or rental income generation.
Land owners have the ability to remove one of their current homes and replace it with two or more contemporary dwellings on the same block if they choose to build dual-occupancy homes on their property. You may decide to sell one of the properties and apply the money from the sale towards the purchase of the other home, or you could opt to rent out the home in order to continue being a part of the community that you so deeply care about. You might also make use of DualOcc if you want to bring your elderly parents or adult children closer to you while yet protecting their privacy and allowing them to maintain their independence.
Intelligent property owners typically choose DualOcc because it provides the option for investment. This is one reason why DualOcc is so popular. It is possible to produce revenue and rental returns through the building of a large number of houses on land that is already owned or on blocks of land that have recently been bought, provided that this is done wisely and with the support of experienced counsel.
How Does Dual Occupancy Work?
Dual occupancy projects can be one of two different types: the normal side-by-side option, which is frequently referred to as a duplex; or stand-alone townhouses, which are generally set one after the other in a row. Both of these options are sometimes referred to together as a duplex.
In most circumstances, duplex complexes are required to have separate driveways, whereas detached townhouses may be permitted to share a single driveway. However, this is dependent on the local building code. There is no one number that can be quoted as the amount of land that is ideal for a development that will have two different tenants coexisting on the property at the same time. Your project's ideal land size will be determined, in part, by the development goals you have set for yourself as well as the laws and restrictions that have been established by your local government.
If you are looking for land for a DualOcc development, a decent rule of thumb is to look for blocks where the slope is no more than three metres in each direction. This applies whether you are looking at the block from the north or the south. In the event that this does not occur, it has the potential to make the building more complex and increase the costs.
What Are The Benefits Of Dual Occupancy?
A successful dual career may lead to a variety of advantageous results, including financial and emotional benefits, if it is carried out in an effective manner. For some people, the most enticing component is the chance of accomplishing their financial objectives through investment, while for others, the most appealing aspect is the possibility of living affordably in an area that they like.
Wayne Ritchie, a resident of Melbourne, has made the choice to construct a house with Metricon that is suitable for dual occupancy. "At first, I had the notion of constructing a huge residence on a single lot in the Bentleigh region," he explains. "This would have been in the vicinity of Bentleigh." But we were unable to think of something that would fulfil all of the conditions at the same time.
After acquiring an old brick home in a Melbourne neighbourhood that is considered to be among the most attractive in the city, he took the choice to tear it down and construct a new home in its place. He built two houses on the land, one of which he kept for himself and the other of which he let out as a rental property. According to what Wayne has seen, "the return is roughly the same in terms of capital growth and depreciation advantages, increased by two."
The family has just finished building their second home, which is comprised of two independent residences. The construction went off without a hitch thanks to the fact that everything went so smoothly. "By this time, everything had become natural," he notes. "By this stage, it had become second nature."
Are There Any Drawbacks?
Before you make one of the most important choices of your life, which is to decide whether you want to build a new house for yourself or as an investment, it is in your best interest to conduct as much research as possible regarding both of these possibilities. This will help you make the best choice possible.
Find out first and foremost from the local authorities in your area if they would grant you permission to establish a building that has a dual occupancy, since this is the most important step. In addition to this, you will need to familiarise yourself with the various systems of zoning and planning that are in place in your region and get familiar with how they work.
If you do not begin by gaining the appropriate direction, it is probable that you may end up squandering a significant amount of time and money on endeavours that are destined to be unsuccessful.
It is essential to take into consideration the extent to which it is possible. Are you able to provide the necessary funding for the development, and do you believe that the potential returns from sales or rents will be adequate to pay for the costs?
Engage the services of a seasoned builder who can help you achieve your goals, such as Metricon, which has been active in the building sector for more than forty years. Metricon can assist you in attaining your goals. Have you given any thought to the possibility of altering the way that your property looks?
What Factors To Consider For Dual Occupancy
Under many typical scenarios, the creation of dual-occupancy housing might provide an excellent business opportunity.
Knockdown an existing property and rebuild two new dwellings could be an option if:
- You are fortunate enough to own a sizeable piece of land in an area where it is anticipated that the price of land will continue to go up.
- You've reached a point in your life when you no longer require a huge house, but you still want to keep living in the same general region. When the children have reached an adult age and moved out of the family home, this scenario may play out.
- You have made the decision to convert some of the equity in your home into liquid assets.
Building a new residence behind an existing residence could be an option if:
- There is area on your block that is not being utilised, such as a backyard or space on the side, and it is open for usage.
- On this street, the house that you currently own offers sufficient space and amenities for your family to lead a happy and healthy life there.
- You have built up a significant amount of equity in your house, and you would now like to convert part of that wealth into cash.
After you have built a home that is suited for dual occupation, there are many options available to you.
The following choices are accessible to you if you make the decision to construct a house that is suitable for both full-time and part-time living:
- If you put the two houses on different titles, you will be able to sell one of them while still retaining the other as your principal residence. This is because you will have the ability to sell one title without affecting the other.
- By living in one of the properties while renting out the other, you might potentially create a new source of income for yourself. This might be especially useful in areas with a limited supply of rental housing and with rents that are somewhat expensive because of the lack of available homes.
- You have the choice to sell either one or both of the houses.
As a result of the fact that land values have climbed more rapidly in recent years than the values of houses, a significant amount of equity has been accumulated in the property that many people's homes are situated on. The equity that you have built up over the years might sometimes be released from a home that has been converted to accommodate two households.
Points To Think About When Building A Dual Occupancy Home
When it comes to the approval of dual occupancy developments, each municipality will have its own unique set of requirements for its residents to adhere to. Another key factor that must be taken into account while attempting to answer the question of whether or not dual occupancy is legal is the zoning of the area in question. The width of the block's frontage, the measures of the block, the proportion of the home footprint that is covered, and the number of driveway crossovers are all examples of things that fall under this category. Collaboration with an architect or builder who will manage the approval process on behalf of the local council is required because of the difficulties of the approval procedure. Because of this, it is vital to engage with an architect or builder.
Service Options For Dual Occupancy Development
There are a wide variety of different options available when it comes to the construction of a building that can accommodate occupants from two distinct households. If you already own a piece of land or a house that is only occupied by one family, you have the option of hiring an architect to design the project for you. After that, you may work with a town planner to submit your plans to the government for permission, if you already own either of these things. We have a significant number of clients who already own designs that have been completed and given the go-ahead for construction, and we work from those. This includes projects that include dual occupancy in addition to multiple occupancy in their units.
Imagine that you are in need of some guidance and that you are the owner of a home or a piece of land and that you want to. If this is the case, you should get in touch with Silverline Homes so that they can provide the full service, which includes determining whether or not the project can be carried out, obtaining the project design, managing the process of obtaining council approval, and constructing the dual occupancy property.
The following are the stages that comprise a dual occupancy development strategy:
- Finance preapproval. It is essential to have a preapproval from a lender in place before you start looking at development sites or any property before you start looking at homes.
Acquire an awareness of the requirements set by the council for the operation of various businesses in this region. Take a look at the local environment plan (LEP) as well as the development control plan that was drafted by the local council (DCP). By using this information, you will be able to determine the minimum and maximum lot sizes that are necessary for a dual-occupancy residence. - You should focus most of your attention on the area where you wish to develop, and you should investigate whether or not the land there is adequately zoned for multiple occupancies. However, even if it is designated for the construction of this type of structure, there may be constraints on the site that prevent it from being erected. After doing study in this region, narrowing your choices down to only one or two suburbs at the most is really necessary. This is an extremely important step, and at this time you need to have a solid comprehension of the subject matter.
- You should look for land that may be used for either residential or commercial purposes. Size: examine the frontage of the building to establish the minimum width that is required for a dual-occupancy structure. How much frontage you need for a duplex site is something that will depend on the duplex design that you want to use, but it will probably be anywhere between 18 and 20 metres. Investigate the width and depth of the property to determine whether or not it satisfies the DCP's requirements for property size.
- In addition, look at the topography of the property and see if there is enough space to meet the requirements for the bare minimum of outdoor private space. Check to discover if there are services such as gas, electricity, and sewerage in the area where the property is located. The last thing you need to do is examine the back of the property to see if there is a drainage easement and make certain that the terrain is mostly level with a slight incline towards the street.
- You need to verify the planning certificate to see if the property is located in an area that is prone to floods or bushfires. You can still construct in these areas, but the cost of your final project will be more expensive per square foot.
- You should ask your builder to perform a site check for you. This is of utmost importance since the builder will look at the land from a different perspective point.
- It is necessary to carry out a feasibility analysis in order to ascertain whether or not the project will be successful. Before you can utilise this information as the basis for your final value estimate, you will first need to discover recent comparable sales references in the market. Have discussions with real estate agents about the present situation of the rental market and the rent that may be anticipated, and then calculate the yield that might be expected after the project is done using the information you gleaned from those interactions. It is of the highest significance for you to have a good understanding of the building expenditures. The overall cost of the construction will shift several times during the course of the design and planning process. Your builder will be able to present you with an estimate once they have prepared a concept design for the project. In spite of this, the builder will be compelled to hold a full tender as soon as they have access to the comprehensive plans and paperwork for the development application (DA). You'll be able to determine the accuracy of this information by contrasting it to the first estimate you provided. You may submit the DA if everything appears to be in order. In the event that this is not the case, you will be need to go back over the design and look into several possible areas of savings. After the plans have been authorised, the builder may hold a second round of tendering if there are any modifications to the designs that the council wishes to have made. In the case that this does not take place, the final offer will be put together after the engineer's plans for the construction certificate (CC) are made available.
- Obtain possession of the property with a dual occupancy and negotiate with the seller for an extended settlement term as well as authorisation to file a development application. You are able to finish all of the design work before deciding on the land, and you may even be able to have the DA and CC issued; doing so would reduce the holding expenses connected with the property. Check to be that the subdivision is listed on the DA that you hand in.
After you have gotten permission from both the DA and the CC, you are then able to go back to your lender in order to acquire an unconditional construction loan. The Object() method, which uses native code, will be able to begin operating as soon as this component has been installed. - It is recommended that the building phase of a home in which two households share living space take between three and four months, however this range might vary depending on the environment. You are obligated to make a weekly trip out to the construction site in order to keep an eye on the progress that the builder is making and to put out any "fires" that may arise while the structure is being constructed.
After all of the construction work is finished, the building will be issued an occupancy certificate. You will now have success in finding renters for your villas. Don't forget to place an order for a depreciation schedule; doing so is simple; simply send an email to your quantity surveyor with the drawings, the builders' tender, and any other cost data that you can think of. - You are now able to make an application for the subdivision certificate, and as soon as the council provides it, you will be allowed to register the subdivision. Currently, you are able to submit an application for the subdivision certificate (after your lender has signed off on it). If you want to keep the villas in your possession and have no plans to refinance them, there is no need to register them as soon as possible. In the event that the villas are kept under a single title, you could find that some fees, such as rates, are slightly more affordable than they would be in any other scenario.
And regardless of whether they chose to buy, rent, or sell, all of them eventually came to the realisation that even though these kinds of real estate projects are considered to be on the smaller size, they are still capable of producing significant results provided that the appropriate team is responsible for carrying them out. This was the case irrespective of whether they decided to purchase, rent, or sell the property.
I have just provided a very basic description of the process; nevertheless, despite how simple it may look, it is actually not that simple. Despite how simple it may appear, it is actually not that simple. You will need a substantial amount of time to carefully plan out this development strategy, since any missteps at this point of the process might result in big financial losses while developing the property. If, on the other hand, you hire a seasoned property development project manager, you won't have to choose between "having your cake and eating it too" if you desire both of those alternatives, because you won't be forced to make that choice. You will be able to keep the job that you have now, acquire a significant amount of new material while the process is going on, and have the piece of mind that comes with knowing you are in the capable hands of an experienced expert. After that, you could discover that you are ready to take on the future work all by yourself, and that now is the time at which you should do it. If this is the case, then you should go ahead and do it.
FAQs About Dual Occupancy
A dual occupancy is two dwellings on a single lot. Generally it implies separate services and at least the potential to subdivide at some point in the future. It is often misused to represent primary and secondary dwellings or dual-keys properties.
Secondary dwellings are permitted through the State Environmental Planning Policy (Affordable Rental Housing) 2009 (the Affordable Rental Housing SEPP) in residential zones (R1, R2, R3, R4, and R5). They may also be permitted in other zones under council's Local Environmental Plan (LEP).
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.
Currently within the Mixed Housing Suburban and Urban Zones, 2 dwellings are permitted, but the ability to build three dwellings is under appeal. Dwellings within these zones have a minimum size of 30m2 for studio dwellings and 45m2 for one or more bedroom dwellings.