Dual living dwellings are becoming increasingly more popular for both investors and homeowners. For investors, dual Living provides an opportunity to receive two rental incomes, meaning the property should be positively geared. For homeowners; they can utilise the extra rental income, allowing them to pay down their mortgage faster, decreasing the amount of interest paid.
What is ‘Dual Living’?
A dual living dwelling is essentially two completely separate houses built under the one roof, with a single owner. Each ‘living area’ has its street entrance, different address, separate front doors, separate kitchen, separate bathroom, separate living areas, separate garden. Power, water, gas, NBN and all other services are separately installed into the separate dwellings: bills go to the respective address.
Looking from the street though, the modern solution looks like a single house and shares the one roof. Typically one living area is larger (3 or 4 bedrooms), and the other is smaller (2 bedrooms)
Dual Living is two dwellings on one lot of land, usually separated by a fire or party wall. There is usually a larger dwelling with all of the inclusions of a standard home and the second dwelling is generally a one to two-bedroom “unit” with a smaller kitchen, lounge and bathroom. Planning for a new look for your house? Look no further! MJS Construction Group is here to help in your dual occupancy builder Melbourne.
Why Dual Living?
In addition to increased cash flow, dual Living has;
- cheaper build costs compared to a duplex or two separate dwellings
- Purchase only one block of land
- lower maintenance costs
- one set of rates / no body corporate fees
- lower risk – if one property is vacant for a certain period, there is still an income from the other dwelling
What is multigenerational and dual Living?
Both innovative solutions are dependent on a number of people coexisting on the same property.
Multigenerational Living consists of more than two generations living under one roof.
Dual Living, on the other hand, consists of one main property that comprises additional dwellings which may be shared by two separate parties or tenants.
For dual Living, there are practical and regulatory issues that need to be taken into account should a homeowner decide to convert a home into a dual living property.
A growing worldwide phenomenon:
Multigenerational Living is becoming a leading option amongst families who are finding it difficult to make ends meet. This is due to the rising costs of Living which makes it especially challenging for youngsters to leave the nest.
According to Lew Geffen Sotheby’s International Realty Executive Director Sandy Geffen, who has more than three decades of property industry experience under her belt, South Africa isn’t immune to this trend.
“Young adults are living with their parents for longer, affordable retirement accommodation is in short supply, and homeownership is frequently delayed for years as young families, and first-time buyers now have to save for bigger deposits,” says Geffen.
The last South African Census suggests that just over 50% of the country’s households are multigenerational. In accordance with a study reported in Time Magazine last November, it was noted that young adults (aged 18 to 34) in the United States are living with their parents in greater numbers now since 1940.
According to Geffen, local estate agents have experienced an evident increase in the number of queries for properties that can accommodate extended families.
The benefits of this type of arrangement:
The need to share property is a necessity for many, as a result of a weak economy. However, Geffen suggests that this type of arrangement can be advantageous.
“There’s always a silver lining to be found in any challenging situation, and in this instance, there are several, even if it’s a case of three generations squeezed into one not overly large home.”
Sharing household expenses can help to ease the financial pressures that accompany homeownership. Sharing a home can also provide a better quality of life. It can strengthen the bond between a family, especially in a time where the traditional family unit has become less prevalent.
Geffen says that multigenerational Living can solve the everyday challenges faced by modern households.
“Few families today can afford a stay-at-home parent, and many are finding it difficult to cover the costs of childcare, so in this way, the need for care for both grandchildren and grandparents can be seamlessly accommodated”, says Geffen.
Home safety and security is an additional benefit of multigenerational Living. More people sharing a household means that the home is unlikely to be unoccupied for long hours during the day.
Elderly family members living in a shared household are also less likely to become vulnerable targets of crime compared to when living alone.
The challenges of multigenerational and dual Living:
According to Geffen, it’s important to consider the challenges that can arise when embracing this style of Living. A shared household can include different needs and expectations that can become problematic if not managed correctly.
Geffen advises that “planning, flexibility and ground rules are essential to make it work for everyone in the long term because unless all parties buy into the household ethos, it can go wrong.” MJS Construction Group has the best range of dual occupancy builder services to help you create your dream house.
An essential guideline to avoid the pitfalls and maximise the benefits:
- It’s important to define each person’s responsibilities and any particular requirements upfront. Consider if additional care and assistance are needed by inhabitants and to what extent this needs to be implemented.
- Set boundaries to be decided upon together and ensure every household member mutually respects these.
- Choose your battles wisely – general disagreements may arise, but not all are worth a full-scale argument.
- It’s important to allow sufficient time and space away from each other to avoid becoming overwhelmed.
Dual Living with tenants:
For cash-strapped homeowners and prospective buyers, dual Living with a paying tenant is a smart way to stretch their budget in order to pay off a home loan faster or make a purchase in a high-demand area.
According to Geffen, it also enables first-time buyers to enter the market sooner. “It might take a bit of time to find the right property, but it’s worth the effort in the long run.”
Dual Living can fund retirement:
South Africa has fewer than 10% of retirees that are financially independent. According to the country’s Reserve Bank, South Africa has one of the worst savings records in the world, which is why Geffen encourages dual Living as an excellent way to help fund retirement.
“A rental income enables younger homeowners to save in tough economic times. At the other end of the scale, active retirees can stay in their family homes longer knowing an on-going rental income stream subsidises their living expenses” says Geffen.
Establishing privacy in dual living arrangements:
In order to achieve successful dual Living, it’s important to ensure inhabitants are able to enjoy a measure of privacy.
By considering everyone’s needs and requirements within a household, homeowners will be able to establish whether a separate, self-contained dwelling would be most suitable for everyone or if altering an already existing structure would suffice.
According to Geffen, this applies to current homeowners and prospective buyers looking for conversion properties.
The building of separate dwellings:
“If you want to buy and build a separate dwelling, it’s imperative first to check whether you’d get local authority planning permission before leaping. And regardless of whether you intend to convert or build separately, always consult a reputable architect who’ll draw up plans that don’t contravene bylaws or zoning regulations.
It is crucial to check whether you’d get local authority planning permission, before moving ahead with plans to buy and build a separate dwelling. Consulting with a reputable architect is essential, regardless of whether you intend to convert or build separately. By liaising with an architect, you can ensure that the building plans won’t contravene bylaws or zoning regulations.
Ensuring that the construction of the separate dwelling is done in the correct manner will be beneficial later down the line. Cutting costs to save a few rands can become costly, and if you decide to sell the property at a later stage, the selling process can be delayed if the property structure does not match the initial property plan.
Why you shouldn’t overcapitalise:
Overcapitalising is the most common pitfall amongst homeowners. To avoid this, Geffen advises on the importance of conducting thorough research in order to understand the local market. Consulting with a reputable estate agent will enable you to achieve helpful advice on rental price options and market trends within your area.
Doing so will help to ensure you don’t overcapitalise, which can diminish a return on investment if the costs outweigh the revenue.
Geffen concludes: “In the current economy, whether you want to offset the rising cost of Living or create a new income stream, dual Living makes a lot of sense. If implemented correctly, it has far more benefits than disadvantages and will add substantially to the value of your property when you eventually sell.”
Two Separate Incomes From One House Project
When you build a dual Living house, you are effectively building two opportunities under the one roof, and you can do as you wish with them when built:
- Rent both separately to different tenants and have two income streams;
- Live in the smaller whilst a tenant contributes good rent towards your mortgage;
- Live in the larger whilst a tenant helps you pay off your mortgage;
- Change your mind or strategy over time between the above options.
Higher ROI On The Last $100K
Building a normal house can be a wonderful strategy and will save you money when compared to dual Living. The normal house is still the common option, and we build them more. When you switch to a dual living concept, you will need a carefully selected block which requires a wider frontage and needs to have fairly parallel sides to the block, because the second living area either makes the overall building wider, deeper or both, depending on the design you choose.
One thing is typically achieved though: the additional approximately $100k will achieve a ‘better bang for the buck’ of rental! In a simple example, a four-bedroom house may cost $500k, and the rent you will receive maybe $430 – $450. Adding the other dwelling adds approx. $100k and earns
you approximately $230 – $250 in rent.
A Different Property When It Comes Time To Sell
Just as you may consider Dual Living, so might a purchaser in the future. They will have the same benefits that dual Living offers you. Someone may be able to afford to buy your house because they can offset their mortgage with the rental income: you might get a sale where someone else
In modern developments, most blocks may not be able to fit Dual Living, and a percentage of people buy Dual Living, and many builders do not offer the option. So the number of Dual Living houses in any area is limited. It gives you a unique solution.
You Might Get Higher Tax Benefits & More Capital Growth
In all instances your circumstances need to be considered: typically the Dual Living option will be positively geared and thus does cause a tax bill on the income from rental exceeding outgoings, but also depreciates on higher value and may separately incur costs. Yes, this comes from a more expensive package, but importantly the more expense you are incurring is based on an extra income flow becoming available.
Two Homes For The Price Of One
While the concept of multiple dwellings on one property is not new, they usually come with a big price tag: you’re either footing the bill for a separate granny flat, or the cost of two properties if you’re buying a duplex.
The main difference with dual occupancy homes is that they’re two homes on one block of land, like a duplex, but you’re only paying for one. Although you can’t subdivide a dual living property, as they can’t be strata-titled, they cost in the ordered of $100,000 less than a duplex.
You can still reap all the benefits of two rental incomes and receive higher returns. Dual living homes can be designed with separate entrances and separate utilities, so they’re completely independent homes that can be leased separately.
They’ll share the same roof like a duplex, but because they’re not strata-titled, they’re considered a single property—which means a lower purchase price and lower fees, such as council and water rates. Finding the right duplex build is an important decision. Check out our range of the best home design constructions at MJS Construction Group.
One of the biggest selling points is the potential for positive gearing that dual living properties offer. Investors are the most frequent buyers, and it’s not difficult to achieve positive cash flow.
If those reasons aren’t enough to convince you of the benefits of dual living homes, you might be sold on saving on the cost of maintaining them. One of the biggest obstacles to holding onto an investment property is the ever-increasing fees and rates that investors need to pay throughout the financial year—and it’s one that dual living properties do away with.
Dual living properties look like a standard family home from the outside, with only the multiple letterboxes indicating anything different. Because the property has a single freehold title, there are no body corporate fees like there are with duplexes or apartments, and you’re only liable for one set of council and water rates.
That’s an enormous financial saving, accounting for thousands of dollars a year that you’re no longer doing without. It is certainly something that improves the extent of your positive gearing and a bright and sustainable property investment future.
Easy Conversion To A Single Property
Dual key properties are designed with completely separate outdoor living areas, including backyard space and clotheslines. They also have separate laundries, kitchens, indoor living spaces and garages, so they’re completely independent homes connected only by a roof and a firewall.
The phrase ‘dual occupancy’ has been gaining traction in recent years as homebuyers discover the benefits of designing two homes in one. Maybe you’re teaming up with a friend or sibling to jump on the property ladder, and while you’re happy to share the mortgage, you each need your own space. You may even be looking to generate extra income with an independent space you can rent out to Airbnb guests, students or FIFO workers.
Whatever your motivation, sharing can make housing more affordable and give you more bang for your buck. And even if sharing isn’t on your current agenda, adding in features that suit dual occupancy design will help future-proof your new home should things change down the track.
So how do two homes in one work? Separation is key.
- Having independent entries into the home is a practical design feature that enables everyone to come and go as if they were in a separate home. This could be as simple as swapping windows for sliding doors in the bedroom, providing the room can be easily accessed from the street.
- Making the bedroom in the independent zone big enough for a small couch, and maybe even a desk, so that it becomes more of a studio space.
- The addition of a kitchenette in a second sitting room – maybe one that adjoins the bedroom – would further increase the studio vibe.
- A space in the kitchenette just big enough for a washing machine would complete an independent set-up.
Innovative housing solutions, like multigenerational Living and dual Living, are increasing in demand and proving to be beneficial during tough economic times.
Unfavourable economic conditions are encouraging people to find alternate ways to help sustain a household. A popular trend growing across the globe are dual Living, which provides a rental income stream and multigenerational Living which helps to cut down costs.