Dual occupancy properties add so much more to your investment portfolio – giving you positive cash flow, better security, greater potential for capital growth and options for you to live in one side and rent out the other – helping you to pay off your loan faster or using the equity to purchase another investment property.
What is a dual occupancy property? It is where you have two dwellings on the one title and in some occasions you can split the property and make a duplex with two titles. We have seen this develop over the years, where people have brought an old Queenslander (a type of house unique to Queensland, usually a large wooden house built upon tall stumps) renovated and built in the bottom to create another dwelling. The problem with this method is often this is the cheap way and not council approved, which makes it not legal to live in so it should only be used for storage.
The type of dual occupancy properties I love are the new generation purpose built homes that are built new built to full regulation and council approval so they can be rented out to two different parties.
My biggest Love of dual occupancy property is its CASH FLOW! It is usually about 1-3% higher than the traditional house and land purchases at 5% rental yield.
What does this mean in real terms? Well on a $550,000 dual occupancy purchase, potential cash flow positive of about $5k to $10k per annum after all your expense have been paid, this is before you get some tax benefits through creative accounting, depreciation etc. So you own a property and every week it puts money in your pocket. How many of these properties can you own if they are making you money? Unlimited!! As it’s not effecting your personal cash flow. So if you currently earn $100k per annum, you would need to invest in 10-15 properties to completely cover your annual salary!
We haven’t even touched on the equity aspect of the dual occupancy property. As an investor – if you could buy a property already giving you a greater rental return than a typical house you would be happy to pay more for that property. Typically we are seeing about a $40-50k equity uplift or rise in the property’s value 6 months after it has been finished. So the smarter investor is building a dual occupancy investment property with the bigger picture of maybe selling in the future and cashing in or using that equity. You must still do your homework and talk to the professionals about getting the right advice as to where to buy. As you still use the same fundamentals and look for infrastructure, growth, employment, schools and shopping centers as a guide for capital growth.
Is a dual occupancy property one of the best buys for a first home owner? I really think it is. The reason for me saying this is – the deposit is not that much more than a single dwelling property and you now have a tenant helping you pay the mortgage. I often see first home owners try to build the “Mc Mansion” and struggle to pay for it and have no money for the lifestyle they are used to – let alone purchasing an investment or building a property portfolio. The dual occupancy property is a great start and a leg up for first home owners and one of the best properties they could buy to help them invest in to the future and build real wealth through property.
For more information on dual occupancy investments email Chris at email@example.com