Dual Occupancy – What are the reasons for building a dual occupancy?

 

Why would someone think about doing a dual occupancy?

Generally, people think about it because they see one going up in their neighbourhood. So a lot of the time we get a call from people when we’re building a dual occupancy because they see our signs.

People call us and ask if I’ve got a block of land that is a similar size do you think you can do it on ours.

So generally it’s because they see it happening in their area, it sparks their interest.

What are the reasons people would do a dual occupancy?

The main reason is obviously for investment purposes. So if you’ve got a large enough block of land, and you want to look at creating it as a retirement investment or you want to use it as an investment property, you can maximise the use of that land.

Because now you’ve basically built two houses on one block of land. You’re splitting half the cost of that land, essentially doubling your income on that block.

Are the two houses on the same title, do they have to be on separate titles, How does that work?

Generally, because they’re only a small block, to begin with, you can’t really separate them or subdivide them into two titles.

Again that depends on the size of the land, which we can obviously look a bit further into on a job to job basis.

But generally what you can do in the majority of councils, is actually strata subdivide them.

What that essentially means is, they’re on the same main lot title, not the land and they can be sold as individual units.

They’re the same principles in the block of apartments. They’re all strata titled, so they’re their own individual units.

So Which if you can strata subdivide it, it obviously increases the value because that can be sold as individual lots. To different investors and you can then, either retain one if you still have to live in it or as a rental property.

So does it matter if you don’t strata title them?

No, it doesn’t matter if you don’t. A lot of people build them initially and use it like that and then, leave it as an option further down the stream if they then decide to do it as an investment or development later on.

So some people might build it, live in one half and rent out the other half. Which is not essential to strata subdivide it at that point. But in the future they might look at, well we’re going to sell it and move. You know, they might be retiring somewhere and at that point, you can always strata subdivide it. So it doesn’t have to be done at the time, that is something that can be done afterwards.

Is it something that you’d want to know beforehand, as a plan, so as your overall investment strategy? 

If what you wanted to do or you wanted to change the purpose of it. Do you need to know that beforehand or can all blocks be strata titled?

Not all dual occupancies can be strata titled. Because some councils, in and around the Sydney area don’t allow it regardless of the block size.

So in the Hills council area, your Castle Hill, Baulkham Hills areas, they generally don’t allow strata subdivision. So you need to know up front if that is your ultimate goal, at the end of the day, which generally it is.

With a dual occupancy, your general end goal is to be an investment, either as a rental or to on-sell it. So that’s something that you’d want to know early stages.

If I couldn’t do a strata subdivision, if I was in one of those council areas where they don’t let you strata title the block, why would I still go ahead with the dual occupancy, what difference does it make for me?

The only difference it makes is like I said, you can’t sell them as individual units. So you can’t sell unit A and not unit B. So if you want to sell it to, somebody who’s looking for an investment, you’d have to sell both units in one,  then they rent them. The owner can still rent them individually.  It’s just they’re still technically one building on the one title.

Who else would think about doing a dual occupancy?

We’re getting enquiries from mum’s and dads that have extra space on their land and are looking at just that potential.

To build something as a secondary income. Especially on the blocks where they know they can build a detached unit, because it allows them to keep their house existing on the front.

They keep their house on the front and build a separate house down the back which they can again strata subdivide, and get a rental income from.

Obviously, the construction cost is more expensive than a granny flat but the return on the investment is five times more than what you’d get on a granny flat.

Because of the fact that you can subdivide it and sell it as its own block.

So instead of being restricted to a one bedroom or two bedroom granny flat which is 60 square metres, (which isn’t very big) you’d be better of building a three bedroom house with a single garage with its own backyard and can then be subdivided as its own unit.

A granny flat which you can’t sell on its own now becomes a house you can sell on its own.

So it becomes a opportunity to either maintain it as a rental or if you need the extra income, you can off-sell that one and reinvest it somewhere else.