Is dual occupancy right for you?
There are many types of properties in Australia that provide investors excellent potential for a varied and prosperous property portfolio. Of the approximately two million landlords in Australia, their investments are made up of a mix of shares in units, townhouses, apartments, single dwellings, duplex, and even houseboats (It’s true!).
As we all know, there’s no one size fits all when it comes to which is best investment is best. Location, demographic, geography all contribute to what property type is sought after and, even then, is it right for you?
One option that is a growing concept in Australia (though not new) is dual occupancy properties. These are also known as dual key.
Already very popular overseas and gaining momentum here, dual occupancy is, effectively, one property with two dwellings: one formal title, two separate assets. Usually, but not always, there is one ‘main’ dwelling and a sub dwelling, such as a granny flat, and they predominately share utilities. Where dual key properties share utilities between dwellings, consider how billing will be shared between the two.
They may appear to be a great option for extra income with one set of fees and while this may be true for cash flow, as with any investment there are other aspects to consider.
As these types of properties are attractive options for investors, one consideration could be when it comes time to sell the property, interest may be somewhat restricted to an investor pool. For the investment property owner who is selling, it may limit the buyer pool, although it may be beneficial for current and future tenants of the property.
While the vacancy rate remains in landlords’ favour at present, sharing one property with others may not always prove an appealing option for tenants, who may feel their privacy is compromised or simply not wish to share. On the flip side to this, these types of properties may appeal to a niche tenant market looking for alternative living arrangements in both a rental arrangement and purchasing arrangement.
When it comes to buying a dual occupancy property, depending on your future plans – sell, renovate, keep, live – there is always the option to move into one of the dwellings, while renting out the other.
Some dual key properties may share utilities between dwellings. If this is the case, consider how billing will be shared between the two.
Dual occupancy properties provide landlords with another option of investment, but as with any important financial investment, it’s vital to do your due diligence to make sure it is the right investment type for your current and/or future goals.
SOURCE: RE/MAX Australia
