Strategies for Investing in Dual Occupancy, Dual Key, Primary and Secondary Dwelling
There are a lot of terms that we need to differentiate so let’s check each one in detail. Once you are keen in buying a property with any of these categories – you may not actually know and understand completely what you’re getting into. Let us show you how.
All about Dual Occupancy
Dual Occupancy or more popularly known as Dual Occ. are actually two houses on a single lot. This signifies that their services are not joined with the possibility to even divide it further into sub-units in the future. Although this will certainly involve preparations and work to accomplish the goal. Whenever a property is described as Dual Occupancy to you – be sure to check that what you’re after is really this type of dwelling before you make the actual purchase. Dual Occ is perhaps the most-often used term we hear in the property marketing field. It is also misrepresented for the Primary and Secondary Dwellings which will be our next topic.
One simple way in confirming whether it’s a dual occupancy is to get a copy of the Development Approval or Planning Permit (depends on what state one is residing in).
Primary vs. Secondary Dwelling
What’s the difference between a primary and a secondary dwelling?
A main standard house on a property, usually the customary 3–4-bedroom type of home is called a primary dwelling. Conversely, a secondary dwelling is the development term for what is generally known as a granny flat. These houses can either be attached or detached.
One of the more significant factors to consider when checking out this type of property is that it will seldom be advertised as Primary and Secondary Dwelling, but more generally we refer to them as Dual Occs, Dual Keys or the rather vague term, Dual Living. But it’s really trivial what these terms indicate, as long as you realise what you are up to when you purchase with the innate limitations in each variety.
Why it is not normally marketed as Primary and Secondary?
In many locations in Australia, the so-called Granny Flats or Secondary Dwellings are allowed, however, their usage is limited. At present in most areas in Queensland (excludes Ipswich City Council) and Victoria, it is not legally allowed to have Secondary Dwellings as investment properties. This means they cannot be leased out and requires that the residents must have some kind of relationship with those living in the Primary Dwelling.
Note though that it is simpler to acquire approval for Primary and Secondary Dwellings, as a full Development Application or Planning Permit is not obligatory. But this comes with restrictions, aside from who are the legal dwellers in them. But worth an observation is that if you have a property in NSW with a Complying Development approval – this property will never be allowed to be subdivided. The approval was obtained under the function of the ‘Affordable Housing State Environmental Policy,’ therefore it cannot fall under the local council’s decision.
What is a Dual Key Property?
When you talk of a dual key home, it basically refers to one property like that of a regular home if you’re looking from the outside but in reality – it is broken into two different houses.
It’s comparable to the concept of a granny flat and a duplex joined together. Definitely, there are two dwellings constructed in just a single property. Though the picture of two similar units like a duplex is pretty far from that. On one portion of the property is actually a house, but with another unit inside or located on the further side of the property.
How do these homes look like?
- With either a foyer at the front or just one entrance which directs to 2 separate lockable doors
- With an additional bedroom door (among the other rooms of one house) which runs through a studio unit (with own tiny kitchen and a bathroom within the unit)
Conclusion: A dual key home is unlike a duplex and one or more granny flats combined in a sole property. It is a similar dwelling that’s shared simultaneously by two distinct tenants.
Reasons for Investing in Dual Key Homes
Interested in investing in dual key homes? Take a look at the advantages and disadvantages below:[table “5” not found /]
How are taxes deducted in Dual Key Homes?
Wanting minimal risks in property investment like dual key homes – it is important that one needs to understand and analyse first the figures such as capital growth, property costs and rental income before he takes the plunge in the market.
The number of various property rental tax deductions are significant, so be reminded of this when deciding on your options. It is correct to say that depreciation comes in second after loan interest among the tax deductions which can be claimed under this type of investment.
Why is Depreciation High for Dual Key Homes?
First, there are actually two separate homes in the same structure. Your guess is as good as ours. What follows: two kitchens, two bathrooms, and so on.
The arrangement above is always pricier than a property for single occupants as attested by Quantity Surveyors using the square metre rate of building construction standards. What would require more expenses? It will be the bathroom, toilet and kitchen as expected, with more works such as tiling and plumbing (known as division 43). There are also plant and equipment accompanying these areas, like dishwashers, washing machines and dryers (under division 40).
Remember: When you’re occupying a portion of the property and have the other half leased out – you are obligated to allocate whatever is deducted from what is included in your rental expenses.
- Property investment is a culmination of the right strategy in support of one’s financial goals and needs.
- In property investing – you may have to think ‘out-of-the-box’ at times as a useful strategy.
- If you’re buying property in one market – be sure that it is legal, and you know what you’re getting into. Be sure you’re capable to sub-divide it into several units in the future.
- The best strategy for dual home investment is to upgrade or renovate the property later, consider transforming it into 2–3-bedroom single dwelling. This will certainly upturn its resale value so this will definitely be beneficial.
- Ask help from professionals and experts in all aspects of property investing as it is not likely that you know it all. It pays to consult the right people.
- Dual Occupancies are not in any way favourable vs. primary and secondary dwellings. They’re considered unique and distinct. At times, the belief is that the savings we get with one type of dwelling and approval may offset the flexibility of using a different strategy moving forward.
So if you like give dual occupancy as an investment strategy and want to give it a go, make sure you get educated, have the right team in place, run a thorough feasibility study, and budget accurately for all the additional expenses you will incur and don’t forget to include the increased time it will take to look after the property.
What are the best suburbs to build Dual Occupancy Houses? What suburbs in Australia have a high dual occupancy demand and have a good capital growth? These are the most common questions property investors ask and it involves a lot of time researching to find answers to all of these.
The good news is, we’ve already done those hard work for you. Within seconds, you’ll be able to identify which certain suburbs are more desirable from people who are looking for room/s to rent or have a high room rental demand combined with a good capital growth.
Check out our Room Rental Demand Report
It is the most comprehensive location report of all 15,000+ suburbs in Australia – with linked state, suburb, and postcode. It’s the perfect tool for property investors looking to buy a property to rent out rooms individually to have a positively geared portfolio.