Why A Dual Occ Residential Property Development Could be The Key to Your Wealth
- Written by Peter Kelly
In years gone by, many people looked to the rental property market for a sound investment. Developers in Melbourne were rich folks who had lots of cash to splash. Regular people stuck to investing in an existing property. While historically, this strategy paid off, it was always a long burn game. You had to be patient and wait for properties to grow their value, then sell when the market was right. Or you faced months of loss as rental properties sat empty. Or you had to fork out for insurance premiums and excesses when dodgy tenants damaged the place.
There’s another, smarter (and quicker) way to generate wealth through property. A dual occ residential property development, if done right, can see you net some serious profit. In this article, we’re going to explore why.
Use Your Existing Land to Subdivide
If the family home is sitting on a lot large enough and suitable for a dual occ subdivision, you could cash in on this. You could do a dual occ development project on your lot. This could mean building two or more smaller properties after knocking down the existing one. If you’re in the later stages of life and the kids are all grown up and out of home, this might be just the ticket for you.
Or you might own an existing rental property or a vacant lot that is a sitting duck for a dual occ project. As mentioned, in days past, most would have just sat around waiting for capital growth. But don’t wait for capital growth, create your own.
A Word on Other Investment Strategies
If you’re reading this and you’re not sure if this is the right approach for you, let’s take a look at some other methods of generating wealth.
The stock market is undoubtedly a better approach. Well, look at the impact the coronavirus is having on shares. Billions of dollars of value shaved off leading companies. Say goodbye to your dividends if there’s a severe crash or bull market. Even companies with strong histories and stable profits can go under.
Just look at the number of Australian retailers going into voluntary administration recently. Shares are a high risk, high return venture. Dual occ subdivision developments, when done right, can result in high returns. They are not without their own risk, but if you know what you’re doing and are willing to learn, you can generate some substantial wealth.
And if you don’t, you can always rely on a professional project management company to do it for you. These dual occ advisors are on top of the game.
Townhomes and Units Are Becoming the First Choice
As the property market rises again, a three-bedroom, freestanding home is often out of reach for first-home buyers. More and more young families are looking to units and townhouses for their first property. The majority of these are dual or more occupancy subdivisions. You can rest assured, knowing that there is a seller’s market for these types of homes.
Choice and Flexibility
If you’re building your dual occupancies as an owner-occupier, building two on a large lot gives you more choice and control. For example, you could live in one property and let the other one out. This allows the rental to rise in value until you want to sell it for a tidy profit. You might even choose to build an investment property.
If you do this, owning a dual occupancy can increase your rental yield, not to mention you would have paid wholesale for it. If you have aging parents, you could move them into the second dwelling while you live in the first. By developing two properties instead of one, you are giving yourself choices and flexibility.
Higher Rental Yields
If you do choose to rent out a single or all the properties, any tenants who move in there will pay the market rate for the area. This means that if you let out a home you’ve completed, you will get a higher return than if you invested in an existing property. Why? Because you’ve saved money by doing the project yourself. If you bought a brand-new subdivision development, the developer has pocketed their slice of the pie.
Build on Your Success
Once you’ve successfully built a dual occ subdivision and have sold them for a profit, no-one is saying you need to stop right away. You can look for another suitable lot, plan another project, and launch yourself into a career as a property developer. Your drive and your energy are the limits here.
Summing Up
There are a few reasons why undertaking a dual occ subdivision is a better way to grow your wealth than other methods. We’ve outlined them above for your ease of learning—all the best on your adventure to generate some serious wealth.
Author bio: To put it mildly, Peter Kelly is enthusiastic about real estate with 10+ years experience as a residential property developer in Melbourne, Australia. When he’s not looking at properties, or visiting potential sites, Peter can be found online searching realestate.com. For him, it’s more than a job – it’s an obsession. Peter is a co-founder at Little Fish, where he currently heads up the project management side of the business.