Earlier we discussed what a dual occupancy development is, some history around land sizes and sourcing properties. In this article, we will discuss some financial benefits of a dual occupancy development.
Benefits of the dual occupancy project
In carrying out a dual occupancy development, one’s capital is preserved because the asset purchased – a house on land – has a proven value and assumed rental income. This preservation of capital reduces the risk because if, for any reason, the development does not go ahead, the asset retains its value. Even after the redevelopment, the value of the existing dwelling is by and large retained.
The existing dwelling also generates cash flow during the planning process and in some cases even when the development is underway. This cash flow cannot usually be generated from a vacant allotment.
Profitability and the land value equation
Dual occupancy developments, like most infill developments, are profitable because of the land value. If the land purchased for development is say 675m2 this would generally be enough to build a second dwelling and subdivide the land into two allotments. Two dwellings, each on say 337m2 will generally be considerably more valuable than one dwelling on 675m2 and will certainly provide a greater income.
Are you considering a dual occupancy development?
If you are considering a dual occupancy development, it is important to understand the requirements for developing and subdividing. For example, there needs to be adequate space to do so, and this is determined by the position, as much as the size, of the existing dwelling. There needs to be adequate access for vehicles to enter and exit, and the proposal should be financially viable.
Our Property Development Assessment (PDA) service can answer these questions for you.
A dual occupancy development is the subdivision of an existing house and land into two allotments; one with the existing dwelling and one with a new dwelling.
Standard middle ring suburban allotments are usually ideal for dual occupancy development.
A dual occupancy development can preserve capital, diminish risk, and generate cash flow.
Infill developments are profitable because of the land value.
Property can be sourced from the market, through family or it may be right behind you.
If you are considering a dual occupancy development, consider position, size and access.
A Property Development Assessment is the first step towards establishing your Dual Occupancy Developments.