Posted on July 4, 2022
What is a Dual Occupancy Property?
A dual occupancy property can be a very attractive investment option because it provides a high yield. It does this by generating rental income from two dwellings on the one title. A typically scenario would be a 4 Bedrooms, 2 bathrooms and a Double Garage on one side and a 2 or 1 bedroom, 1 bathroom and a single Garage or Carport on the other side. The configuration of the two separate dwellings will depend on Council bi-laws, town planning guidelines and will vary from Council to Council.
The reason why this type of investment purchase is so attractive is that with two incomes coming in, owners will make a higher return on their investment. This type of investment usually indicates a positive cash flow. This means that excess funds can e channeled towards reducing debt while still enjoying reasonable tax benefits.
A typical dual occupancy property will cost anywhere between $450,000 through to $600,000 depending on the area, with the average pric purchased at around $530,000. A dual occupancy property at this price can demand a combined rental of around $650 per week. This is a gross yield of 6.38%. In comparison to the $530pw achieved for a single occupancy property purchased at the same price, the yield would be 5.20%, giving us a 1.18% higher yield on the investment. The additional $120 that you receive each week means that this extra cash flow can be utilized to pay down any mortgage debt or non tax deductible debt.
The above calculation does not take any of the other benefits received from a dual occupancy property. If you take into consideration the fact that you have two separate dwellings in which to claim depreciation on, and then you factor in the extra money received through submitting a tax variation, then this will leave the investor with a considerable positive cash flow. If you go ahead and acquire two or three of these types of property as part of your strategy to achieve your financial goals or retirement goals, then the extra cash flow will allow you to pay down debt at an accelerated rate. This is how you create what is called a cash cow.
In any property investment strategy, the ultimate goal is to create cash cows. In building a property portfolio you want to be utilizing cash flow to reduce debt and build your portfolio as quickly as possible. This is where Cash Flow is King. This is where a dual occupancy property can assist you in achieving your goals of financial independence quicker that other property types.
If dual income property investment is something you wish to be a part of, contact us at Property and Finance Solutions today, for more details.