WA Buying IPs to later create dual occupancy on

Hi guys,

so i see the term of "dual occupancy" thrown around a lot, but im not really sure what exactly this is in reference to. Can someone in Perth point me in some direction of what kind of land space i would generally be looking at, the capital and whether its possible to sit on an IP with a large plot of land and develop later?

What kind of strategies would you implement? I would presume that saving up capital to develop two separate occupancies would requre a fair amount of capital?

 

Sorry, I can't post a detailed post now from my phone but I am standing in a dual occ potential property in Perth right now. Plan is to demo a build 2 in around 10 years. In the meantime we are converting it to a 4x2 which will make it cashflow positive while holding.

 

Hi perthguy thanks for the reply, could you share some details in regards to how you found this deal? Did you buy it as a plot of land and build it up or is this an older property that was renovated to fit the requirements.

Also, how do you go about sourcing the initial capital to go about the conversion?

 

very smart strategy that is good focus..I am doing this now....buying cheap now..with a view to develop in another 5-6 years...I will be retire by then it will give me something to do.

 

It is an old house and granny flat badly joined together and semi converted badly. We are just fixing it up ourselves to be good enough to rent out for 10 years. It should not cost much so we are just paying cash.

 

Its not really a WA term that gets thrown around - so over here, it doesn't have any technical meaning. You're better off talking in terms of the precise legal ways that you're allowed to have separate dwellings, and the requirements for those.

For example, ancillary dwellings (granny flats), or built stratas.

 

Back home!

There are 3 main ways to do dual occupancy in Perth.

1) buy an existing house on a big enough block and build ancillary accommodation (a granny flat). The rules for the block size and granny flat size are in the R-Codes.
2) buy an existing house on a big enough block to keep the original house and build a house behind (two grouped dwellings).
3) buy an old dump, knock it down and build two grouped dwellings.

You need to know the R-Code of the land and how much land you need for that R-Code. Links at the end. I will show you an example:-12 Whiteside Street Cloverdale

12 Whiteside Street Cloverdale WA 6105 - House for Sale #123876562 - realestate.com.au

First we check the City of Belmont website to find out the R-Code.

IntraMaps

City of Belmont Maps shows this property as R20.

Then we check the minimum and average lot size requirements for R20 in Table 1 of the R-Codes.

http://www.planning.wa.gov.au/dop_pub_pdf/State_Planning_Policy_3.1-Residential_Design_Codes-P.pdf

Table 1 shows us for R20 Grouped Dwellings we need a Min of 350sqm and Av of 450sqm.
Basically, 450x2=900. The lot size is 1241sqm so it could easily accommodate 2 grouped dwellings.

Incidentally, if you wanted to retain the existing house and build at the back you would need 3 metres down the side free and clear. This property has that so it is also a potential retain and build.

The subdivision requirements are in DC 2.2.

That's how you find a deal. Is this a good deal? Not in my opinion. Personally I think it is overpriced. I haven't run the numbers. Just for me the end values are way to low, rents are abysmal and vacancy rates are at record highs.

Numbers may be better if you can get 3 grouped dwellings on there. Or even house and granny flat on the front block and a house on the back. What makes it attractive is the block size. What makes it unattractive for me is the price.

City of Belmont
http://www.planning.wa.gov.au/dop_pub_pdf/State_Planning_Policy_3.1-Residential_Design_Codes-P.pdf
Development Control Policy 2.2 Residential Subdivision

 

Ancillary accommodation (R-Codes)
Strata Plan (Development Control Policy 1.3 Strata Titles)
Survey Strata Plan (Development Control Policy 1.3 Strata Titles)

On a strata or survey strata plan the dwellings are grouped dwellings, unless you build after subdivision of a survey strata with no common property in which case they would be single houses.

Development Control Policy 1.3 Strata Titles

 

Thanks Perthguy, yeah that clears it up quite a bit for me. I guess as someone starting out i should look out for a good location with a large block of land and possibly look to clear the R20 requirements to build a house behind or something later on. I see how that would "manufacture" a whole lot of equity though. Definitely a good method to consider.

p.s. So from what you;ve just said it would be divided as 12A/12B/12C whiteside St Belmont?

 

There are R30, R35 and R40 duplex blocks too... these are suitable for 2 grouped dwellings. I will see if I can find one in Beckenham to post.

 

I would chose Opt 1 or 2 over Opt 3 any day of the week, in a flat/fallen market like Perth. However if you're buying now, with the view construct in 5 years time then Opt 3 may become appealing.

 

Usually no profit in this deal so agree with @RetireRich101

 

I agree in this market there is not. You would need a rising market for this to work. Otherwise if you can hold a positively geared property for long enough, eventually it would become profitable to demo and build. The reno we are doing right now will be Option 3'd down the track.

 

What your doing is the "smart mans" version of land banking.

 

If you are going to demo and build you would need something not worth retaining like this:-

21 Birchington Street, Beckenham, WA 6107 - Property Details

 

next door 23 Birchington did exactly Option 2

 

Looks like it! Personally, I think that the front house for 23 was in fairly good condition. It looked more like a reno to me:-

23 Birchington Street, Beckenham, WA 6107 - Property Details

 

In WA, for the configuration in 23 Birchington, can the new dwelling ( in a battle axe subdivision ) be a main dwelling + granny flat? ( say constructed at the same time a 3bed/1bath + 2 bed/1bath under 1 title)?

If this permissible, then I can same dwelling be constructed in the front lot ( down the track, demolish, build main + granny flat)

 

I will have to look up to confirm by for Ancillary Accommodation I believe you need a minimum lot size of 450m2. 23 was 847m2, so you would have to pick which house had the Ancillary Accommodation.

You would need 900m2 (I think, have to check) to do house+ancillary on both new blocks.

 

it appears the rear lot is 470m2 so permissible for main +GF if our assumption is correct.
front lot is only 376m2 though. in certain parts of SE QLD you could do a main + GF as small as this.