Dual key / dual income properties ( near-new )

I'd be keen to hear some feedback from PMs, buyers-agents or owners on their experiences with newer-style dual-income properties that are increasingly common in SEQ.

What sort of actual yields are being experienced? In what areas?

Are there any specific t&c's that need to be place in lease agreements?

How easy is it to secure tenants compared to single-occ properties?

What are the main gotchas? Any specific stories?

What designs work well?

What is the best combination? ( and why? ) 3 bed + 2 bed, 3 bed + 1 bed, etc

 

There's a lot of them being sold by marketers in new estates in SEQld... LOTS of them...

The concept itself is excellent, as you can generate far better yields than from a vanilla single property, and then reinvest the surpluses towards debt reduction, thereby improving your ability to borrow over time. But the locations in SEQld ( Redbank Plains Leichardt/Ipswich , Pimpama etc) are chock full of other INV stock, so tenancy vacancy rates may be an issue...

I am looking to start doing some of this type of thing in regional NSW in much smaller batches. 5 or 10 in Orange or Dubbo or Bathurst or Port Macquarie, for example, every 12 months... Looking at Some opportunities in Shepparton VIC at the moment as well... the idea is to produce a great product but not to saturate the rental market, as you end up *******ising the cash flows ...

These kinds of products can typically be done at 550K or below, and in some locations, at 450K and below... so the returns can be pretty excellent. They can be especially potent in the right structure, an SMSF for example might find the numbers particularly attractive.

The benefits of regional positions vs SE Qld is that you arent buying into new housing estates chock full of properties being sold by 100 other marketing companies, to other investors, and the prices tend to be cheaper, allowing you to generate far better returns on equity , use less money to do so, and therefore improve your borrowing capacity further again...

Only NRAS is a superior cash flow proposition, but with those opportunities really thinning out now, dual occupancy is going to be the next best thing for those wanting to inject a cash cow or two into their portfolio.

 

Thanks for the input @euro73 . Can this be achieved on regular new building blocks in most parts of NSW? Is it easy to achieve optimal titles - e.g. Strata title?

What is the minimum lot size that can generally be used?

 

You can do it in nsw under the affordable rental housing sepp. It's just a house with attached granny flat.

 

You can, but then your DA "may" require that you provide a 20% rental discount... and that your property be managed by a Community Housing Provider

Just as easy to do it without AHSEPP

 

NSW allows attached/detached Main+Granny Flat (GF). The max allowable floor area for the GF is 60m2.

In WA, same as NSW but with 70m2 allowable for GF.

While NSW and WA is State owned initiative, however QLD is council specific.

• MBRC and BCC allows to build these GF, but they can not be rented out separately under current legislation. so no go.
  
• Ipswich council is similar to NSW and WA, but last year scaled down allowable GF space to 50m2. With this size, probably a 1 bed GF at most.
• Logan council is similar to NSW, but allowable is 70m2 GF max floor so 20m2 larger than Ipswich.

 

Thanks @RetireRich101 . Only attached type I've seen to date for new construction in NSW is a fonzie flat above a garage. Examples I have seen are in North Kellyville and Rouse Hill.

What other configurations have you seen done in NSW?

 

Some examples of floor plans I have seen done in NSW

Note that most of these are not detached dwellings. For some reason, the 2 detached dwellings has not proven popular amongst most builders/developers ... I' m not sure why... I think it's a better way to do 2 on 1 title.

 

I've seem some of the fonzie flat above garage. Think some of new builds in SW Sydney, and in inner city older terrace and a garage at rear entrance. clever design though.

 

I liked last design in the drawings you have compared to majority of QLD dual living design. Most QLD council wants you to hide the entrance of the Granny flat.

 

For the rear garage and fonzie to work best, rear lane access is extremely handy ...

 

Be careful in BCC area. There are a large amount of new and near new ones that do not have approvals in place as rooming accommodation and you will be unable to rent out separately without spending some money and time getting the approval. Also BCC is changing the regs soon so you won't be able to rent out these at all (unless you have an existing approval). BCC prosecute this sort of thing very hard, as in summons to appear in a magistrates court.

 

Is it LCC and Ipswich council that you're aware that allows Main + Aux units to be rented separately?

BCC, MBRC and others while allow to build them they cannot be leased separately?

 

Logan & ICC are fine with it. Redlands should be in the new scheme also. Haven't looked at MBRC lately.

 

The latest MBRC planning scheme doesn't appear to be so... unless someone confirming I am wrong.

 

Comes down to cost. More expensive to build two separate than two attached. The only thing I am not sold on with the attached one is the make up of the firewall. It's not a brick wall between them, it just a fire rated product. Not sure how well it goes with acoustics.

From what I have seen in several markets it still works out better to just find an old good condition house on a big block and then build a detached granny flat.

 

Some of the builder i spoke to indicated the isn't a big price difference between attached and detached. The firewall seperation is probably like a t/h villa seperation. I lived in one, yes you could still hear if neighbour drops their plate, but not a conversation..

 

It's around 10-20k. Not huge but enough to sway the market which way to build. Don't forget these types of set ups are hard to finance as it is adding more on top could be a deal breaker.

 

detached dwellings are easier to finance than attached dwellings under one roof.. they are technically considered dual key when they are under one roof, rather than dual occ. Im being pedantic- but thats an important point when considering finance, as banks will also be pedantic.

True dual occ is 2 detached dwellings on 1 title, and insurers and lenders typically happily lend to 90% against 2 on 1 title ... no issues. Several lenders will do 3 on 1 title at higher LVR's without an issue, as well.... a house with 2 x fonzies.... that would be quite the cash cow!

 

Any figures on typical build costs for these dwellings?

Also examples (with actuals) of yields being achieved?