Two units on one titled land - What is this?

Hi, I am in the process on looking for my first IP and have identified a property that has two units on pone titled land.

I went to the property thinking its a normal house. Upon reaching I realised that its a 3+1+1 house in the front and a small unit (which looks like it was part of the house) at the back. This unit is a 1+1+1 (own kitchen).

They dont look different or separated units at all. Its just that the front house has a front entry and the unit at the back has a back entry.

With two units, there are two separate tenants and paying approx $500/week in total.

The land size is 600sqm and the property is within 2km of train station, 1.5km to a major shopping center.

Is it normal to have a property like this? Is this legal?

Looking forward to some advice.

Thanks

 

could be granny flat... whether it was done legally, you can check with council.

 

Good idea. I will check that.

Most of the granny flats i have seen are separate to original dwelling.

This could be a different style granny flat.

 

We have a IP which is similar. We did the "granny flat" conversion after buying it completely legitimately under a CDC based off the 2009 Affordable Housing SEPP legislation.

Note in our experiences rent is good, but valuations fluctuate wildly - I think the valuers don't know what to make of it. If we ever decide to sell it we would need to decide whether or not we turn it back into a normal house first or whether we sell it as is.

Regards,

Jason

 

What city is the property in?

 

NSW Legislation

For ones under the SEPP 2009 legislation note the section on secondary dwellings:

The standard instrument defines secondary dwelling as follows:
secondary dwelling means a self-contained dwelling that:
(a) is established in conjunction with another dwelling (the principal dwelling), and
(b) is on the same lot of land (not being an individual lot in a strata plan or community title scheme) as the principal dwelling, and
(c) is located within, or is attached to, or is separate from, the principal dwelling.

Regards,

Jason

 

Melbourne

 

Ignore me then ... wrong state Apologies for cluttering your thread.

Jason

 

This is exactly my concern! Even though the land size is good the valuation of the property may not be as good in the future.

In two minds now.

I might have to keep looking.

 

This is called dual occupancy. It is quite common these days if the building was built like that. If they added something afterwards then I can't comment but there is plenty of new construction being done that way these days for investors and extended family requirements. There is usually a firewall installed in the common wall to separate the two properties and approval is acquired from the council for two letterboxes. Not sure what rules are in place for dual occ in that council...

 

If in Melbourne it's unlikely to be a granny flat. Have you reviewed, or had your lawyer review the Section 32? That should have the information you need. It sounds like a 'dual key' home. Here's an article I found about them. You need to confirm that it has all been done legit, your conveyancer/lawyer should be able to do this for you.

It could potentially be a nice cash flow positive investment with the two rental streams! If you are worried about the valuation (in discussion with your conveyancer/lawyer) consider making an offer subject to valuation, if the valuation comes in under just walk away!

 

thanks.

I visited this property yesterday and it looks like it is one big house but with two separate living areas, kitchen etc.

It also has two separate letter boxes and two electricity grid but only ONE water meter! Got told apparently it costs $4-5K to get that separated.

 

I agree.

Good tip. thank you.

 

Yep, sounds like a dual occ. Check with council on what approvals it has. You don't need to separate the water metres. A plumber can put a trip metre on the feed that runs into the second occupancy so you can split the bills between the tenants. I did this at a dual occ I own, cost about a grand but paid itself off within 6 months. Your real estate agent will need to visit the property to get a reading every quarter.

 

Good info. Thanks

 

that is how most dual occ are built and designed. Not every lot is wide enough to have two entries and on the corner to have two gates. Some even look like a single dwelling from the outside.

In my opinion corner lots are the best for dual occ. If you design it well it looks like two different houses.

 

So people generally assume this setup is legit?

Because when I first see properties like this, I'm pretty much like "unapproved and illegal for dual occ unless proven otherwise".