IS DUAL OCCUPANCY WORTH IT?

IS DUAL OCCUPANCY PROFITABLE?

A dual occupancy can be extremely profitable if done the correct way!

So where do I start?

Here is a general check list:

Finance is your first step in any development. Don't run out of cash so do your homework and work within a cost budget

The New Residential Zones in Victoria are complex when it comes to property subdivisions. Understand the council planning requirements for dual occupancies or triple occupancy in the area. Read council’s planning scheme and the schedules which apply. The scheme will let you know the minimum size of land you’ll need for your dual occ and what type of development is permissible. Check for overlays- especially those relating to bushfire where restrictions could occur.

Property Location is paramount for a profitable property subdivision. Infrastructure, availability of services, schools, shops, recreation spaces, employment coridors, views, cultural context and transport add value to your development.

Expert Site assessment is the foundation. Search for land that meets the dual occupancy or triple occupancy criteria. Talk to us. We know which sites work. It’s a complex exercise best left to professionals who will be with you all the way.

Size of land is important. If it’s a duplex site, you may need a minimum of 16-25 metres frontage in mid to outer suburban rings and less in the inner areas controlled by City of Melbourne, Yarra to name two. Site width for two crossovers is not encouraged by several councils who prefer to see all garages and car parkimg hidden from the street view.

Check the title, Title Plan and Planning Certificates. Check the planning certificate to see if it is in a bushfire or flood zone. You can still develop in these areas but it will add to your build costs. Check the title for covenants or agreements.

Building Cost Budget. This is very important as the builder will look at the land from a different perspective. We can assist you with the building process too and a cost budget to measure your progress is a great idea.

Run your development feasibility to ensure the project will be viable. Run one in the reverse format to work out what is the maximum amount you should pay for a site. Of course this will not apply if you are subdividing your own home or land or doing a dual occupancy in your own backyard.

You will need to find recent comparable sale prices from which you can base your end value estimate on this. Talk to agents about the current rental market and what rent could be expected to calculate the projected yield on completion. Most importantly, you need to have a good understanding of the build costs. We advise to do a Cost Budget to set your goals and control any overspending. Over capitalising or getting emotionally bound to a development could cost you in the end.

Long Settlement terms help. If buying a development site, a long settlement period helps and obtain pre-consent from the vendor to lodge a Town Planning Application pre settlement.

Town Planning and Building Permits. Once you have all the approvals, you can then go back to your lender to obtain your unconditional construction loan. As soon as this is in place, the builder can start.

Construction. The build phase for a dual occupancy should be around four months upwards and usually around eight months for a double storey to Certificate of Occupancy stage. Once the building works are completed, an occupation certificate will be issued.

Don’t forget to order a depreciation schedule; this is simple, just email the plans and builders tender and any other cost details to your quantity surveyor. Depreciations can be very attractive as long as you hold the propert

Build Equity through the property subdivision. You can now apply for the subdivision certificate and once council issues the certificate, you can register the subdivision (after your lender has signed off on it). There is no need to register immediately if you are planning to hold and not planning to refinance as you may find costs such as rates may be a little less if the dual occs are kept on one title.

You may decide to “flick” one of the lots with its own title to a builder or developer who is cashed up to start building now rather than waiting for the 6-12 month period it usually takes to come to this planning approval stage. So you may have built equity and value through your town planning and subdivision permit. Talk to us- we know how it ws.

Welcome to the world of property development and successful subdivision!