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  • Writer's pictureSwarup Dutta

Dual occ Vs Non Dual Occ investment returns


This is an extract from a Certified Practicing Accountant- David Shaw.

It shows the cash positive opportunities a dual offers for a retiree or a first home investor.

One of the most significant and positive development I have seen during my 4000 interviews over the past 10 years is the dual occupancy property. The dual occupancy is simply a property with two sources of income. Some Local Councils will allow a 3 bedroom and a 2 or 1 bedroom apartment to be constructed on the one property. Returns for both the short and long term are superior and this assists tax payers with the recurring question of “how can I make my property positively geared?” Dual occupancy gives superior cash flow because of the two sources of income. Upon analysis of this, I discovered the following:

Cashflow:

  • A typical dual occupancy property purchased at $550,000 can almost be positively geared from Day 1. That is, with a purchase price of $550,000 the combined rental can be $670 per week as opposed to a non-dual occupancy property at the same price at $550 per week. This additional $120 per week means that after 20 years of holding the property even if the property pays off no debt it will still yield twice the cash flow return.

Levels of debt

Because the dual occupancy delivers a superior cash flow you actually need less of these properties in retirement to achieve the same result. In the example used above, if you were to purchase 3 of these properties today with a 5% rental growth over the next 20 years without paying off any debt, you would generate a positive cash flow of $114,081 per annum. If a $550,000 non-dual occupancy property was purchased with the same rental growth you would need 6 of these properties to develop the same cash flow. Therefore, with a dual occupancy property you take on half the debt and achieve the same long term cash flow.

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