Dual Occupancy Houses for Sale Melbourne – A Generational Opportunity
Are you browsing dual occupancy houses for sale in Melbourne? Or perhaps you’re considering undertaking a dual occupancy subdivision project of your own.
Whatever the case, you’re in the right place. Here at Little Fish Real Estate, we live and breathe all things real estate and dual occupancy developments.
We have a sister boutique project management development company. Every day, we partner with landowners to help them maximise the value of their land.
This article will delve into the benefits of doing a dual occupancy development. You’ll learn why you might want to undertake such a project.
We’ll also explain how this opportunity is generational and how such an investment was not readily available to average Australians in the past.
So, let’s get into it.
What is Dual Occupancy Development?
A dual occupancy development is when a block of land is subdivided, and two separately titled lots are created. The property developer then builds two dwellings next to each other. These are usually townhouses, but sometimes they are what would be considered detached units.
The “dual” comes into it because the two houses are next to each other. Other terms for this include duplex or side-by-side.
This type of development can take some time, often around nine months to a year.
The old dwelling is demolished, and a dual occupancy builder constructs the two new townhouses. Construction can take time due to delays and the nature of the work.
Then, you can either sell the townhouses or hold and rent.
Why Build Dual Occupancy Houses for Sale Melbourne?
You may be wondering why you would undertake this type of residential development project.
The primary motivation for many people doing this type of project is profit.
For instance, you may own a house on a block of land worth $900,000. If you sold it as is, you would make that money. Sometimes you’d deduct a remaining mortgage loan from this amount.
However, if you built two townhouses on the block, you could sell each for $750,000. That’s 1.5 million.
Of course, you’d deduct your construction and other costs. However, you can see that you would walk away with a tidy sum of money.
Other people might approach it differently. They may want to stay in the location they’ve lived their whole lives. In this case, they may choose to occupy one townhouse while they sell the other for a cash injection.
Or, they may rent out both to generate passive rental income.
Furthermore, other people might want to bring elderly parents closer to their homes so they can care for them. In this case, they may occupy one property while putting their folks in the other one.
You can see there are many reasons why people would build dual occupancy houses for sale Melbourne.
A Ripe Investment Opportunity for this Generation
A dual occupancy development is a ripe investment opportunity available to this current generation.
In the past, most people invested in real estate by buying existing property to let out. This is still a suitable method. However, your income from rental properties comes as a trickle. You might get a few thousand a month for an investment property.
And, in days gone past, everyday people were locked out of property development. It was an occupation for those with money to spend and a way for the wealthy to get wealthier.
There was insufficient information for landowners to undertake a dual occupancy development. It was hoarded by those in the know.
However, this is a changing landscape with time and a new generation of homeowners.
Like any investment, if it is lucrative, sooner or later, it gets out.
People started realising they owned a significant asset – land that could be developed.
Now, everyday people are maximising the value of their land by subdividing it and developing multiple dwellings on it.
Side note – if you are wondering if you should buy a townhouse, click here and also here for reasons to buy an off-the-plan townhouse.
Companies Like Little Fish
With this phenomenon, companies like our Little Fish Property Developments were created. We are client-side project managers who facilitate property development on behalf of our clients. They own the land, and we develop it for them for a fee.
However, we go even further than just managing a development project. We actively work to upskill the landowners, providing free training and sharing all our information.
Eventually, some of our clients undertake a project of their own if they have the appetite for the work and the drive to make it a reality.
Building Wealth – One Project at a Time
Developing dual occupancy houses for sale in Melbourne is an excellent way to snowball wealth generation.
If you walk away from a development project with a solid profit, you could bank it. However, money in the bank is not working for you. Especially with record-low interest rates. Even a term deposit is not a great idea.
Sure, the stock market is there. However, stocks are a volatile investment, and if you’re not careful, you can lose your entire investment in the case of an adverse market event.
However, you can snowball your wealth by funnelling that profit into another dual occupancy development project and then another one.
Before you know it, multiple projects will run and see big bucks when they come to settlement.
Priced Out of a Location?
Another reason a landowner might want to build dual occupancy houses for sale in Melbourne is to leverage the money to buy in the desired location.
For instance, let’s say you live in a particular suburb. You own a house there worth X dollars. However, you have your heart set on another suburb.
Maybe you grew up there, or you love the local area, or your parents are nearby. Whatever the reason, you want to live there. But the property prices are simply not affordable in your current position.
By undertaking a dual occupancy development project, you could generate enough profit to have a sizeable deposit for a house in your desired suburb. You can then service that mortgage with your income and buy into the area finally.
And, if you snowball your wealth as we described above, paying the mortgage will be easy.
Some Things You Should Know
You might be ready and raring to go after reading this far. However, we’ve got to point out a few things to temper your expectations.
In this game, knowledge is power, but it’s also money. Let’s dig into a few things you should know about developing property.
Not All Sites Are Suitable
Not all blocks of land are suitable for building dual occupancy houses for sale in Melbourne.
Some might not work for various reasons. This could be because zoning, encumbrances, easements, or the site dimensions don’t work for a subdivision.
If this is the case, you’re not out of the game. You just need to approach it from another angle.
High Risk, High Reward
Property development is a high-risk, high-reward form of investment. We’ve seen plenty of people go under because they underestimated the risks involved.
We don’t want to scare you off. However, we need to be honest.
However, like any risk, you can mitigate it. You mitigate this risk by learning, knowledge, and processes.
You need to learn anything and everything you can. Have a learning mindset. This mindset will arm you with knowledge. Then you can lock down the processes.
For instance, your development feasibility and numbers need to be airtight. Check, check again and check a third time. A miscalculation or error here can cost you big time – in either delays or dollars or both.
Once the risk is mitigated, property development can become a high-reward investment avenue.
Learn the Market
To get involved in property development, you must learn about the real estate market. You must be across all the websites, magazines, blogs, newsletters, and YouTube channels.
Immerse yourself in the sector and learn all you can.
For instance, you’ll learn how the property market fluctuates over time. As of writing this, there is a dip in the market. However, it will rise again and then fall again.
You don’t want to time the market in this case. A good property developer can make a profit in any market. As described above, the trick is knowledge, process, and risk mitigation.
You’ll Need Finance to Build Dual Occupancy Houses for Sale in Melbourne
Unless you’re loaded, you must access development finance to fund dual occupancy houses for sale Melbourne project.
This means working with banks or other lenders. There are differences in development finance compared to an owner-occupier home loan or even an investment property loan.
Interest rates are higher, and there may be more fees associated. Also, the bank will typically only fund hard costs – construction, for instance. You’ll need to fund designs, town planning, marketing, and conveyancing.
The bank will want to see evidence of contingency planning and funds, so you need a war chest to get started, even if you borrow money for a project.
A specialist finance broker can be an excellent professional to engage in some cases.
Summing Up
In this helpful article, we’ve shared about dual occupancy houses for sale in Melbourne. We’ve shared why a dual occupancy development might be a great investment choice for this generation.
It can be an excellent way to build wealth and snowball it over time. Furthermore, we’ve shared some things that you need to know before embarking on such a project for yourself.
Remember, if it all sounds too hard or you don’t have the appetite, that’s where Little Fish Property Developments can step in.
We can manage the entire process, from start to finish, for you. We can even show you the ropes while we do it. And, of course, sell them for a premium on your behalf!
Get in touch with us here.
Finally, if you want to buy a townhouse, check out this nifty article on what to ask when buying.
