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<p>Are you planning a knock-down and rebuild? Or perhaps you’ve acquired an empty lot and you’re planning to build that dream home on it. </p>

<p>It’s an exciting time - not everybody gets to plan every single detail of their house. You get to plan your fixtures, fittings and finishes. But it might be worth pausing for a while and considering building two dwellings instead of one on a single block. </p>

<p>Now, there are a few reasons why you should do a dual occupancy project such as this. It is a tactic favoured by Melbourne’s leading <a href="https://www.urban.com.au/new-townhouses">townhouse property</a> developers, so it could be the right play for you in terms of generating wealth. </p>

<p>Let’s take a look at five reasons why you should consider this move. </p>

<h2>1. Flexibility and Choices</h2>

<p>If you’re building as an owner-occupier, building two residential dwellings on a large lot gives you more flexibility and choices. For example, you could live in one property and rent the other one out. This allows the rental to enjoy some capital growth until you want to sell it for a nice profit. </p>

<p>You might even choose to build an<a href="/guides/how-to-invest-in-property-in-2020-the-ultimate-guide"> investment property.</a> In which case owning a <a href="https://www.littlefishproperties.com.au/side-by-side-dual-occupancy-designs-melbourne/">dual occupancy</a> would increase your rental yield, and in most cases significantly. If you have aging parents, you could move them into the second dwelling while you live in the first. You can be close to them to provide care as they need it. </p>

<p>By developing two properties instead of one you are giving yourself flexibility and choice. </p>

<h2>2. Higher Rental Yields</h2>

<p>If you do choose to rent out both or one property, any tenants who come to live there will pay the market rate for the suburb. This means that if you let out a build you’ve completed, you will get a higher return than if you invested in an existing property. This is because you save by building yourself.</p>

<h2>3. To Grow Your Wealth</h2>

<p>With the right support, everyday landowners can generate wealth by embarking on a dual occupancy development. It is a proven, low-risk way to grow personal wealth. That said, if you do it yourself with no prior experience, it will quickly become a high risk, costly venture that could see you go bust. </p>

<p>If you’re not prepared to put in some time and effort into learning the ropes it can be a fool’s errand. This is why using a property development project manager is a great idea. If you want to attempt a project like this but are time poor or lack the confidence to go it alone using a project manager is a great option. </p>

<h2>4. To Gain Leverage for Your Lifestyle</h2>

<p>You might have a preference to live in a certain location, but you’ve found yourself locked out of it due to the cost of real estate there. By undertaking a dual occupancy development, you can use your land to springboard off. You could generate enough profit to buy outright in your preferred location or have enough for a tidy deposit and a lower mortgage to pay off. Building two instead of one will give you the flexibility and capability to make your next move, to where you would rather be. </p>

<h2>5. Tax Benefits</h2>

<p>Owning multiple dwellings gives you some solid tax benefits, including <a href="https://www.urban.com.au/guides/property-depreciation-continues-to-maximise-cash-flow">depreciation</a> allowances which can often result in a ripper tax refund. And if you choose to rent out one of the homes you have the potential to be <a href="https://www.urban.com.au/expert-insights/buying/targeting-the-right-kind-of-new-rental-housing-with-negative-gearing-policy-changes">negatively geared</a>.</p>

<h2>To Conclude</h2>

<p>So, there are five reasons why building two instead of one could be the right play for you. You get flexibility and choice. And, if you rent out one or both properties you will get a higher return on investment. At least compared to buying an existing rental property. </p>

<p>It is a proven way to grow your wealth, but only if you know what you are doing. If you don’t, consider engaging professional property developers to manage the project for you. You can use the profit from building two to move to the desired suburb, and you get to enjoy the tax benefits that come along with it. </p>

<p>Good luck and happy developing! </p>

<p> </p>
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antoniourban

5 Reasons Building Two Instead of One Could be The Right Play

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<p>Before we start, <a href="https://www.urban.com.au/guides/how-to-navigate-australias-first-home-buyer-grants">Government grants</a> in themselves do not make houses more affordable. They can have the opposite impact – by sustaining prices above market clearing rates and reducing overall consumer welfare at a given level of production. The trick to making a grant effective lies in delivering more houses which may lead to an orderly market price correction.</p>

<p>I’m sure that this was at the forefront of the minds of the Federal Government when it announced the <a href="/news/everything-you-need-to-know-about-australias-25-000-homebuilder-grant-how-much-off-the-plan-homebuyers-could-save">Homebuilder Package</a> in early June 2020. The Homebuilder Package was a response to dire predictions from industry groups that showed a cliff fall in construction activity in the latter part of 2020. </p>

<p>Since the announcement there have been issues raised regarding the practical eligibility of the package in the two largest markets – <a href="https://www.urban.com.au/developments/melbourne-vic">Melbourne </a>and <a href="https://www.urban.com.au/developments/sydney-nsw">Sydney</a>. What the critics fail to acknowledge is that the package is the single biggest stimulus provided to the industry. Not only that, the Government is involved in a very tricky balancing act where it doesn’t want to artificially prop up prices in markets that are arguably already overpriced (and will be even more so when household income falls). When taking these two important points into consideration there may be justification for the eligibility criteria. </p>

<p>The key to success of the program has little to do with the grants themselves. It has more to do with housing delivery. If more housing is delivered the grant will not exert undue influence on house prices and this is where it gets even more complicated. The Federal Government has little direct control over housing delivery. This is the domain of State and Local Governments – through the planning system. Failure by State and Local Government to deliver real and immediate change in planning approvals will seriously undermine the effectiveness of the Homebuilder Package.</p>

<p>It must be acknowledged that efforts are being made to improve the planning system by accelerating the process. On a whole it is working reasonably well but not without problems. The acceleration program in <a href="https://www.urban.com.au/developments/nsw">New South Wales</a> has overwhelmingly approved State Government projects to date. There are still specific Councils in Sydney stuck in a pre- COVID folly.  After reading media comments from my former colleague Danni Hunter from UDIA Victoria, the situation in Melbourne is probably similar.</p>

<p>Things aren’t always perfect and what is important is the intentions of our policy makers. You must give them all credit for trying in these difficult times. The key to success will be the collective efforts of all levels of government with the Federal Government working on demand stimulus and the State and Local Governments working on the (far cheaper) supply responses together. Get this out of sync and there could be issues.</p>

<p>Now homes aren't built by Governments. The industry has a role in this as well.  They have a responsibility to avert the cliff fall in activity by sustaining it (and not holding onto approvals without delivering homes). Banks have a responsibility to keep lending to homebuyers and revisiting presales requirements that simply aren't realistic in the present circumstances. We are seeing efforts on all these fronts.</p>

<p>Good things can come out of challenging times. The past few months have been traumatic for many businesses and individuals. The amazing thing is how Governments, businesses and individuals have responded to the challenges. While not perfect we are navigating uncharted waters and the efforts of all involved have been indefatigable.</p>

<p>The final equation will be the homebuyer. We have heard a lot about the impact of lower immigration on demand for homes. Immigration recently accounted for 60% of population growth – it hasn’t always been at that level and the impact of reduced entrants to Australia on home purchases are probably a little overstated. It is all about the price and the availability of credit. It is likely that there will be low growth in the short to medium term as we see an orderly market correction there will be a recovery and the homebuyers will benefit in the longer term.</p>

<p>There are many actors in this script and not everything will play out as anticipated or forecast. There will be different responses to changing circumstances that may materially change outcomes. But at the moment, it has been handled prudently and responsibly and there is a chance the doomsayers can be kept at bay for a little longer.</p>
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Antonio Pinal

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Antonio Pinal

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