Serious money can be made from multiple dwellings on one block: Terry Ryder
Many property investors scour the country for value-adding opportunities in residential property.
While most look for houses ripe for renovation, the serious money can be made from situations that allow multiple dwellings on one piece of land.
When local zonings allow a second dwelling to be built on an allotment, the land for the second house is essentially free (except for subdivision costs), and that provides great potential for profit.
It provides many options for investors: the existing dwelling provides rental income while the new project is happening; investors can keep one rented out and sell the other; retain both rented out; or sell both.
For many investors, opportunities like that are gold.
The Blacktown City Council in Sydney is currently re-writing its Local Environmental Plan (LEP) and, assuming the draft LEP becomes law, there’s plenty of potential for small investors to add value.
Blacktown City is the No.1 growth area in New South Wales, adding more to its population each year than any other municipality in the state. It expects to add 44,000 dwellings to its residential mix by 2036.
One way the council intends to facilitate that growth is with higher densities in residential areas. Depending on the location and the zoning, property owners will be able to build a second dwelling on land that currently contains only one, in some cases attached and in others detached. The best opportunities will be corner lots that can be subdivided into two.
Brisbane City Council also has a new City Plan in draft form, which is based on the projection that the area, by 2031, will need 40% more homes than it had in 2006.
“Most will need to go into already-developed areas,” the council says. That means more dwellings squeezed into existing suburbs, with an emphasis on development in and around transport hubs – or close to key infrastructure like universities and hospitals.
This is likely to make it easier to get approval for medium-density developments on smaller blocks of land.
In Adelaide, the 30-year plan means big changes for the city. Property investment lecturer and author Peter Koulizos says that, until now, 70% of residential expansion in Adelaide was greenfield development in new areas and only 30% came from in-fill development in established suburbs. The new 30-year plan turns that around, with 70% of growth to be in-fill.
Local councils are having to change their town plans to accommodate the new situation. The emphasis is new development along main arterial routes and close to major transport nodes.
In some areas, an 800-square-metre block with a single house on it will be re-developed with three, four or five units. There will be many opportunities to put a second dwelling on a lot that currently has only one.
This likely to be a common theme for major cities across the country, as government seeks to accommodate new population without adding to the city’s overall footprint.
Terry Ryder is the founder of hotspotting.com.au