When investors are looking to diversify their investment risk, there are a number of strategy’s that can be put in place in to help achieve this outcome, from multiple properties in varying locations, at different price points, to investing in multi-income property to help off set complete loss of income when a tenant moves out.
If we focus on the multiple income property, we are talking about such things as Duplex's, – two houses separate titles and held by same owners, Dual Occupancies (Dual Occs) are two dwellings on the same title under single ownership, houses with granny flats or small secondary dwellings for example, “In-One-Line” villa or townhouse complexes – these may be on one title or on individual strata or community titles, but retained under a single ownership, and Dual Key properties, which are purpose built investment dwellings where the structure is designed to look like a standard dwelling from the front, however the internal floor plans have the building split into 2 or more individual living areas.
There are pros and cons with all the above examples, and it depends on the markets in which are you are buying as to how well each option is received by the local market (both rental and sales).
Dual Occupancies, granny flats, duplexes, villa and townhouse complexes are all pretty common in most residential markets across NSW including regional markets. The benefit of this is that these styles of property have a wide appeal in the market at different price points, and therefore lease and trade regularly.
The Dual Key style of property are not as widespread across the markets and depending on housing pressure and investor interest will determine how common and accepted this style of housing is. The benefit of this style is that you can effectively have two investment property’s with the outgoings of a single property, multiple income streams to limit the impact on cashflow during vacancy periods, and reduced overall outgoings.
The reluctance to this style of property is that in many regional markets they are untested/unproven, and sometimes suffer in capital gains as there is less demand for the property especially from the owner occupiers’ market sector. They are primarily aimed at investors trying to increase yields from a single investment. The developments are very susceptible to design quality, and poorly designed property become difficult trade and lease.
These types of property have also been the Go-to for many property spruikers who promote the greater depreciations offsets and investment yields at investment seminars offering them with guaranteed rental returns for X number of years and then sell them for premiums in the local market usually to non-local investors.
Dual Key property can be great investments as long as you have realistic expectations about the long term performance of this style of property and you are buying them informed of their real market value and overall appeal in the local market.
If you need help with direction, motivation, or general advice about finding, choosing, and acquiring the property please contact us here.