As leading residential property advisors, we have seen a rise in the popularity of dual-key properties. Let’s take a look at what these types of properties are and whether they are worth the investment.
What is a Dual-Key Property?
A dual-key property is a real estate investment that consists of two separate living spaces within one property. The idea behind this is to offer flexibility and the potential for higher rental income while simultaneously lowering the investment cost. Generally, dual-key properties feature a main common area with two private entrances and private living spaces.
They can be set up so that the owner lives in one part and rents out the other, rents out both parts separately, or uses one part of the property to provide short-term accommodation, such as an Airbnb. This flexibility can help property owners maximise their monthly rental yield.
Engaging a property buying agent can be particularly beneficial when considering a dual-key property, as they can help navigate the complexities of such investments, ensuring you get the best deal and avoid potential pitfalls.
These types of properties are becoming increasingly popular in high-demand areas, such as major cities, where there is a strong demand for affordable rental accommodations.
The Upside of Dual-Key Properties
Dual-key properties have numerous benefits, the most notable of which is the increased rental income. Due to their flexibility, owners can rent out both units separately, generating a higher total rental income, or simply rent out one half of the property while living in the other half themselves.
When using the property as a rental only, a dual-key setup can reduce the risk of a complete vacancy, as it is less likely that both units will be unoccupied at the same time.
The versatility of a dual-key property makes it attractive as it can be used either for personal use, investment, or both. It also provides for various rental models, whether for short-term or long-term rentals.
The cost efficiency benefits of a dual-key property are also worth noting, as buying dual-key properties is often more affordable than purchasing two separate properties, even though you can earn the rental equivalent of two separate properties.
In addition, maintaining a dual-key property is more affordable than maintaining two separate properties. Utility costs can also be shared or split, reducing the overall expenditure compared to two distinct properties.
The Downsides of Dual-Key Properties
Compared to single-unit properties, dual-key properties typically have a higher purchase price due to the larger space required. This larger investment can be prohibitive for some.
Moreover, the complexities involved in securing finance for a dual-key property might also be a hindrance, as some lenders see them as riskier than traditional single-unit homes. There is an inherent risk in terms of the market and tenant availability, as dual-key properties appeal to a specific niche market, which might limit potential tenants or buyers.
Vendor advocacy services can also play a crucial role when selling a dual-key property, helping to market the property effectively and reach the right buyer pool, thus mitigating the challenges associated with reselling.
Managing two sets of tenants on one property can also be quite tricky, especially in terms of the time and effort required to deal with two different tenants’ concerns. Having two tenants share a space can also lead to conflict when there are issues with noise, clutter, or misuse of common property.
Another downside is that reselling a dual-key property can be challenging due to the limited buyer pool. Dual-key property purchases are typically investor-only, which can make selling such a property more challenging and potentially affect the resale value.
[CTA] Are you interested in investing in a dual-key property? Speak to us at WPG Advisory today. We are experienced residential property advisors and can guide you through the process, helping you make the right investment choice.