What is a dual occupancy property?

A dual occupancy property offers two incomes to an investor by way of two separate living spaces and therefore two tenancy opportunities. Common examples of a dual occupancy property include a granny flat, duplex or dual-key property. Although these property types all have the potential for rental income, there are various differences between them which will affect investors.

Different types of dual occupancy properties

• Granny flats: typically the size of a studio or one bedroom apartment and located to the rear of an existing, larger property. Generally speaking, a granny flat will require council approval before building the property, as well as being allowed to accept tenants into the property.
• Duplex: two properties which are adjoined or share common walls, such as a house divided into two separate properties, and can therefore be sold separately.
• Dual occupancy: not too dissimilar to duplexes, dual occupancy properties share common land but do not have to be adjoining or share common walls.
• Dual-key property: typically one property with a shared front entrance door and hallway and potentially additional living spaces such as the kitchen and living room. However there is a section within the property which is locked and rented out to a separate tenant, for instance a bedroom and ensuite.

The benefits of dual occupancy properties

There are several benefits of dual occupancy investment properties. The main factor being the ability to maximise the potential of one block of land. Essentially this means improved cash flow and reduced maintenance costs. Furthermore, they are a smart decision for investors looking to grow and diversify their property portfolio.

Source: build, 2016: http://www.build.com.au/blog/5487

A dual occupancy property delivers a superior cash flow and therefore allows an investor the opportunity to pay off their mortgage at a faster pace.

To discuss your dual-occupancy  investment options, contact CPS Finance today.

However, commentators are suggesting that 2016 will be much more difficult for both borrowers and lenders.

“It’s going to be tougher for households next year and it’s not just borrowers who can expect higher costs, but also renters. Fifty-eight per cent are predicting property prices to rise in 2016, despite 38 per cent tipping a decrease in demand for residential property in the next 12 months.”

Read the full article on yourmortgage.com.au

Interested in refinancing? Contact CPS Finance to discuss your options.

On the back of this month’s RBA announcement the Australian lending landscape has entered uncharted territory with the official cash rate now sitting at 2%!

If you haven’t checked recently there are some fantastic opportunities available to restructure your finances, potentially saving you thousands in interest costs and most importantly set yourself up for the next investment opportunity.

Whatever the reason, now is the time to act!

Here’s how you can leverage the current low interest rate environment:

1) Get your property valued by the bank before they change their valuation policies

Property values are skyrocketing, especially in Sydney. Now is the best time to review your properties asset value and lock in a valuation at the top of the market before banks change their lending policies.

See article re pending policy change http://www.smh.com.au/business/banking-and-finance/banks-put-brakes-on-investor-lending-20150521-gh6imi?skin=dumb-phone

2) Our Finance Strategy – Extract your equity NOW, before the rules change

The higher the bank’s valuation on your property, the more equity you will have to reinvest in other investments.

We recommend extracting the equity from your property as cash and moving it into an offset account. What this will do is ensure that you have the capital ready for your next investment opportunity. If your loan is interest only, it won’t cost you anything to keep the money in your offset account.

The important thing is to maximise the amount of capital you have available for reinvestment. Ideally this amount should be 80% LVR (loan to valuation ratio) of the value of the property, as this will mean you can avoid paying Lenders Mortgage Insurance.

3) Look for the next investment opportunity

Now you are ready to invest in the next opportunity. Get advice from property professionals on which investments make the most sense for you and your personal circumstances.

Interested in reviewing your home or investment loan? Contact us for a second opinion.