It has perhaps never been more difficult in recent history to purchase a home in places like Melbourne and other major cities across Australia and whilst that is certainly a matter that remains to be resolved, those who can access property have all the more reason to be cautious about their investment.
As with all investments, there are risks involved and investors naturally want the most optimal return on investment possible. For housing, one of the fastest growing trends outside of CBDs and in the growing (perhaps even sprawling) suburban areas of cities such as Melbourne is multi-unit dwellings like townhouses and dual occupancy homes.
These properties are highly appealing to investors, and they can likewise be quite appealing for the (on average) smaller family sizes and changing demographics and preferences of many younger Australians – whether as a buyer to live in or to let out to tenants.
Here are five reasons to consider investing in multi-unit dwellings:
01. Maximise Rental Income
This may seem rather obvious, but a multi-unit dwelling has the potential to increase potential rental income significantly. For a dual occupancy home, this could be a doubling of potential rental income whilst not necessarily spending twice as much to build both properties.
This is also quite good for hedging against risks from vacant properties since you will still generate some income if one tenant leaves and others remain, for example.
02. Risk Diversification
Following on the previous point, dual occupancy homes help to diversify some of the risks inherent with property letting. Moreover, the investment into the property itself becomes more diversified since in a dual occupancy arrangement both properties are separate legal entities and what affects one property may not affect the other.
In terms of property maintenance and repairs, having access to two or more units means that you can allow contractors to perform works on a vacant unit (e.g. to turn over for prospective new tenants) without too much worry since there is still income coming in from the other property.
03. Potential Tax Deductions
In Victoria and in many councils elsewhere in Australia there may be potential tax deductions for owning a dual occupancy home, especially in terms of rental income.
In single-family detached dwellings, for example, it may be possible to rent out a room or granny flat to tenants but if you live on the same property this can be make tax deductions more challenging and you may not be able to claim for as much as you could when you have multiple tenants living on dedicated properties such as in a dual occupancy home.
04. Consolidated Maintenance & Upkeep
When you own two or more properties adjacent to one another, it can be much more straightforward to manage property maintenance and upkeep. The costs for maintaining common areas like gardens or hedge trimming lawns can be consolidated and contractors can often do all properties in one go.
This is essentially economies of scale and even if it saves a little bit in the long run, that little bit adds up.
05. Increase in Property Equity
A big draw for property investors is not just the potential for “passive” rental income from tenants but the appreciation of the property itself. While nearly all Australian property has historically appreciated – even in times of great calamity such as the Second World War – dual occupancy homes have been growing at a remarkable rate due to their popularity and practicality.
Trevor Homes
Invest in dual occupancy homes with the developers at Trevor Homes.
