10 Secrets To Finding The Best Dual Living Property In Qld
Property Queensland CEO,Graeme Shiels shares histop 10 secretsthat will assist you in making the best possible investment in a dual living property.
By way of introduction, I should point out that Property Queensland was one of the first agencies in Queensland to be selling Dual Living properties in Brisbane when only one of Brisbane ’s five council areas was allowing them to be built and rented out to separate tenants.
You may think that some of the information below is not in the category of “secrets,” but you may also be surprised to learn how many of our prospective clients have overlooked this information, invested without it and lived to experience the problems caused as a result.
Summary: AH Bailey in 1862 in London when addressing the financial services industry of that time, enunciated the main principles of investment, which are just as relevant today as they were back then:
a. Safety - The primary purpose of investment is not to earn maximum profit but to maintain a complete security. Therefore, speculative investments involving possibilities of large profits or large losses should be avoided.
b. Profitability – The investor should earn at least an assumed rate of return, otherwise he will suffer a loss. The investment should yield the highest return consistent with the principle of safety.
c. Liquidity – This is represented by the ability to sell an investment without experiencing any loss of capital and to achieve, to the greatest extent possible, maximum capital gains.
From a design point of view, there is a wide variety of facades available for dual living properties
So with these principles in mind and in the hope that these secrets will assist you in making the best possible investment in a dual living property, I have compiled what I consider to be the most important secrets, in priority order:
1. Capital City investments. The biggest population areas on the east coast of Australia, being Brisbane, Sydney and Melbourne are the safest areas for investment, (with the possible exception of high-rise units). Cities that have already boomed, tend to be riskier and have less upside potential in the short to medium term, than cities that are in the take-off phase of their cycle, such as Brisbane.
Brisbane, Sydney and Melbourne –the nation’s three biggest and safest cities in which to invest
Some regional areas and single-industry towns may at times seem attractive, but outside of the three major population areas, smaller cities and regions are subject to volatility, creating higher ups and lower downs. Examples of volatility causing losses experienced by investors over the last ten years since the GFC include mining towns in Central Queensland and to a lesser extent, the Gold and Sunshine Coasts.
2. Investing for maximum potential capital growth. Although many investors may think that they should invest as close to the state’s CBD as possible, this is not the case. The property analysts in Australia report that historically, the major capital growth has occurred in the outer suburbs of Brisbane, Sydney and Melbourne. The overriding factor here is to look for areas where there has been high population growth and reasons to expect further high population growth, i.e:
new jobs are being created to attract workers to move into the area,
the government and industry have committed to new infrastructure spending,
the government and industry have committed to providing new social infrastructure such as educational facilities, hospitals and shopping centres to make it attractive for families to relocate to the area.
3. Investing in a dual living property for maximum yield and minimal vacancies. Dual Living properties return higher gross yields than new duplexes, houses, townhouses and apartments and without any requirement to pay strata fees or higher council or water rates, also show higher net yields. And fortunately, they are also found in the same areas as those recommended by analysts for maximum potential for capital growth.
4. Invest in a dual living property where council allows dual tenancy. This may seem really obvious, but some investors have been caught in this trap. Just because a council area allows dual living properties to be built does not necessarily mean that they are allowed to be tenanted to separate groups of tenants.
Brisbane has only five city council areas and three of these allow each side of a dual living property to be let to a different set of tenants. These are Ipswich City, Logan City and Moreton Bay Region. One of these councils is in the process of down-grading their regulations on dual living properties, to the extent that they will be effectively, phased out.
5. Buying a dual living property where the plans comply with council regulations. Again, this may seem really obvious, but some councils which allow dual living properties, have different regulations for the smaller side as to its size and the number of bedrooms – either one or two. This is usually dependent on the size and frontage of the land. Unfortunately, some builders are not making this obvious to their clients, by offering dual living properties that include two bedrooms in the secondary side, whereas when plans are submitted to some councils, they will not be approved. By the time you find out that the two bedrooms in the smaller side cannot be approved, it is typically too late, as you already own the land.
6. Be aware of which smaller units are in the highest demand. Left to their own devices, many investors assume that two-bedroom units in a dual living property are more in demand and therefore more rentable than one-bedroom units. Whereas Property Queensland’s property managers confirm that the opposite is the case. Some property managers who are renting out dual living properties for our clients wish that they had an unlimited supply of one bedroom units. (Names and contact details are available). One-bedroom units are experiencing the highest demand.
A sample of floorplans available for Dual Living properties
One of Australia’s leading demographers has reported that we now have a nation where less than 50% of properties are occupied by the “standard” family, i.e. father, mother and one or more children. Now more than 50% of occupants of properties have one or more of these elements missing. This majority now consists of singles of all ages, couples of all ages without children and one parent with one or more children.
7. It is important to have strong positive cashflow. This factor alone will make it easy for you to hold the property for the number of years necessary to ensure you maximise capital growth. Owners of negatively geared properties may find that they are confronted with different reasons to sell before their property shows sufficient capital growth. But this won’t be the case with dual living properties that pay you to own them.
8. Choosing a property that is good value. Again, this may sound very obvious. But in terms of value, you will find that there are many providers of these properties with different land and dwelling prices. The different values will come from:
the suburb – as with other capital cities, values vary from suburb to suburb. In a lot of cases, expensive suburbs may appreciate more than the cheaper suburbs or vice-versa.
the estate – land within an estate that is more expensive than others in the same suburb is likely to appreciate more than land in other estates,
land size – generally, the bigger the land the higher the value. Except for the existence of excessive slope, a shape that makes it difficult to build on and excessive noise,
the builder – some builders will charge more to build the same dwelling than others,
functionality and street appeal of plans – some floorplan layouts will be better than others, whilst street-front aesthetics will also determine levels of appeal
dwelling inclusions – additional features such as stone bench tops, higher ceilings and ducted air conditioning (although not required), will increase prices,
dwelling size – generally, the bigger the dwelling, the more the labour and materials required to build it and so the higher the price.
When receiving recommendations from potential suppliers of dual living properties, try to deal with those who have the widest possible selection over the Brisbane city council areas where they are permitted. This will give you the widest diversity and a supplier which can help you to compare what is best for you without bias.
9. Choose a property with a balance of gross yield and capital growth potential. Some investors may look for a maximum gross yield without taking into account the capital growth potential. Whilst others may look for maximum capital growth potential without regard to the gross yield. But it is important to assess both to consider a good balance of the two as both are likely to best support your needs into the future.
10. Research. Acting upon the recommendations of only one property analyst may be easy, but is a mistake. It is fair to say that there is not just one analyst who has all the best answers.All have pieces of the puzzle available to you. You should make yourself aware of recommendations from a number of property analysts, (company names, recommended reports and contact details are available). And be sure to balance their recommendations with any perceived biases that they individually may have. Some even get down to recommending property types for investment, and dual living properties are high on some analysts’ lists.
Additionally, do your own independent research. There is a plethora of information available on the web, accurate, biased or inaccurate. Before commencing, be aware of any preconceptions that you may have, i.e. make sure that your research is also done in an unbiased manner.