The idea of earning two incomes from one property may sound too good to be true, but according to Phillip Allen, investment property strategist and owner of Latitude Property Group, dual income investments can help investors succeed in an increasingly competitive market.

As the name suggests, dual income investments enable investors to derive two incomes from one property via two separate rental agreements.

“The dual dwelling design is remarkably innovative. From the street, it appears like any normal four-bedroom home,” Allen said. “However, when you study the floor plan, you’ll notice a significant difference: There are two completely self-contained private dwellings under the same roof. The two dwellings are divided by a commercial grade soundproofed firewall. This protects one area from the other, and reduces legal and insurance risk.

“Similarly, there is a high backyard fence that separates one dwelling from the other, offering both occupants a greater degree of privacy. In most cases, the homes are separately metered, allowing tenants to easily manage their own power and water bills. Each dwelling has been designed to be a delightful, spacious home.”

The higher rental income that can be derived from dual income investments makes them attractive to many investors, particularly those who want to pay off an existing mortgage or supplement their income stream for retirement.

“Consider this: A typical four-bedroom home in an average suburb around Brisbane could be rented out for $450 per week. The dual dwelling, however, gives you two income streams instead of one,” Allen said. “It could rent for a whopping $650 per week. The combined rent gives you a lot more cash over the course of a month or year than any traditional four- or five-bedroom house.

“In fact, the rent would more than cover your mortgage payments. It’s a great feeling to have extra dollars filling your pocket every week. If one tenant leaves, you still have the other to keep your cash flow healthy.”

Being on a single title ownership means there’s only one set of rates and no body corporate fees.

“There are also attractive tax advantages to this arrangement,” Allen said. “Being a new property, depreciation benefits start from day one, and you only pay stamp duty on the land, not the house. You also benefit from full builder’s warranty. Your new dual property is helping the community by driving growth and providing homes for more families. Clearly, dual dwellings are a smart move for both homeowners and astute investors.”

Moreover, because some of the councils involved in these developments have shown lukewarm interest, that means the market isn’t too overly exposed. The trick, of course, is to find great dual-income properties in high-demand, high-growth suburbs.

“The big interest in dual income properties comes from people who would like to pay down their mortgage rapidly. With an average rental return of over 6% per annum, such investments are very much cash positive. This surplus cash is then funnelled onto the existing home loan along with any tax refunds and the rest, as they say, is history. By using this method, it is not uncommon to see a mortgage term reduced to under 10 years from its current projection.”

 

Source: yourinvestmentproperty.com.au