Colin Fragar, our founder and CEO, shares advice for how to approach the costs of a dual occupancy and what factors to take into consideration.
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Or for those that prefer to read, here is a transcript of the video…
How much does it cost to build a dual occupancy?
My name is Colin Fragar from the Council Approval Group. Great question. I want to answer it in three different ways.
Costs to Build a Dual Occupancy
So if you’re thinking about doing a dual occupancy, obviously you’re doing your numbers and you want to know – How much is it going to cost before I go too far? However, my first point, please see the end from the beginning. So what I mean by that is, make sure, as well as looking at how much it’s going to cost, you work out how much you’re going to be able to sell this for.Value Considerations
How much is it going to be valued at? Look at two different things:- What is the rental income?
- What’s your cash flow position?
Second, consider also with your rental income that you are going to have a larger floor area than a granny flat or a secondary dwelling. So you’re going to have probably a three-bedroom rather than a two-bedroom dwelling. So think about that sort of return.
Also think about, if you are using the Council Approval Group, whether or not you can achieve a dual occupancy subdivision. It is an awesome strategy really to be able to reduce your debt levels by subdividing that dual occupancy. It’s not always possible, but often it is.
So my first point is to think about how much money you’re gonna make out of this when you’re looking at the financials in terms of the costs. My experience is that the cost of doing this project is better compared to so many other development types like multi unit housing, which you go into a whole new ballgame in terms of who do you have that finances the project. At dual occupancy, most banks will allow you to get two dwellings on one title. So you’ve got a lot more lenders to use.
So how much does it cost to build the Dual Occupancy? The first point, think about the endgame.
Be the Developer
The second point is to consider using yourself as the developer rather than going to a project home builder. I really want you to be fully informed of the marketplace in Australia. Most of the time novice investors see an advertisement from a project home builder and they think:Oh, instead of getting one house, I can get two. I can live in one, mum and dad can live in the other.And they are sold on the idea of the dual occupancy, when really, they should be looking to be doing it themselves.
Now, why would you do it yourself, because you’re paying wholesale not retail. You can get the approval. We can organize it for you. Then you can choose from a multitude of different builders. You’re the developer, so you choose to builder. If you sign up with one builder from the start to manage your council approval, you are literally locked into them through the entire project and you will pay a premium for that.
Remember the Ancillary Costs
The third thing that I would ask you to consider when working out the cost of a dual occupancy is to think about those things that are ancillary to the cost of construction. You can work out the cost of construction. You can work out the square meters of each of the dwelling, multiply it by the per square meter rate of, say $2,000 per square meter. It could be down to 1500 or up to 3000, depending on how much of a premium product you want. You can work out that but please don’t forget the ancillary items.Obviously, there’s the sewer connection. If it’s on the same title won’t be as significant as if it’s subdivided. Also consider the soft costs, the consultants costs, council fees and things like that.
Book in a Consultation for your Dual Occupancy
If you would like some more detailed discussion about your project, please give us a call. Please book in a consultation with one of our team at the Council Approval Group. We’ll be able to hear about your dreams and ambitions and recommend the road map for your first step.Often it gets down to what we call a preliminary planning assessment, which will work out first if you can get a dual occupancy and then work out a road map for you going forward. So don’t get too tied up in the numbers at the beginning. You just need to have some general ideas. Don’t get stuck on the finances and muck up your overall project because you never took action. I encourage you to take action by booking in a consultation with one of our team if you’re serious about taking the next step.