Divide and conquer with a development designed to reap you rewards

Divide and conquer with a development designed to reap you rewards

If you are lucky enough to be sitting on a large slice of land in Melbourne, chances are you have considered a dual-occupancy build.

As Metricon director Peter Langfelder explained, soaring land prices in recent decades had prompted many people to explore dual occs.

“One of the main advantages of dual-occupancy homes is the potential to make more income from a single land title,” Mr Langfelder said.

A number of builders have dedicated dual-occ designs, with Metricon even launching The DualOcc Diaries in 2018 — an eight-part online series tracking the dual-occ build of a Melbourne couple.

So, is it the right path for you to travel down? Firstly, let’s start by defining exactly what a dual occ is.

What is a dual occ?

According to Mr Langfelder, the term “dual occ” refers to any two developments sharing the one block of land.

In other words, it’s a broad umbrella term that can apply to many configurations of two houses on the one title.

“They can be multi-dwellings with one behind the other, side-by-side attached (also known as a duplex), or combinations of these types of developments,” Mr Langfelder said.

Who is doing it?

Dual occs are a popular choice among families and very small developers.

Hallbury Homes director Brett Trebilcock said most developers his company saw were “mum-and-dad investors” aiming to capitalise on their piece of land by demolishing their home and building two new homes in a dual-occ format.

“Most owners live in one home and sell the other, which pays for the whole development and, more importantly, turns a profit,” he said.

“We also see a lot of professional developers who make a living from four to six developments per year.”

Dual-occ projects are also a popular choice for those who want to stay in the area or street they love but in a more modern and manageable home, according to Mr Langfelder.

“This is particularly appealing for empty-nesters and retirees who don’t want to sacrifice the familiarity and connections of their local community,” he said.

Processes and pitfalls

The length of time it takes to complete a dual-occ project varies, depending on local-council planning processes and the complexity of the build.

However, Metricon usually recommends allowing 18 to 24 months to achieve a quality, finished product.

Mr Trebilcock said many first-timers did not understand the build timelines.

“Anything to do with developments is a long process,” he said.

“There is design time, town planning (time) and construction time. You can be looking at two years from start to finish.”

It can be a costly process when building a new home, but if you already own the land — or have paid off a lot of it — then you’re in a good position to leverage that as equity to fund the dual occ.

“The less you owe, the more profit you will make,” Mr Trebilcock said.

“The prime objective is to sell with enough to pay the loan plus profit. If you are a first-timer, the best idea would be to consult with a financial adviser who specialises in this type of development, to work out the viability of the project and the potential earnings.”

You could end up making hundreds of thousands, tens of thousands, or, if you make bad choices, you could be left in the red.

“It depends on the area of the development and the level of finish in the homes,” Mr Trebilcock said.

“The best way to work out the potential for a development is to seek advice and do the math.”

Mr Langfelder added problems arose when people did not get advice early.

“It’s important to work with a builder who understands what’s possible on your land and what will pass muster with your local council and neighbours,” he said. “If you’re working with an expert, the dual-occ process shouldn’t be stressful.”

Case study

Wayne Ritchie is well on his way to becoming a seasoned dual-occ builder.

The first time he completed a dual occ, he was nervous. The second time, he was a little bit more confident. And by the time his third rolls around, he reckons he will be a dab hand at it.

Not that he is in a huge hurry to get started on his next dual-occ project.

“It’s been quite a hectic few years for Jordanna (his wife) and our two children,” he said.

“I think we will just enjoy our new house for a while, but eventually I would like to do a third.”

Mr Ritchie completed his first dual occ in Bentleigh in 2017 and another one in late 2018 in Bentleigh East. He chose Metricon as the builder on both occasions, with dwellings in a side-by-side configuration.

He and the family are living in the Bentleigh home, and renting the other three properties out.

“I was originally attracted to the notion of a dual occ by the potential to

manufacture equity and maximise the block of land,” he said. “You also avoid the risk of overcapitalising when renovating an old house.”

Mr Ritchie offered the following tips to help minimise stress for those considering a dual-occ project:

• Become fluent with town planning, finance and construction, so you understand each stage.

• Engage independent advice at every stage of construction to check the standard of work. That means hiring site inspections, town planners, and so on.

• Have a vision and execute it. Do not fall into the trap of analysis paralysis so that you don’t progress.

• Meet the construction-site supervisor on site every three to four weeks during construction

• Stick to open plans and neutral colours to appeal to the broader market.

• Budget for costs not included in the building, such as vehicle crossovers, landscaping and fencing.

• Ask yourself if construction is for you. Are you up for the challenge?

Dual-occ builders

Many builders offer dedicated dual-occ designs in Melbourne. They include, but are not limited to:

• Metricon

• Carter Grange

• Hallbury Homes

• Porter Davis

• G.J. Gardner

• Optimal Homes

• Marque

• Stroud Homes

Need to know

Here, Vince Bellier, head of sales and marketing at home builder Carter Grange, shares five important things to know before embarking on a dual-occ project.

1. Understand what you’re getting into

For owner-occupiers, dual-occ projects can help release equity for retirement or wealth creation, and for investors can be a lucrative endeavour.

But be aware they take more time than single-home construction. There is town planning involved, which usually adds six to 12 months to the project timeline.

Town planning changes from council to council, so the rules aren’t the same everywhere. Be flexible with your expectations, both in timeline and design outcome.

2. Not all blocks are created equal

Every site is unique and has several important features that can’t be changed, including your council, zone, block dimension, orientation, trees and slope.

Each block has its own set of opportunities and constraints — builders and clients can’t use a one-size-fits-all approach.

Physical limitations (such as the site’s slope) and legal limitations (such as a town-planning regulation) need to be addressed upfront if possible.

To ensure you maximise your block’s potential, seek expert guidance from a reputable dual-occ builder on how best to leverage its unique features. You need to know what you can’t change about your block.

3. Your requirements

If you plan to live in one of the builds, it’s important to consider your personal requirements.

For example, do you need a bedroom at ground level to avoid stairs? Do you need two garage spaces? Do you need a large walk-in wardrobe? Is the kitchen the centre of your universe? Is an alfresco area important?

Having the right features will ensure your build is future proofed for you and your family.

4. Your market’s requirements

If you’re intending to sell or rent one of the builds, be aware of what your target market wants.

Are you looking to appeal to young families, downsizers or couples? Each demographic will have different needs, and the build’s design, colours and finishes will determine how the market will value the project.

Seek expert advice from a reputable dual-occ builder on your target market’s needs and the cost of internal finishes.

5. Your builder’s experience

A dual-occ project is very different to a single-dwelling knockdown/rebuild project.

The construction process itself is not that different (there’s a slab, frame, roof, windows et cetera) but the pre-site process is vastly different because of the town-planning component.

You will want a builder with a track record of many successfully completed projects in your suburb and/or municipality.

You will also need to ask yourself how much preparation work you are prepared to do personally.

Many builders only want to deal with clients who have plans ready and town-planning approved — they’re only interested in the construction, not the process that leads to it.

For a smoother build process, look for a builder that can take you from the start to the finish of your project, including determining if the project is feasible, custom-designing your project, preparing and submitting town-planning permits, following up the permit applications, running any issues to ground, and helping you with colours and interior design.

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