Thinking of undertaking a Dual Occupancy development? In part 2 of this 2 part series, Rick Forster, a property developer who operates in the eastern suburbs of Melbourne, takes us through the ins and outs of developing dual oc's.

Please click here if you would like to read Part 1 of this two part series on Dual Occupancy development 

All of this will be guided by your architect or draftsman so make sure they are across all council requirements just as you would if you were knocking down the dwelling and constructing multiple units. Council may well require you to make some changes to the existing dwelling as they have their own preferences. If you are taking away the backyard you may have to create another external exit directly onto the new private open space of the existing dwelling. Internal fences, sheds and clothes lines may need to be relocated. Just as with larger sites there must be adequate turning circles for all motor vehicles to be able to drive in and out at all times without reversing. Landscaping will have to be addressed just the same as bigger sites and even the existing dwellings landscaping will be affected.

Dual Oc

The profit margin in a dual occupancy development predominantly lies with the new dwelling so every decision you make concerning both the new and existing dwelling must be considered carefully. You don't want the appearance of the existing dwelling affecting the value of the new dwelling. Any renovations and /or upgrades to the existing dwelling however must have a return value attached to them. I prefer not to have to touch the existing dwelling apart from the bare minimum. Extensive renovations and upgrades, especially to kitchens/bathrooms can be expensive and if you spending $70k doesn't give you a return well above that then all you have created is more work that requires more of your time and attention. That is time and attention that needs to be directed towards the new dwelling and all the associated decisions.

Some of the advantages of a dual occupancy development apart from relative safety of the project is that they often do not incur council development costs that are applicable to bigger sites. If you have tenants in the existing house you can often keep them in there for longer and maybe even throughout part of the construction phase of the new dwelling although negotiating the rental fee will most likely play a part in that.

Dual Oc


Along with some of the advantages comes some of the disadvantages. One of those that may not be taken into consideration initially is the additional cost to the construction and associated works of the new dwelling that larger sites are able to spread out. All associated site costs must be worn by the new construction including the cost of the driveway, letterboxes, internal fences and retention system. The builder can't divide the associated site costs up between dwellings as only one is being built. The per sqm cost will come back higher on a dual occupancy development than on a multi unit development as a $20,000 driveway on a 4 unit site can be divided up into 4 x $5000 lots. With a dual occupancy development the new dwelling wears the $20,000 cost alone. Another disadvantage that may not be apparent when first considering doing a smaller development is the timeframe. The timeframe for a dual occupancy development and a 4 unit development are very similar. Just because you are only building one dwelling doesn't mean you will get it done 4-6 months quicker. That is because councils and banks use the same process for all developments. My current site is just hitting the 18 month period and is only just over halfway through construction so there is still a few months to go before completion. A 3 month delay due to a council oversight didn't help but such occurrences are not uncommon with any site.

One thing I have taken away from the experience is the knowledge that all sites will hit hurdles and problems that you didn't expect to crop up. Solving them one at a time holds you in good stead to go on to bigger and better things and the confidence gained from the experience only assists you in broadening your ability to deal with the risks associated with property developing. Getting at least one or two dual occupancy developments under you belt will go along way in progressing your ambition to be a full time property developer if that is what you want to do. If not you can easily undertake them whilst working at the same time.