If you’re thinking of sharing an apartment with someone, researching more about a dual key apartment arrangement is a great idea before you begin the hunt.
Related Articles
- Houses Vs. Apartments: Which will perform better over time?
- The Ins and Outs of Property Sharing Agreements
- Joint Property Ownership: Buying Property with Friends
What is a dual key apartment?
Before diving in, you may be wondering exactly what is a dual key apartment? Although it is a relatively new concept, you will find that these types of apartments are increasing by the minute in multiple states in Australia.
A dual key apartment is a standard apartment that is divided into two dwellings. We know it may be a bit tricky to imagine that.
Picture an additional dwelling inside of the first, both dwellings sharing a front door.
Unlike a regular divided townhouse or duplex, there is one singular space that contains two separate areas. Each has its own bedroom, bathroom, and living area; it can be seen as two self-contained areas in one space.
Is a dual key apartment a good idea? The main selling point is that people are allowed the flexibility that comes with owning their own unit while having shared spaces that can be split with someone else. This, of course, is all based on personal preference and needs.
Living arrangements such as this one come with a lot of fine print that should be read thoroughly for a comprehensive understanding. If you go into it blindly, it may not be as beneficial for you as you may be hoping.
Having a shared apartment comes with obvious perks but disregarding the reality of an agreement like this can place you in financial turmoil. Before diving in headfirst, do the necessary research to avoid any damaging fallout.
There are many reasons to invest in dual key property. Whatever your reasoning, it is important to understand the advantages and disadvantages of living in a space like this.
Advantages to a dual key home
There are many advantages to investing in a dual key home. Depending on where you are at in your life and what you are hoping to prioritise, it can serve as the perfect way to live comfortably.
Advantage #1
Firstly, because there are two dwellings, this means that the apartment has a dual income. With a dual key apartment, you will have two sets of rental incomes for one shared title. This is the advantage that tends to convince people to invest in this kind of living arrangement.
If you are struggling to make ends meet or just need a little assistance with the rent, looking into the dual occupancy meaning can be a viable solution. As long as you are sure that having dual income on one title is more beneficial than not, go for it!
Advantage #2
Another advantage of a dual key apartment is having just one set of fees. If you have ever looked into renting an apartment, you are no stranger to the tons of fees that are lumped into your lease.
Luckily, with this kind of living arrangement, you will only be paying fees such as strata rates on only one property rather than two. Expenses can be a headache so having that weight lifted off your shoulders can be incredibly beneficial.
Advantage #3
Lastly, there are tax benefits you are sure to see by living in a dual home. Because this apartment layout is fairly new in the Australian market, many of them are on the newer side, which obviously, has upsides when it comes to tax.
When you have a new property, you are more likely to experience some depreciation, which helps with taxes. Consulting with your tax advisor or financial planner will give you further insight into the full tax implications involved.
Disadvantages to a dual key home
While looking on the bright side is always ideal, there are some disadvantages to investing in dual key apartments.
Disadvantage #1
Because these types of apartments are newer, investors may have to pay a premium for them.
If you find that you are paying the equivalent to or even more than the asking price, it is likely that you are not sourcing properties below the market value. Focusing on growth opportunities is the preferred route.
Disadvantage #2
There is also the problem of there not being much mass appeal. It is a newer concept and there are many other types of property that are already up for the competition, so if you have not heard crowds raving about this sort of living arrangement, there is a reason.
According to experts, most of the appeal stems from those interested in dual key apartments as an investment property rather than places to live in. This means that there is a small percentage of the rental market, like students, that would actually live in a situation such as this one.
Disadvantage #3
The last disadvantage is a tough one. There is quite a limited scope for capital growth.
Most people would prefer two single properties that are below the market as opposed to investing in a dual key property that is priced the same. This is because there is more promise for capital growth with the two separate investments.
The logic stems from the likelihood that you would need to decrease rent because of the fact the tenants are sharing space even though the property isn’t necessarily going up like you would like it to.
Like what you’re reading?
Keep yourself updated with useful tips like these by downloading our app for the full Soho experience. Not only are we finding you your dream home, but we’re also helping you save for it and decorate it!
So don’t forget to swipe on your property matches so we can get you there faster.
