Hi everyone
can someone please explain dual key to me. Is it when you have a two bedroom apartment, with two living areas, two kitchens and you can set it up as two x one bedroom apartments?
In that case why not just have it as two x one bedroom apartments with seperate titles? Does council like dual key better?
I find the whole concept a little odd, though maybe I just don't understand it properly.
Any explanation gratefully accepted.
Many thanks
Ben
Hi Ben,
A dual key apartment is one which (usually) has a self contained studio accessed by a door, inside the main apartment. There is a common hallway, but separate lockable doors to each section. So the title belongs to one owner, but they can let the each portion separately, or live in one and let the other.
The advantage is higher yield and/or income. You could live in the main part and let the smaller part out, so you get income to help with the mortgage. Or let both parts out separately. I’m not sure whether banks like them or not – I can imagine scenarios where perhaps the owner defaults on the mortgage but the paying tenant has a lease, so that would be messy and banks don’t like mess.
I visited the marketing office of a dual key block in Sydney years ago. I liked the idea, and overhead one man who said he was going to buy two, but the price was quite high (900k back in 20040, and I didn’t pursue it any further.
Swampy30
hey swampy – thanks for the reply. So why don't they just make them two titles? Surely a developer would make more selling two apartments rather than one apartment with dual key? Plus wouldn't the tenant rather not have a common hallway – just have their own apartment?
Ben,
I think dual key apartments are meant to appeal to owners who want convenient city living, with control over additional income. If I was a dual apartment owner living in Sydney CBD, I would have no problem letting out a studio to a student or executive. (Did you see that story about a foreign student who paid $140 per week to live on someone’s balcony?!). However the studio is completely separate, so no queues for the bathroom! So shared living without the hassle. Also that additional income would mean I could afford to buy in the city whereas without it I couldn’t. But because I am the key holder of the common entry, presumably I can dictate terms to the tenant more so than if it was truly a separate apartment.
Or it could be a solution to shared living for families with teenagers or in-laws.
Not sure how tenancy laws come into play in this arrangement. I imagine each dual key development would need to be zoned for short term lets as well as long term/owner occupancy.
I think this is an idea that is great in theory, not so good in practice, yet. As I said, banks don’t like lending on them, and who wants to live in a building comprised of 50% short term lets, with all the issues that brings?
Swampy30
It’s a very common product on serviced apartment buildings.
AH Hospitality | Apart Hotels Hospitality
https://aparthotels.com.au
Email MeProperty Investor and Hotelier
And of course impossible to finance at a half decent LVR.
Cheers
Yours in Finance
0-40 properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
