A Comprehensive Guide to Multi-Income Properties for Investors

Building a successful property portfolio requires a diverse approach. While many investors stick to traditional properties like houses and apartments, exploring multi-income properties can significantly boost your cash flow—if managed correctly.

But what exactly is a multi-income property? Simply put, it’s a single property that generates more than one stream of rental income. Although this type of investment offers great potential, it also comes with both advantages and challenges.

Types of Multi-Income Properties

There are several types of multi-income properties that are popular among investors. These include:

• Dual income properties
• Duplexes
• Rooming or boarding houses
• NDIS housing

Each of these property types offers unique opportunities, but they also come with their own set of challenges. Some are better suited for more experienced investors, so it’s important to understand what you’re getting into. While they generally require more management than single-income properties, multi-income properties can be a powerful tool to accelerate the growth of your investment portfolio. Let’s take a closer look at each one.

Dual Income Properties

A dual-income property involves one title but two rental incomes. These properties often look like a single house from the outside but are divided into two separate rental spaces. A typical dual-income setup might include a larger home with a smaller unit, such as a one-bedroom apartment or granny flat.

The key benefit of this property type is the potential for a 1-2% increase in rental yield. However, the challenge lies in finding a property manager with experience handling dual-income properties. Since they aren’t as common as single-income properties, it can be difficult to find someone who understands the nuances. Once you find a reliable property manager, however, this type of investment can become a steady source of income.

Duplexes

A duplex property consists of two separate units, each with its own title and rental income. These units are typically joined by a shared wall or part of the building, but they remain independent. Unlike dual-income properties, duplexes give you the flexibility to sell one unit separately, which can increase your potential for capital growth and provide more options down the line.

One downside to owning a duplex is the potential for higher council rates, which can vary depending on your local area. It’s crucial to research the rates and any other costs associated with duplex ownership to ensure it aligns with your investment goals.

Rooming or Boarding Houses

Rooming houses involve purchasing a large house and dividing it into smaller rooms to rent out individually. While the rental income can be significant, this type of property is not for the faint of heart. Rooming houses come with various challenges, including issues with banks and insurers, and can be difficult to manage. Additionally, local authorities may have concerns, such as fire safety regulations, which can make it harder to secure financing.

Unless you have significant experience managing this type of property and are willing to take on a hands-on investment role, rooming houses may not be the right choice for most investors.

NDIS Housing

The National Disability Insurance Scheme (NDIS) provides support to people with disabilities, offering specialized housing for those with unique needs. Specialist Disability Accommodation (SDA) is designed to meet these needs, featuring accessible features such as wider doorways, ramps, and specialized bathrooms and kitchens.

Investing in NDIS housing can offer a stable income stream from both rent and government subsidies. While SDA properties tend to be more expensive to build and equip, they provide long-term financial benefits and allow you to contribute positively to your community by supporting individuals who require specialized housing.

Conclusion

Multi-income properties can be a great addition to your investment strategy, but they’re not without their challenges. From dual-income properties that offer flexibility to the unique requirements of NDIS housing, each type has its own set of considerations. Be sure to do your research, understand the risks, and choose the property type that aligns best with your investment experience and goals.