Single Income vs Dual Income Property: Pros and Cons

Single Income vs Dual Income Property: Pros and Cons

when investing in property you can look at single income dwellings that just have one rental income coming in or there’s also the opportunity to look at dual income properties this is when you get a property and build a granny flat or maybe build two properties next to each other but in today’s episode we want to talk about the pros and cons of each and who may be suited to a single income dwelling and who may be more suited to a dual income investment opportunity so today i have with me ben everingham buyer’s agent from pumped on property how’s it going ben good man feeling good yeah excited yeah i’ve been loving recording these videos today and i’m excited to talk about this one because we talk a lot about cash flow obviously we talk a lot about dual income but we don’t talk as much about single income properties but there’s some really good single income opportunities out there and there’s definitely some investors where single income opportunities make a hell of a lot more sense for them than a dual income or like a granny flat sort of property so it’d be cool to kind of weigh the pros and cons of each we’re not going to try and sell one versus the other and say this one’s better it’s more like okay here’s some things to think about and then you out there listening can decide okay which one’s actually going to be best for me and just so you know ben’s got experience investing in both single income and dual income got experience in doing existing properties and building granny flats as well as doing new build properties both single and dual income for himself as well as like the team over at pumped on property so there’s a lot of experience here uh in terms of these different types so let’s start with let’s start with dual income because most people know about single income and we’ll circle back to that but what are some of the benefits of dual income and who might that be suited to sure um so dual income is someone like myself now there’s i suppose there’s different types of investors there’s the get rich quick investor that never really gets rich um we we know who they are i was one of them 10 years ago for sure there’s the retirement investor that’s looking to create financial freedom over 45 years for their retirement there’s the financial freedom investor like you and i that want to get there in 10 or 15 years and then there’s the professional developer again i’ve got no interest in that because that’s really high risk and not suited to most personality types yeah um so if we talk about like the retirement investor and the financial freedom investor um the positives of a dual income strategy is let’s say that you know 10 years ago in sydney right you could have bought a house in blacktown i’m just pulling a suburb out of the air for 400 500 grand at that time and so that property at that time was worth 500k it was running for 500 bucks a week um to get a thousand dollars a week you would have had to go and buy two of those houses worth 500k each so a million bucks renting for a thousand dollars a week so you’ve had to spend a million bucks to get you your 50 grand a year of income if you owned it outright the thing i love about dual income is if you have done a similar thing at that time which would have been buying your 500k home and renting it for 500 a week then building like a really beautiful you know whatever you want to call it auxiliary unit dual income secondary dwelling granny flat tiny home we probably got got to get clear on that at some point everyone knows what we’re talking about um it’s just you could have built a really trendy one with a beautiful big deck a nice big backyard its own car space you’d probably get 420 bucks a week for that and it would have only cost you a hundred and forty thousand to build down there so you spent six hundred and forty thousand dollars to get very close to your thousand bucks a week or fifty grand a year of income versus spending a million bucks now why that’s so important to an investor is it means you’ve got to trade less years for money to get the same return on investment and therefore you can achieve financial freedom or retirement sooner yeah and also one of the benefits of dual income one thing i do want to bring up is we’re not talking capital growth or cash flow we really believe in buying in high quality markets when you’re doing dual income so that you’re still getting that long term capital growth as well as the rental growth for that property but one of the benefits is that getting the extra cash flow from the dual income can put you in a positive cash flow situation which means you’re not negatively geared the property is not costing you any money it’s paying for itself and spinning off a bit of extra money that extra money you can use to pay down the debt faster on the property or you can use it to save up for another property or you can use it for your lifestyle so we’re seeing people do each and everything me personally i’m more inclined to you know use it to continue the portfolio rather than to live off it but yeah and also that can lower your risk if we go through a market that is stable or if you go through a market downturn you’re not just relying on capital growth to make profit you’re actually making profit through the rent so it allows you to continue to make a profit even in downward cycles and it allows you to weather personal storms that may come so maybe you lost your job during a recession or a pandemic or something like that if your property is paying for itself rather than a property that’s costing you money you know you’re not forced to sell that property because you can’t afford it anymore the property is paying for itself and giving you a bit of extra money which is helping to support you through those times so i personally see it as a way to decrease risk as well but obviously it depends on what property you’re buying what area what the rental yield is how much you’re spending to build the granny flat etc so a lot goes into it but yeah getting into that positive cash flow situation can help you pay off debt faster and can lower your risk completely like i’ve told you the story about dave our client from sydney um you know he came to us he already owned three houses and three granny flats that he’d built in sydney you know over the last 25 years like he was the i’m earning 100 grand a year i’m going to invest in one property every seven years when i can afford to i’m going to raise my family and slowly do it at the same time when he came to us he’d bought his properties well 15 to 25 years ago for 500 400k they’ll out all now worth 1.1 mil because you’ve got good locations closer to the city within 20ks yeah so he still got the capital growth yeah and his cashflow was amazing like he was getting over a thousand bucks a week per house in granny flat over 150 grand a year he just reached out to us because he didn’t know brisbane and he wanted to do the same thing and honestly when he came into our business i at that time i think owned seven or nine properties and only one or two of them were dual income after in that two to three or two to three years since then i’ve completely changed the structure of my portfolio because i was on the fence like so many people as to like can i get long-term growth as soon as he showed me that i could from buying good assets i was like all in and that’s why you’ve seen me set up the houses and granny flats or whatever you want to call them throughout this process yeah well that’s and with dual income there’s multiple different ways to do it which we don’t really have time to touch on in this video but you can buy an existing house and then build a granny flat out the back which a lot of your clients do ben i know or you can go down the path of buying land or doing a knockdown rebuild and building a property that is dual income which i know you like to do ben for the depreciation benefits and just it’s low maintenance once it’s done plus you’ve got a knack for building and so does your wife so that’s kind of the strategy that you’ve gone down but yeah i love with dual income that you can still get that long term growth but then you can also get the cash flow as well which can help you i guess towards that financial freedom faster and then you can do it multiple times you know if you want to increase your income now let’s switch across to looking at you know single income dwellings because you know dual income just sounds so perfect why why would we want single income but definitely single income can be an opportunity and can be a better investment for some people so what would you kind of say on the single income opportunities yeah i mean you know single income is the traditional way that hundreds of or thousands of australians have became wealthy through property like imagine buying a single income home on bondi beach 30 years ago for 200k and now it’s worth 2 million bucks like what dude that was yeah you know what i mean like i’m being conservative as hell like the single income strategy is safer it’s lower risk you’ve got obviously significantly more people that you can resell it to in the future like one of the negatives with dual income is there is this growing need in australia which all of the governments and state governments have recognized which is affordable housing and multi-generational housing they’re calling it which is like i move in the front home and i put mummy out the back because she needs an affordable option and she just pays me a bit of rent or maybe she doesn’t so there’s that resale market there’s a super funds there’s the investors but with a traditional home with a good block in a great street in a great suburb there’s the whole marketplace to sell to investors moms and dads super funds so there’s safety in that um yeah there’s definitely some suburbs where doing dual income just does not make sense you’re actually going to decrease the value of the property if you’re in a multi-million dollar area with like a beautiful backyard and that’s what people want and you chuck a granny flat on it you know you might get extra rent but you’re probably going to decrease the value of the property because that’s not what people in that area are looking for perfect example man i worked with some people on the northern beaches of sydney a few years back and a lot of people at that time were trucking secondary dwellings up in their places in narrabeen coleroi palm beach even a you know cocoa cabana up the coast and stuff and it’s kind of like copper’s cabana sorry um and they were sort of like um saying that you know one there wasn’t a rental market for it because a lot of people had cash and two from a resale perspective people like why did you get rid of an entire backyard on a three million dollar property when that’s what our family wanted and so you know it doesn’t always work same in some really cheap areas like maybe there’s just not a strong enough rental demand for them to actually drive getting them rented but single income properties for me right so where i see them fit is if you’re an investor that has your own home and big debt on it and maybe you don’t want to go dual income or you don’t have a tendency to like want to set yourself up with passive income for life through property but you want to own your own home fast so like you might buy a really good quality blue chip single income property in sydney melbourne brisbane or perth hold it for 15 years sell it in 15 years make 500k hopefully and then pay off a big chunk of debt like you might have a number of dual income properties like me and don’t necessarily need any more but you’ve got this big debt that you need to pay off to get free you might go buy a single income property as an investor with the intention to renovate it and sell it in 10 years and use that chunk to pay off a dual income outright yeah like as an example let’s say your investor and you’re looking at your markets and you’re saying okay brisbane is a market that i want to invest in maybe you’re a high income individual and you’re like i actually want to you know get good capital growth in this area let’s say you look at the suburbs and you identify a suburb in brisbane city council that looks really good from a growth perspective for the next you know 5 years 10 years 15 years it’s going to be really good you can buy a property with city views that has the potential to renovate it you know other renovated properties in the street have sold for a lot more than an unrenovated one but brisbane city council doesn’t allow like secondary dwellings or granny flats or whatever you know they’re called in that area but that could be a really great opportunity for someone who doesn’t necessarily need any cash flow from their property but can buy a high quality asset where they can manufacture value and then either hold it for the long term and just keep it as a part of their portfolio or as you said ban in the future and maybe something to you know you manufacture that growth you get some growth through the suburb you sell it you get a large chunk of cash from the sale of that property and at that time you might decide to use that cash to then pay down debt or invest in the stock market or use it for your lifestyle like so it can be an opportunity to build up those chunks of wealth completely luck i’ve worked with two people in the last month now one of them said that in eight years time they want to really buy a beautiful home in perth or in sydney for their family to live in but they you know don’t know how they’re going to save the 500k deposit so they’re investing in a market they’re going to hold it they’ll sell it at the top of the cycle take that gain and therefore make that step into the market much easier i’ve got other people and clients that we’re working with at the moment that are in a similar boat but the reverse they’ve got the same as me a couple of dual incomes set up already they just want to pay them off in 10 15 years instead of 30 using principal and interest so they’re just going to hopefully make a chunk of cash over 10 or 15 years each one of them they sell pays off another one outright and speeds up the process of financial freedom yeah exactly for everything bro yeah and then we yeah you can do both at the same time as well you don’t have to choose between one and the other there’s people out there who might you know buy the single income which makes them negatively geared and then they pad that out by getting dual income that’s positive cash flow so their portfolio as a whole is need is neutral geared and then they’re getting the benefits of the single income as well as the benefits of the dual income and then you know it just gives you that flexibility as well and different ways to invest so there’s different risks there’s different rewards associated with each of them one’s not better than the other it just depends on who you are what your financial goals are or what your property investment goals are and how you want to invest so i know that ben and the team over at pumped on property help people buy both single income as well as dual income properties if you’re there thinking oh i don’t really know which one’s right for me i’m not really sure then they do offer free property strategy sessions so you can get on the phone to them you can talk about where you’re at where you want to be in the future what type of property is probably going to suit you as an investor and suit you and your risk profile and get clear on okay what are my next steps to actually move forward you can then take that information and move forward by yourself or if you want to you can hire the team over pumped on property to help you find the exact right property for you so if you head over to on-property dot com dot u forward slash strategy you can book in a time that suits you they’re booked out weeks in advance so you know you’ve got to get in quick but yeah go to on-property dot com do you four strategy or click the link in the description down below and then you can pick a time that suits you get clear on which of these is going to suit you best and then you can move forward towards that is there anything you would add at the end here ben yeah like what i wanted to say is that you know when i first started investing i thought there was only one way to do it and as i’ve got more sophisticated as a property investor i’ve realized there’s so many different ways there’s the two properties the financial freedom strategy that we talk about where you buy two houses two granny flats and hopefully pay them off over the long term there’s you know 10 properties in 10 years where you sell half of them and keep half of them you know there’s um developing there’s this and there’s that and it’s like your job as an investor or mum and dad listening to this is to pick the different ideas that you like from us and from other people and then like me to formulate a strategy that works based on your lifestyle your risk profile and your earning potential and to actually get financially free because regardless if you go single or dual income ultimately it’s about choices and the choice to spend time with the people you care about doing the things that are important sooner hopefully rather than later so you know whichever strategy you go down you know it doesn’t mean that you have to follow that forever like i made a big shift from single income properties to dual income about three years ago like that was you know an awesome thing to learn that hey i’m not going to need 10 properties anymore i could own four and get the same income was like oh like what a relaxing feeling like i’m in half the debt now that i was back then because of that strategy so you know just as you learn grow like if you’re just getting started beautiful if you’re not and you’re like me you’ve got a few properties that don’t align maybe you have to make a tough call on them in the future or maybe you don’t maybe it can be a blended strategy as well yeah so we’ll leave it there i’m going to link up to the video we did on the two properties to financial freedom strategy so you can get an idea behind dual income or i’ll link up to the video where we talked about the brisbane market at the moment and the suburb research ben has done in those areas so i’ll link up to those two check out one of those otherwise until next time stay positive

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Both single income and dual income properties each have their own pros and cons and often suit different investors

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0:00 – Introduction
1:40 – Dual Income Properties
7:40 – Single Income Properties

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