Higher Yield – Lower Risk
When a property has multiple tenants and therefore multiple income sources, the return from the property is usually higher than having a single tenant dwelling. The cost of purchasing the property is usually not proportionately higher and the outgoings to maintain the property year to year are not that much more than those of a single residence.
For example, a house rented to only one tenant might bring in $500 per week, whereas if the same house was divided into two and rented to two tenants, the weekly rental might be $375 each or $750 per week.
You can see the yield has increased by 50% yet it is highly unlikely the purchase price of the house or the yearly expenses to maintain the property would also increase by 50%.
This may not necessarily be the case for commercial premises, as they are generally valued based on their yield capacity.
We always recommend that you seek professional advice as this blog is for general information only