A duplex is a residential building that has two units under a single roof. The two units share a common dividing wall that splits the building into two separate homes. Also known as dual occupancy, each unit acts as a totally separate home with its own amenities, entrance, and yard. Both units can be on a single title, which would mean you would have to sell both units together. Although it costs more to build a duplex than a single freestanding house, it’s usually cheaper than building two houses, and because both dwellings are on the same block, the land costs less than two separate lots.
Why Invest in a Duplex?
For investors If you are an investor, buying a duplex means that you’ll receive two rental incomes from one asset. And building one means you’ll be able to earn almost as much rental income as you would from two detached houses while saving thousands on land costs, as a duplex requires much less land than two detached houses.
For regular buyers If you are a regular buyer, the main benefit is the price tag, which is often up to half of what you’d pay for a similarly located detached house. This is great news for first-home buyers, anyone on a moderate budget, or anyone wanting a low-maintenance lifestyle in a premium location, such as retirees and down-sizers.
Here are some of the main benefits of investing in a duplex:
1. Instant Equity Building a duplex on a block of land instantly increases the value. It can go up tremendously once your builder completes construction. This is known as instant equity. This allows you to control your portfolio and don’t need to wait for capital growth in the market. Our clients are regularly seeing gains of $150,000+ in instant equity in less than 12 months. Another thing that that spurs people to build a duplex rather than buy a duplex is the opportunity to customise it. You can add linen cupboards, pick your stone benchtops, ducted air conditioning, and downlights. You can choose your windows and the entire layout of the duplex to suit the demographics of the area you’re building in, to maximise the return.
2. Positive Cash Flow A duplex provides 2 incomes under one roof and in most cases has positive cash flow! Arguably one of the leading benefits of building a duplex is the dual-income. Rent from two units provides you with positive cash flow, with the potential to earn 7%+ rental yields. This creates a positively geared portfolio. Having an additional income can help you pay off other debts, go on that long deserved holiday or take a break from work.
3. High Growth Potential Choosing the right location for your duplex project is so important to ensure you can maximise on capital growth. And the best part is, you will be gaining growth on not just one property, but on two properties by building a duplex. This will help you create equity within the properties, which you can then use towards a deposit for your next project or purchase, and continue growing your property portfolio.
4. Solid Introduction To Real Estate When you jump into the property market for the first time, building a property gives you a nice introduction to the entire process. Can you build a duplex on your land? Depending on your council, yes you can. This allows you to stay close through the process, and you’re close to your tenants if you choose to rent it out.
5. Instant Loan Repayment Help Chances are, you’ll take out a loan to afford the cost of building your duplex. Moving tenants into your duplex or into one side of your duplex is an excellent way to get revenue flowing in. You can put your tenant’s rent payment toward your loan payment each month.
What is the difference between a duplex and a house? A house is different from a duplex because it only contains one dwelling under a single roof, rather than two dwellings under a single roof. In a duplex, the two dwellings share one common wall but are entirely separate entities with their own entrances and amenities.
Can you own half a duplex? Yes, you can – although it depends on whether the two dwellings are on the same title, or on different titles. You will only be able to buy one half of the duplex that has been subdivided into separate titles.
Let’s Start Investing with Dual Keys It is our mission to help clients make informed decisions about their residential property purchases, and take the guesswork from the equation of property investment. Dual Keys assists our clients to secure a quality investment with a strong rental return for the future. Are you ready to start your investment? If you still need more information, our team is always ready to help you.
