Is building a duplex a solid investment, or is it double the trouble? That seems to be the million-dollar question for those considering building a duplex. When considering a new build, the initial appeal comes from the fact that you will only have to go through the building process once for the building of two separate (but one) rental properties and although building a duplex generally costs more to build than a single free-standing house, it is usually cheaper than building two houses. Duplex projects indeed have the potential for significant profits. Still, they have hidden costs and liabilities that need to be determined when deciding whether to invest in this property type.
When it comes to building a new home, building multiple homes on one block of land may not be the first option on your mind. However, building a duplex has several advantages for promising homeowners, particularly when it comes to maximising your land’s potential investment and accommodating extended family.
Why should you build a duplex?
There are many reasons why building a duplex may be beneficial. Essentially a duplex can generate more financial stability with options to rent out both sides, sell both sides, or rent or sell one side and live in the other. Building a duplex also gives you breathing space if you want to buy another property by taking some equity out of that property to purchase another. Also, duplexes provide you with another source of cash flow. Double the income is generated from the cost of a single piece of land – basically two for one’s price.
Why Is Building Better Than Buying Off The Plan?
One of the main reasons homeowners prefer to build a home to live in or have as an investment is because they can increase their home’s value over time. A bonus is not having to worry about replacing old plumbing and appliances for a while. The cost of building a duplex may sometimes be a deterrent; however, the building gives owners the flexibility to stay within budget. Unlike buying off the plan, customisation is one of the main reasons why owners choose to build a duplex. Many Sydney homeowners choose the trusted team at We Build Australia as their builders for their uncompromised quality and competitive prices.
How Much To Build A Duplex, And Are You Financially Able?
When assessing how much it is to build a duplex, you can face many unknowns such as extra costs, unforeseen problems, and risk factors. The ﬁnancing planning for developing a duplex is very different from buying a standard investment property, so it’s important to engage specialists to talk you through all the potential costs. While it may cost more to build a duplex than a single standing house, it remains less expensive than building two houses. This is because both dwellings are on the same block maintaining lower land costs as opposed to two separate lots. Finding the right duplex build is an important decision. Check out our range of the best home design constructions at MJS Construction Group.
Building a Duplex
Developers specialising in duplex homes often recommend premium neighbourhoods for building duplexes. Build costs being the same everywhere, and an exclusive location will be a crucial differentiator for buyers as it adds snob value to the property. Additionally, higher build quality and premium fittings will ensure good returns on the property.
The cost to build a duplex is typically just over a million dollars, with a build turnaround of 3-4 months. Ideally, the block planned for a duplex should be level and have street frontage for each dwelling. Local councils have different zoning rules, but the block should optimally be about 600sqm through duplexes that have been built on smaller properties. Larger blocks – about 700sqm or more – will provide more room for design flexibility and help create dwellings closer in space and design to a detached home.
New rules introduced in NSW in 2018 to promote housing affordability allow a duplex to be built on a 12-metre wide block against 15-20 metres required earlier by councils. While developers still need to meet the minimum block size of 500-600sqm required by councils for a duplex, lots can even be 400sqm if the local council doesn’t specify a minimum Champion Homes is a common builder for these homes.
The medium density housing code of 2018 in NSW also requires dual occupancy dwellings to have a minimum setback of 0.9 metres, with each dwelling to be 5 metres in width and a maximum height of 8.5 metres. Each dwelling must also face a public road. Blocks where the duplexes have dwellings placed one above the other must be at least 15 metres in width.
Compared to a detached, standalone house, living in a duplex home may mean less privacy and reduced outdoor space availability. There’s also limited potential for changing the exteriors and adding value to the property, unlike a detached house. However, a well-designed duplex home in a good location is as good as a detached house – but at almost half the price!
Here are five great reasons to consider getting a duplex house built for you.
Duplexes can be excellent investment properties.
In 2016, one investor made a whopping $1 million profit after selling a duplex house they had built. The land was purchased for $620,000 in Kellyville. Building both duplexes cost another $600,000. After 12 months of work, the duplex was appraised and sold at 2.2 million dollars – earning the investor almost 1 million profit.
Earn a second salary by renting out the other unit
If you opt to live on one side of the duplex while renting out the other, you can earn a second income passively. It’s always great being able to make a little extra ingoing income from your project. Another idea is listing your other unit on Airbnb under the tag’ duplex living’ if you have built a duplex in the desired area. Get premium offers from vacationers looking to rent out a full-house.
Build equity and trade it off to buy another property
Building equity in your duplex is another excellent initiative that will enable you to get more loans to buy more property. With enough equity, you can approach a bank for another loan to invest in another real estate venture. Increase your real estate portfolio through the careful and deliberate management of your duplex.
Keep elderly family members close by
As parents and other family members get older, they might not fancy the idea of going to a nursing home or retirement home just yet. Having a duplex will be a great way to keep them close to you while also giving them enough space to remain independent. This is particularly true if you’re the only one there to help your senior parents or relatives.
Pay off your mortgage in record time.
The majority of people building homes in Australia take out financing from the bank for their home building project. Getting a duplex built and renting out the other unit helps you offset the mortgage and significantly reduce the loan duration. The faster you can pay off the mortgage, the sooner you can get started on building equity.
What Are the Drawbacks of Building a Duplex?
The very first drawback is finding the right piece of land to build your duplex. Duplexes generally require a specific size block and must have appropriate zoning to subdivide the property into two separate lots. Landowners are very aware of the potential their land holds, and because of this, may require higher premiums to purchase the land. In some cases, the premium is so high that it might not even be worth building a duplex as you may not be able to bring in enough income to cover the costs.
Another drawback of a duplex development is that subdivision of a property is not straightforward or streamlined. It can cost thousands of dollars in consulting fees to town planners and is not necessarily a task you can do all by yourself. However, there are blocks with existing approval that can help minimise the hassle, but the cost of land on these blocks will undoubtedly reflect that convenience.
The lower cost for land without these existing approvals might end up costing you the same (or even more) as purchasing and building on a block that already has all the needed approvals. When you consider your holding costs, you could potentially save yourself thousands of dollars and time purchasing land on a block that already has approval. Design, approval, and construction can often take over a year, and holding costs can include loan repayments, council rates and land taxes. At MJS Construction Group, we have the best dual occupancy selection to make your house a dream come true.
When you build a duplex, you do not have to use both sides of the unit as rental properties. Many people choose to live on one side of the unit and use the other side to bring in rental income or even a space to keep family members close. The cash flow generated by a tenant is also the affordability advantage you have by inhabiting the other side of the duplex. The cash generated from the tenant can help you take care of various expenses.
Although there may be some downsides to building a duplex, the overall financial victories outweigh the pitfalls if done correctly. Using Hennessy Building Projects to build your duplex is a luxury you can’t afford to pass up. We take care of everything. Our experience in building duplexes from the ground up is incomparable, and our design ideas are out of this world. When you choose our team to make your duplex, you are sure to interest renters and buyers before completing the building process. Contact us today, and we will set up a quick consultation to discuss your duplex building options.
Simply put, a duplex is a more affordable way to own a largely independent house, especially in an exclusive neighbourhood or a premium suburb. Given the runaway property prices in major urban areas across Australia, duplex homes like townhouses make for an excellent investment for new home buyers as well as investors.
A duplex delivers almost all the benefits of a detached house at about half the price, making it a sensible choice, especially for home buyers on a budget, such as first home buyers who don’t have to compromise on the location. Property investors gain from a duplex’s two rental incomes instead of just one from a detached home. Even their initial investment for land and build costs will be lower for a duplex as it requires less land than two separate houses, and the land cost will be split between the two duplex homes.
Duplex homes also help homeowners unlock the hidden equity in their property by changing their single occupancy dwelling into a dual occupancy. The second unit put up for sale or offered for rent, most commonly found in Brisbane, Sydney and the Sunshine Coast.
This is particularly ideal for retirees who would like to downsize without moving away from their familiar neighbourhood. A duplex is also a practical solution for the current trend of multi-generational families living under the same roof as it ensures privacy while providing the assurance and comfort of having one’s loved ones in close proximity whilst also looking surreal, much like a display home. Looking for dual occupancy? Look no further! MJS Construction Group has you covered.
Things To Note When Duplex Building
How much is it to build a duplex? Does this depend on various factors, such as do you already own the land on which you wish to build the duplex? Is the site already prepared? How complex or simple do you want your duplex to be?
Do you want a single storey or double-storey duplex? A good figure to keep in mind is $1500 – $1800/m2, the average construction cost of a duplex.
Others also ask, can I build a duplex on my land. You will be able to so long as your land has the necessary building zoning for duplexes, usually R3 and R4. If you’re not sure about this, you can check with your local council.