Is Owning A Duplex A Good Investment?

melbourne dual homes
Table of Contents
    Add a header to begin generating the table of contents

    The purchase of duplexes, which generate two income streams, is one of the most popular ways for investors to boost their equity in a short amount of time and, as a result, accelerate their path to achieving financial independence. You could find that this is the ideal investment for you.

    An increasing number of people in Australia are investing in duplex projects because of the potential rewards, which include capital growth, rental yields, and cost savings. This should not come as a surprise given that a home with two revenue streams can be an effective tool for accumulating wealth. Depending on the approach you use to investing in real estate, purchasing a duplex can potentially result in large returns.

    A lot of people don't even think about the possibility of getting their first place in the form of a duplex. But if you buy wisely, a duplex may either be a more inexpensive method to achieve the location you want or an opportunity to become an investor while you become an owner-occupier at the same time. Both of these outcomes are possible with the right purchase. If you're looking for a high-quality, affordable builder in Melbourne, you're in the right place! Check MJS Construction Group!

    What Is A Duplex?

    A single building on a single parcel of land that has been divided into two separate residences is referred to as a duplex. In terms of floor plan, the two houses are typically carbon copies of one another, which is especially true if they are laid out side by side. Both units of a typical duplex are joined together by a common wall.

    A duplex can be thought of as a hybrid between a single-family detached home and an apartment. However, despite the fact that each home has its own entrance, bathroom, kitchen, and driveway, they are not freestanding homes. You will only have one neighbour that shares a wall with you, in contrast to living in an apartment complex.

    A duplex typically has two addresses, one for each side of the building. One might have the number 23a, whereas the other might be numbered 23b, for instance.  At MJS Construction Group, we have the best dual occupancy selection to make your house a dream come true.

    Financial Benefits Of Buying A Duplex

    When the housing market is competitive, duplex financing can frequently be of assistance to purchasers in securing a house. A duplex may be the solution for you to realise your dream of becoming a homeowner in the ideal neighbourhood or suburb, even if it seems financially impossible.

    It is possible that you will be able to acquire the property for a price that is lower than the price of a single-family house in the same neighbourhood if you purchase the title to only one half of the duplex. If you purchase the full property, you will receive rental income from the other side, which can assist you in meeting the financial obligations associated with your home loan.

    For retirees and families on a tight budget who are looking to downsize, duplexes can be an excellent option. You will be able to get an exceptional property for a price that is roughly equivalent to half that of a solitary residence. This indicates that you have the opportunity to either save a significant amount of money or relocate into a better neighbourhood than you previously believed you could afford.

    Due to the fact that duplexes are freestanding homes, another advantage is that you will be able to own the land that is surrounding the property. When compared to a similarly sized apartment in which you do not own any land, this can result in a larger long-term return on your investment in terms of capital gains.

    Potential Issues Of Duplex Ownership

    The decision to purchase a duplex is typically a big one from a financial standpoint; nevertheless, there are a few things about which you should be informed. Think about moving to a neighbourhood where there are fewer duplexes and more single-family homes instead of a mix of both. Locations with a high proportion of duplexes typically have property values that are lower than average and may not always provide a satisfactory return on investment.

    You might also come across duplexes, in which case one of the units will be facing the street, while the other will be towards the back of the property. If you reside in the front half of a duplex that is laid up in this manner, your neighbours may walk past your windows, which may give you the impression that you have less privacy than you actually have. If you buy only one side of a duplex, you'll have to be considerate of the people who live on the other side at all times.

    If, on the other hand, you choose to purchase both halves of the property, this will place you in the position of being a landlord. You will be able to claim the rental income to help pay down your house loan; however, in order to ensure that you comply with the lease laws and regulations that regulate landlords and tenants, you may need to engage a property management business or handle all of the work yourself.

    Pitfalls To Avoid

    Not knowing your investment objectives.

    You need to have a purpose in mind before you consider purchasing or constructing a duplex, right? Investors in real estate do so for reasons other than the simple desire to do so. Because of this, it is essential to establish investing goals, or even just one primary purpose, before making the decision to invest in a property that produces two incomes. In addition to this, you should determine a timeframe for your investment.

    So, if you’re seriously thinking of investing any time soon, be sure to ask yourself the following questions:

    • Are you thinking of using your property investment portfolio as a funding source during retirement?
    • How soon do you expect to generate returns from your investment?
    • Is selling your property in your plans?

    In addition to being aware of the costs associated with securing two different titles for the units, it is important to keep in mind that selling a duplex while it is occupied by renters can make the process more difficult. Considering a new project? Then MJS Construction Group builders Melbourne is the answer.

    melbourne home duplex

    Not conducting due diligence.

    When you buy a home at a price that is far lower than the average buying price, you could have the impression that you hit the real estate jackpot. Be careful not to let yourself be fooled by gains in the short term that could turn out to be substantial losses in the long term.

    This is exactly what occurs with a certain piece of real estate that is put up for sale again on the market just a few short months after it was purchased. This indicates that the property did not perform up to the investor's standards, and as a result, the investor is compelled to sell it in order to return even just a portion of their initial investment. Worse still, this scenario is all too prevalent among investors who fail to undertake sufficient market research and sufficient due diligence on their investments. Looking for dual occupancy? Look no further! MJS Construction Group has you covered. 

    You can avoid this by asking the following questions:

    • Why does it make sense to invest in a duplex and not some other property type?
    • How is the housing market doing in the place you are investing in?
    • What are the current rental rates in the area?
    • What’s the population growth and unemployment rate in the area?
    • Is there a shortage of duplexes in the community you have in mind?
    • Are duplexes allowed in the neighbourhood you are considering?

    You may always seek the advice of local real estate agents, the local council, and qualified and experienced duplex builders if you are having problems discovering the information you need.

    Not considering your finances.

    In addition to the things you need to think about regarding your mortgage, you also need to determine whether or not you are financially ready to face the various tenant-related problems that may arise in the future. The hiring of a property manager, taking into consideration the costs of maintenance and repair, and being able to weather the times when neither of the units are occupied by renters are among these considerations.

    If you do not own a business that may assist you in ensuring that you have appropriate income flow, you ought to have the security that comes with having a steady work. You also need to guarantee that you have a strong credit standing or a history of borrowing that will make you an attractive mortgage candidate to lending organisations. This can be accomplished by keeping a good payment history. You also need to have some cash put up as a financial buffer for times when you run into unexpected expenses.

    If you invest in the correct property, whether it's a duplex, a strata property, or a freestanding unit, real estate speculation is a lucrative market that's well worth investigating since it offers the potential for big financial returns over the course of a long period of time.

    Before you consummate any real estate transaction, it is imperative that you steer clear of the risks described above in order to ensure that the gains you anticipate materialise.

    Why Buy a Duplex as Your First Home?

    Investing in a duplex rather than a single-family house as a first-time buyer might be an exciting prospect due to the numerous unique opportunities it presents. The following are a few of the many reasons why a first-time home buyer might consider acquiring a duplex.

    Access a Coveted Location

    The majority of people who are purchasing their first home have an ideal neighbourhood or suburb in mind where they would like to settle down if only they had the funds. Because one half of a property comes with one half of the price tag, purchasing a duplex can be the answer to getting into that location without breaking the bank for a first home.

    This benefit may not be available to you, however, if you are purchasing the entire duplex, as the purchase price will most likely be comparable to that of freestanding homes in the neighbourhood.

    Save Money

    By acquiring a duplex instead of a single-family home, you can lower your overall housing costs in half while still living the suburban dream. This will make it possible for you to either enter the housing market at an earlier time or to obtain a house loan with a lower interest rate. To reiterate, this only applies if you are purchasing a single property..

    Rental Options

    When you acquire a duplex that is strata-titled, you have the choice of either living in one side of the property or renting out the other. You could also rent out both sides of the property, which would effectively provide you two incomes from just one piece of land. The opportunity to become both an owner-occupier and an investor at the same time is one of the things that contributes to the unique allure of a duplex.

    More Privacy Than Apartment Living

    Apartments are a choice for many people who are purchasing their first house on a budget; however, living in an apartment typically results in less privacy. You won't typically have access to your yard, and you can have neighbours on all sides of the property. When you live in a duplex, you only have to communicate with one of your neighbours.

    Land Value

    In most cases, when you live in an apartment, you do not own the property that surrounds the building; on the other hand, when you live in a duplex, you own the section of the ground that is related with your home. Your acquisition will have a higher worth as a result of this, and its value may even increase over time depending on the location.

    Less Maintenance

    If you just own one of the units in a duplex, then you are only responsible for the maintenance of one half of a house. This means that you will only have to mow half of the lawn, clean half of the floor space, and (hopefully) deal with a smaller number of repairs. On the other hand, if you own the whole building, it can signify that you have more work to do.

    Tax Breaks for Investors

    If you rent out a portion of your house, you may be eligible for tax deductions for expenses that are directly related to the rental, such as mortgage payments or home improvements. You are also allowed to deduct fifty percent of any costs that are shared, such as those associated with building insurance.

    Comparing Investing in a Single-family Home with Duplexes

    When trying to achieve their financial objectives, investors should evaluate a number of different investment properties to determine which one will bring in the greatest amount of money. This indicates that the return on investment for this venture will be unique for each person. Some people would be better off in a duplex, while others would be happier in a single-family home. The decision comes down to personal preference. However, why?

    It is important to keep in mind that investing in a single-family home that is unoccupied will have a lot more significant impact on the return on investment for your monthly payments than will doing the same thing with a duplex that is vacant.

    Some owners will select to reside in one side of the duplex while renting out the other, while others will want to rent out both sides of the property. In most cases, the possibility of both apartments being empty at the same time is not a very common occurrence. If a single-family home is left unoccupied for more than 30 days, the owner is held liable and responsible for the entire remaining balance on the mortgage. See our list of available builder services melbourne to help you make an informed decision for your treatment.

    When compared to the cost of insuring a standard house, the premium for protecting a duplex might be anywhere from 15 to 25 percent higher.

    On the other hand, it's possible that renting a duplex will start out more expensive than renting a standard house. It would appear that the demand for single-family homes is far stronger than that for duplexes. As a result of this, the sale of your duplex can take a considerable amount of time, typically more than a single-family dwelling would. Check out our range of dual occupancy builder for your dream house.

    Do You Have the Time?

    home builders is a two story house cheaper to build?

    You need to take into consideration how much free time you have. When you are just getting started, the management and maintenance of a duplex might consume a significant amount of your time—almost as much as a part-time job would. It may take many hours to complete this process because it involves doing research on the property, determining whether or not you want to live there while renting out part of it, assessing your alternatives for remodelling it, and drafting plans. Once you reach the point where you have a renter, you need to ensure that you have sufficient time to perform any essential maintenance and repairs on the property. You can even view of it as an opportunity to start your own business, complete with a tonne of useful information and strategies to pick up along the road.

    You, your circumstances, your ambitions, the amount of time you have available, and your frame of mind are all factors that will be taken into consideration when determining whether or not a duplex is the ideal investment option for you.

    There are a variety of advantages that come along with owning and renting out a duplex, such as the possibility to live in the investment property, additional income, tax write-offs, and the capability to qualify for FHA financing. Nevertheless, it is accompanied by a number of unfavourable features as well. These include the cost of upkeep and repairs, the possibility of damage, the danger of renting to tenants who will not properly care for your home, and the possibility of vacancy. It is imperative that you set aside some time to deliberate on whether or not you should pursue this endeavour. You might get the impression that you are acting as a landlord at times, and you might believe that you do not have much time for yourself as a result of becoming buried in maintenance and repairs, but the advantages should ideally exceed the disadvantages.

    Frequently Asked Questions About Duplex

    A duplex house is a residential building constructed on two floors. It has a single dining room and a single kitchen. Duplex house design has a common central wall and consists of two living units, either side-by-side or on two floors, with separate entries.

    Most duplexes are built with the two homes side by side, although you can also live in a duplex with apartments on two floors. The Latin duplex means "twofold," from duo, "two," and -plex, "to intertwine." 

    Simplex apartments occupy only one level in a sectional title development, meaning it is a term used to describe regular flats in apartment buildings. Duplex apartments are multi-family homes that have two units in the same building and share a wall between each other.

    Duplexes offer a sense of high-end living as it provides more space and amenities. Unlike an apartment, living in a duplex provides more privacy as you will not be sharing some common services and spaces with any other family. With these benefit in hand, it allows you to get to more rent as compared to an apartment.

    Duplexes are good investment options and have more benefits to offer, compared to apartments or villas. MakaaniQ tells you why it is best to purchase duplex houses, despite their cons. Privacy: No one has been ever disappointed with more space. Duplexes clearly promise complete comfort for the residents.

    Google Rating
    Based on 24 reviews
    Scroll to Top