You’re talking to your real estate agent, and they’re taking you through your options for property types: single-family home, condos, townhomes, multifamily, apartments — it can start to feel like a neverending smorgasbord of choices, and when you finally think you have a grip on all the different property types, they drop a new term on you: duplex.
Now, don’t worry if you don’t know what a duplex is — it can be complicated.
Also known as twin homes, side-by-sides, or multifamily dwellings, duplexes are homes that more than one family occupies. You might even think of duplexes as two houses for the price of one. And with almost one in five families living in some multifamily home, duplexes are as popular as ever today.
What Is a Duplex Property?
A duplex property is a type of multifamily property containing two living units located within the same structure and on the same lot. Although the units may be detached, most are attached, either horizontally such that the units are side by side and share a common wall or vertically such that they’re on separate floors and share a standard ceiling.
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. The two dwellings share one common wall in a duplex but are entirely separate entities with entrances and amenities.
What’s the difference between a duplex, townhouse, condo, and an apartment?
To sum it up: The most significant difference between a duplex, townhouse, condo, and apartment is who owns what. A duplex has a single owner who owns the entire building and usually either life in one unit and rents out the other or rents out both units and lives elsewhere.
A townhouse is similar to a duplex, except that it can have multiple instead of having one owner. Each owner owns both their unit’s interior and exterior structure, as well as any outdoor areas. However, in sure townhouses, amenities, like a pool, can be shared by all occupants. Unlike duplexes, townhomes usually don’t have living spaces stacked vertically but do share walls.
Condos are similar to duplexes and townhomes in that they can be multi-storey spaces and that the units share walls. But with a condo, owners only own their unit’s interior. Everything exterior (e.g., the building walls, shared outdoor areas, the pool, garage) is owned by the homeowners association (HOA), and unit owners pay a monthly fee to cover maintenance of shared spaces.
Lastly, apartments are multifamily buildings with several units (sometimes hundreds) rented out to tenants. One person owns all units, a group of investors, or a corporation. Also, because units in duplexes and townhomes can be rented out, they can sometimes be referred to as apartments. MJS Construction Group has the best range of dual occupancy builder services to help you create your dream house.
Can A Duplex Be A Single-family Home?
A duplex is a multifamily home since it provides two separate living spaces. However, a duplex can be converted into a single-family home—with a few walls knocked down, and any extra kitchens, entrance doors, and garages are removed. However, it’ll require a pretty big investment.
Can You Own Half A Duplex?
Yes, you can – although it depends on whether the two dwellings are on the same title or different titles. You will only be able to buy one half of the duplex that has been subdivided into separate titles.
How a Duplex Property Works?
Traditionally, a duplex is owned and maintained by a single owner but inhabited by two households—one in each living unit. There are three potential duplex living arrangements:
- Live in one and rent out the other: In this common scenario, the duplex property owner lives in one of the units and rents out the other to someone inside or outside of their family. For example, a young professional might occupy a single unit and rent out the other to a friend or colleague, or a senior might rent it out to an adult child who serves as a caretaker. The second unit acts as an investment property, making money for the owner that they can use to offset the potential mortgage and maintenance costs.
- Live elsewhere and rent out both units: An owner who already has a primary residence can purchase a duplex and rent out both units while continuing to live in their separate residence. This presents a good option for a financially established homeowner who is primarily interested in a duplex as an investment property.
- Live in both units: Although less common, a duplex owner with a large or multigenerational family may choose not to rent out either unit and instead buy a unit to occupy both. If a homeowner is transitioning to a multigenerational living arrangement, they might live with their spouse and children in one unit while their older parents live in the other unit.
Pros Of Living In A Duplex
- Only one other unit to deal with: You likely won’t have access to amenities common in apartment complexes like a pool or tennis courts. But living in a duplex means you only have to share common spaces with one other unit instead of a whole complex of people.
- Being close to your neighbour: A duplex means you’ll be in close proximity to your neighbour but entirely private and completely separate units. While this may seem like a negative to some, it could benefit depending on one’s situation. For example, if you want to be close to relatives, you could rent out one unit and have your relatives in the other.
The Cons Of Living In A Duplex
- Sharing may not always be caring: You will likely share the yard and driveway with your neighbour, which could be an issue if your neighbour abuses these areas or doesn’t respect your space. Also, your neighbour could be your landlord.
- You might have a nightmare neighbour: While this applies for any rental, whether it’s a duplex or apartment, having an uncool next-door neighbour (with whom you share a wall) may make it difficult. Understanding this will help set the expectation and hopefully help you avoid any negative situations from occurring.
- Potentially increased responsibilities: Because duplexes are often privately owned, you may be left to do your yard work, snow shovelling, gardening or tidying up around the outside areas.
There Are Several Reasons Why You Should Consider A Duplex Including:
Maximising your return on a property is all about generating rental income. When you build a duplex, you instantly double your rental income earning potential. You also get two different options when you create a duplex.
You can rent out both units to provide you with dual income, giving you the potential to earn 7%+ rental yields. Or you can sell one unit to pay down debts such as your own home while keeping the other unit to generate an income. Either way, you will be creating instant equity and have good cash flow, allowing you to move forward in building your property portfolio to achieve financial independence.
The good thing about a duplex investment strategy, or any real estate investment, is that it comes with tax advantages attached to it. You can claim instant tax deductions the same year you build a duplex, and there are deductions you can claim with the ATO over the years – this is called ‘tax depreciation. They include advertising, council rates, land tax, water charges, cleaning, insurance, pest control measures, interest, property management fees, commission fees, repairs, general maintenance and buying the property itself.
You can claim several things starting a year after you build the property for more long-term tax benefits. The most common long-term tax benefits include lender’s mortgage insurance, loan establishment fees, broker fees, initial repairs, depreciating assets, capital works and more.
More Financing Options
An instant equity property comes with more flexible financing options than you’d get with a traditional mortgage. This flexibility makes financing slightly easier to obtain, no matter which lender you choose to borrow from. You can generally split your financing options into three broad categories, and each one comes with benefits.
You can choose to go with a regular investment home loan, an owner-occupied loan if you plan to live in one side of the duplex, or owner-financing. Owner financing requires you to pay directly to the seller instead of going to a traditional bank. Since you have several choices, buying or building a duplex, whether by yourself or with a friend or family, is relatively painless, especially if you go with a qualified buyer’s agent to help you source one or guide you through the whole land acquisition and construction process.
Easier Mortgage Repayments
Arguably, one of the more stressful parts of investing in real estate is making the mortgage payments if you can’t pay for it outright. Since a duplex can be turned into an income earner right away, it gives you an automatic cushion for your mortgage expenses.
The benefit of building a duplex is that it will provide dual income from day one, making it cash flow positive. This means that your rental income will pay for your mortgage repayments and other expenses, helping your serviceability so that you can move on to your next property sooner. Having an additional income can help you pay off other debts, go on that long deserved holiday or take a break from work.
How to Get a Duplex Property?
If a duplex is suitable for you, and plans to obtain financing to buy the property, shop around for a loan. Consider getting preapproved for a mortgage to determine how much you can afford to borrow for a duplex. Also, have a down payment ready.
Think about the desired location and features you want in a duplex, such as the architecture and the number of bedrooms and bathrooms. Then, consult a real estate agent to find a duplex that meets your needs. The agent will guide you in the process of making an offer on and closing on the duplex.
If you intend to rent out one or both units, familiarise yourself with local regulations pertaining to landlord responsibilities. Similarly, research rents in your area and set a fair rent price to ensure that the unit remains occupied and you maximise the return on your investment. Finding the right duplex build is an important decision. Check out our range of the best home design constructions at MJS Construction Group.
Why Buy A Duplex?
With a duplex, you have the option of purchasing a home to live in as well as having an investment property. Many duplex owners choose to live in one unit on the property and rent out the other as an income-generating stream. If you’re purchasing the property as an investment, there are two income opportunities built into one property.
If you purchase a duplex as an owner-occupant, the interest rate on your mortgage will likely be lower than if you bought the property as an investment. You can also take advantage of tax breaks because you can deduct certain home expenses, such as property maintenance. After all, it’s considered an income-producing property. Insurance breaks are also available for some duplex properties.
Living in a duplex, you’ll be close to your tenants, but you each have separate spaces that are your own. Being close to tenants means that you can keep an eye on the property and address any issues that come up quickly. You also have some legal protections and leeway that a non-resident landlord doesn’t have.
This also could come in handy if you want to be close to relatives; you can live in one half and rent the other half to your loved ones. For example, if you’re going to move your parents into your home, but they want to remain independent, a duplex is a good compromise since everyone has their own space.
Owning a duplex can be great, but it also comes with drawbacks. If you’re looking to start investing in real estate, buying a duplex is a good start. Be sure to look at the choice from all angles before you take the plunge! At MJS Construction Group, we have the best dual occupancy selection to make your house a dream come true.
Should You Do A Duplex?
When renting, you have lots of different options, from single-family homes to standard apartments to duplexes and other multifamily homes.
To find a place you feel proud to call home, you must honestly examine your wants and needs and try to integrate those into your search.