Duplex Rental Investments
Multi-Income Unit Properties
Duplex Homes: What You Need to Know About Buying or Building a Duplex Home
Image: Duplex Homes. Designed and built by Metricon (one of our builders).
What is a Duplex?
A duplex is a multi-family home that has two units in one building. While many people may visualise a duplex as two homes next to each other (with a common wall down the middle), a duplex can come in a range of configurations. For example, a duplex may be a house with two doors located side-by-side that enter into different living spaces, one located upstairs and another downstairs.
A defining characteristic of duplex buildings is that they are constructed with separate entrances for each unit. This means each tenant has their own private entrance to the property. These two separate units are typically similar in size and layout.
Various other types of housing may also have multiple units constructed within one building, including triplex (three homes) and fourplex (four homes) properties. But the term ‘duplex’ is reserved exclusively for multi-family housing that contains just two homes.
The biggest difference between a duplex and a townhouse or apartment is the matter of ownership. Duplex properties are owned by just a single owner and both units are then typically rented out to separate tenants.
Alternatively, a duplex owner may choose to live in one unit and then rent out the other. This situation can be appealing to property owners who want to use the rental income from the second unit to assist in managing the monthly mortgage repayments.
What Are the Benefits of Living in a Duplex?
Living in a duplex, whether as an owner or a renter, comes with unique advantages and disadvantages. However, duplexes have become a popular housing choice for a number of reasons:
- Duplexes offer many of the benefits of a standard residential home, including a yard, garage and a good degree of privacy.
- Duplexes are typically more affordable than a single-residential property (although, as with all real estate, this will depend on a range of factors, including location).
- The affordability of duplex rentals allows tenants to rent in a higher-value location at a more affordable price.
- Duplexes are often constructed with built-in appliances, such as a European-style laundry with a fitted washer and dryer.
Duplexes are a great investment property choice for homeowners since they have the choice of living in one unit and renting out the other. Duplexes are also highly appealing to renters seeking affordable housing in a desirable location.
Here’s Why a Duplex Property Is a Good Investment for Any Conservative Property Investor
Demand
Duplex properties are appealing to a wide range of both renters and buyers, making them highly attractive in various real estate markets. Their smaller size and affordability make duplexes a desirable choice for small families, young professionals, retirees and students.
The flexibility of a duplex also allows investors to rent out both units to separate tenants or live in one unit while renting out the other, providing multiple income streams or cost-saving opportunities.
Cheaper Property Prices
In many cases, duplex properties are more affordable than single-family homes or larger multifamily complexes. This allows investors to enter the real estate market with lower upfront costs when compared to other types of property investment.
This affordability aspect is particularly useful for conservative investors who may have budget constraints or who want to minimise the financial risks associated with high-value assets. Additionally, the lower purchase price of duplex properties allows investors to diversify their portfolio by acquiring multiple units for potentially the same price as a single residential dwelling.
Value, Liquidity and Buyers
The rental income generated from one or both duplex units can help offset mortgage payments and potentially increase the property’s usable equity. Investors may then be able to fund additional investment purchases using the accrued equity in their duplex investment.
Duplex properties also offer relatively high liquidity compared to larger multifamily complexes or commercial properties. The presence of two separate units provides investors with greater flexibility, which can help attract a broader range of potential buyers, such as owner-occupiers, investors looking to expand their rental portfolios or buyers seeking a multifamily residence.
Key Takeaways
Purchasing a duplex property can be a sound investment strategy thanks to its flexibility, appeal to renters and relative affordability. These factors make duplex properties an accessible investment option within the real estate market, particularly for first-time investors.
This information is simply a guide to help you with your research. The type of property you ultimately invest in will still depend on the type of property investor you are.
Here at Positive Income Properties, we source the right property deal based on what will work for our client. We are involved every step of the way, from sourcing to financing, and from settlement to leasing the property. Whether you are a seasoned property investor, a beginner or simply want to buy your first home, we will assist you. We can secure tenancy from the onset of settlement, ensuring a streamlined process.
To find out more about how we can assist you, please refer to our 1-3 Year Rental Guarantee. If you are still undecided or are locked in on a particular property or budget – subscribe to our FREE Resources and Property Deals when you click the button below.
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What Are the Pros and Cons of a Duplex Property?
PROS:
- Affordable: Duplexes are typically less expensive and are often located in more affordable areas. This presents buyers with a less expensive means of buying a house.
- Privacy: Duplexes often occupy a large block of land, allowing plenty of outdoor space for both units. Outdoor areas can easily be divided into two, allowing each unit to maintain the privacy of the occupants.
- Additional Income: As the owner of a duplex, you have the option of living in one unit while renting out the other. The additional income from the second unit can then be used to assist with managing monthly mortgage repayments or ongoing maintenance expenses.
- Multifamily Accommodation: Duplex properties are often seen as the ideal solution for those seeking multiple living spaces for various family members. For example, elderly parents can maintain a measure of independence while adult children remain close by to assist when necessary.
- Lower Insurance Costs: A duplex can be covered by a single-building insurance policy. For owners who choose to live in one unit while renting out the second, this can significantly reduce the cost of insurance, as you’ll only be paying for a single policy instead of two separate ones.
- More Space: Duplexes are often designed with more living space compared to apartments. In addition to having more indoor space, most duplexes will incorporate individual outdoor areas and a garage for each unit.
- Varied Locations: While apartment buildings are still more common in urban areas, duplex properties can be found in regional towns, suburban growth centres and metro areas. This makes it easier to purchase a duplex in the location of your choice.
CONS:
- Noise: Duplex houses have common walls, which can result in excess noise being heard from adjacent units. Proper building insulation is essential to ensure extreme noise doesn’t become an issue in duplexes.
- Lawn Care: Unlike in an apartment or townhouse complex with a body corporate arrangement, it is the responsibility of each occupant to maintain their outdoor areas. If an owner chooses to live in one of the units, they’ll either need to mow their own lawn or arrange for a contractor.
- Issues Between Units: Some tenants may be uncomfortable with the idea that their landlord is living on the other side of the wall. Owners who choose to live in one part of a duplex will need to ensure they aren’t interfering with the tenant’s right to “quiet enjoyment” of the property. This would include complying with limits on inspections and providing sufficient notice prior to entering the leased property (including any outdoor areas).
- Build Cost: The initial cost of building a duplex property will typically be higher than if you were building a single house or unit. This is because you are essentially building two homes (with two kitchens, multiple bathrooms, etc.). Additionally, duplex constructions may be subject to specific building requirements which can involve additional costs (for example, fire-rated boundary walls).
Is A Duplex House a Good Real Estate Investment?
A duplex can be an excellent rental property for buyers at any stage of their real estate investment career. While owning a duplex can present some unique challenges, these can be successfully dealt with. The key is to seek expert advice and do thorough research before making a purchase.
So, is a duplex house a good positive income property investment strategy for you?
Ultimately, if you’re looking for reduced purchase costs, a stable rental income and the ability to build your investment portfolio across multiple properties, then yes, a duplex house could be a great real estate investment for you!
How To Invest in A Duplex House
At Positive Income Properties, we have a fantastic range of duplexes available. All of our properties have been constructed by registered and credible builders with strong industry reputations.
While researching duplexes online is a great place to start, it’s also important to seek tailored advice before going ahead with an investment. So, if you think that a duplex is the right type of property for you to invest in, contact the team at Positive Income Properties today. We’ll give you all the information you need to make an informed investment decision.
Duplex Vs. Dual Key Properties: What’s the Difference?
A duplex is made up of two adjoining residences that have separate titles, but that are built on one block of land. Duplexes can offer a financial advantage over owning two distinct properties on separate blocks of land. This is because they allow an owner to receive two separate streams of rental income, while only paying land tax and insurance on a single property that was purchased for a lower purchase price.
A dual key property is one residence that has been built to accommodate two families. Unlike a duplex (where both units are usually mirror images of each other), a dual key property will often have a larger and a smaller residence. The most common version of this would be a house built with an attached granny flat.
The advantage of a dual key property over a duplex is that there is no special council approval needed to construct a dual key dwelling. This can make a dual key property cheaper to build, while still producing a similar rental return to a duplex.
While it may be possible to sell one side of a duplex property (if you’re willing to invest in separate titles), dual key properties don’t allow for the sale of only one residence (since they are both included on the same title and this cannot be altered).