A duplex home is one of those underrated dwelling types in the property world. It can generate solid value growth and high rental yields for less than the price of a couple of similarly located detached homes.
What is a duplex home?
A duplex is a residential structure with two homes that has a common central wall. The two homes will either be on one land title and be owned and sold together, or be on two titles and separately owned and sold.
Owners must get a building insurance policy that covers the two homes in the duplex.
There is usually no need for a body corporate, but this is dependent on how old the duplex is and its jurisdiction.
The difference between a duplex and a house
A house has only one dwelling under one roof, instead of two dwellings under one roof. A duplex has a common wall that separates the two dwellings, which have their own entrances and amenities.
You can purchase and own half a duplex but only if the property is on a separate title. If the duplexes are on one title you cannot purchase half a property.
The pros of buying a duplex
There are numerous benefits in buying a duplex. For investors, they will take two rental incomes from one property. You will also save thousands on land costs because a duplex requires a smaller land than two separate houses.
The main benefit for ordinary buyers is the price tag, which is considerably cheaper than what you’d pay for a detached dwelling in a similar location. This makes a duplex worth considering by first homebuyers, people on a modest budget, or people who prefer low-maintenance living in a good quality location, like singles, downsizers and retirees.
However, you also need to weigh the benefit of saving money against a possible loss of privacy.
Other benefits include:
- Only one next-door neighbour, compared to multiple neighbours in an apartment building
- Potentially easier to make changes in your own home because there is only next-door neighbour to consult
- Getting the security benefits of having one close neighbour, without too close for comfort
- You can have your own pets because you own your land
- Potential increase in rental income because there are no corporate body fees to pay
- Low garden maintenance because you own just half of an average-sized block
- Duplex configuration is important. Choose side-by-side or corner positions.
- To get the most from capital gains, try to purchase where duplexes are not common
- Stay away from duplexes with different front facades. For maximum value, both homes should have the same colours
Duplexes are a smart investment, if they are in the right location.
People who are considering duplexes are comparing them to apartments. One main benefit that a duplex has over an apartment is the land component size. Generally, homes with a higher land component value appreciate much quicker.
However, you should be aware of the downsides of duplex investing.
Owning just one of the homes in a duplex can limit your ability to perform outside works to the property because it may be part of a strata complex. This means the ways you can add value to your property is limited.
Just like any type of property investment, you need to do your research on duplex investing. The right duplex property can no doubt be a good investment.