Unlike conventional family homes and traditional apartments, a duplex development is an excellent real estate investment for any investor and developer in New South Wales. It is because the features of a 2 in 1 property adds value. It, therefore, gives a high return on investment and boosted equity growth.
Additionally, it is also more affordable than purchasing two separate houses. This blog post explores the advantages of building a duplex.
What is a Duplex?
Duplexes is another word for an attached dual occupancy, but they are single structures that consist of two living spaces under the one roof. It consists of a common wall that has to be fire rated but having separate entrances, yard, garage, bedrooms and living spaces. This investment property falls under the category of residential in real estate investing.
Investing in duplexes or dual occupancies has become a popular investment strategy among savy developers, builders and mum and dad investors. And, that’s for many good reasons. Keep reading to learn about what makes duplexes popular among investors and developers.
7 Top Reasons why Investors and Builders are Developing Duplexes
If you are wondering why investors are interested in duplexes instead of single family homes, here are the benefits:
#1 Maximum Use of Site & Increased Rental Income
You earn rental income when you invest in a rental property. But with duplexes, the rental income can increase two times. You can rent out both dwellings to different tenants, or occupy the one and rent out the other. It’s up to you. Either way, you are making income from your real estate investment.
Moreover, ample outdoor space, individual kitchen, bathrooms, and entrances make unique selling points. These features add to the value of duplexes, increasing your potential to make more money. Thus, with all this, you make the best use of your site.
#2 You can do a Torrens Title Subdivision
Once the duplex has been built, you can do a Torrens Title subdivision to make each dwelling completely independent from the other. Then you can develop a strategy that best works for you, one common trend we are finding that our investors and builders use is to, build the duplex, get it sub divided, live in one of the dwellings for 12 months to save 50% on capital gains tax and rent the other dwelling out, then after 12 months sell one of the dwellings and continue the duplex development strategy until you are building your duplexes unencumbered.
#3 Pay off Mortgage Quickly
Remember, dual occupancy offers a dual income for the price of a single piece of land. So real estate investors use that income to pay the mortgage.
Alternatively, if you choose to live in one dwelling and rent the other, you can use the rental income to pay the mortgage. It helps you get rid of unnecessary stress as you are able to manage your finances well.
#4 High Reselling Value
Investors usually get the help of an experienced duplex designer to create an impressive dwelling in the proximity to parks, public transport, schools and other amenities. It maximizes value of the property.
A duplex has a much higher reselling value than a townhouse or unit as it can be torrens title subdivided and therefore you don’t have to pay any strata fees, it can be appealing to first home owners, young families or retirees who want to have their own portion of land and property.
#5 Gain Real Estate Experience
Developing a duplex can be a perfect opportunity for newbie investors to know the ins and outs of the real estate market. By renting out your duplex property, you become the landlord and get to learn a lot about property management.
#5 Tax & Insurance Benefits
Real estate investments, regardless of their type, come with tax benefits for investors. If you own an owner-occupied duplex, you have two properties – the one you reside in and the other you rent out. The latter is treated like an investment property, and you reap the same tax benefits as you would with any other investment property.
Make sure you check with the legislation in your area of NSW. Understand all tax regulations that apply to rental properties in your region.
#6 Cost-Effective & Future-Proof Living
Most of the duplexes are developed in cost-effective neighborhoods. Although it is more costly than a single-family home, in the beginning, a duplex is extremely affordable in the long run. So when investors can’t afford the property in a costly neighborhood, they buy a duplex. Also, they are buying two homes for a bit more than the price of one, and rental income every month makes the dwelling even more affordable.
Another great benefit of a duplex development is increased security. Investors with small kids and seniors in their family that need special care mostly decide to move out in their duplex property right next door to ease the transition into independent living. It allows them to keep an eye on both the loved ones and tenants while still offering space and privacy for both parties.
#7 Leave a Small Carbon Footprint
Owners usually hire skilled designers and developers to craft a solid plan for their duplex. Professional duplex designers typically utilize experienced design skills to allow maximum natural sunlight to the north heating the house in winter and ensuring the dwellings aren’t too hot in summer.
Also, duplexes take up less room than two freestanding dwellings. So owners also save on land costs. It helps them in minimizing carbon footprint.
There is no surprise that both builders and investors in Australia have embraced the concept of developing an attached dual occupancy. The real gold in this type of investment is mostly in the equity.
So if you are planning to develop a duplex for investment purposes, it’s worth hiring an experienced duplex designer who deals with these type of developments day in and day out. Here at Duplex Building Design we are experienced and happy to offer you a tailored design to help you achieve your long term investment goals fast.