Duplex: Creating Equity with a High Growth Investment

A duplex is two homes built under the one roof and on the same title. It maximises the potential of the land and doesn’t require subdivision for the two properties to be built. Advantages of building a duplex include:

Reduced build costs
Lower stamp duty, holding fees, insurance costs and council rates
No strata fees
Higher tax depreciation

But the greatest advantage of a duplex is the ability to create equity quickly with a high rate of return on your investment.

Example: The land, cost to build two homes, subdivision fees and council fees could cost you around $600,000. Once the houses are built and subdivided they could be sold for $350,000 each, making you a profit of $100,000 – all within 12-18months. Alternatively, each property could be rented for $350-$400 per week, achieving a high return of 6.1%-7%.

Generating a high return from a duplex sounds great, but you need to consider if this type of investment suits your circumstances.

Top 10 Things to Consider:

It’s a high growth and high yield investment, but with that comes higher risks than just buying an existing house or individual house and land package.
A duplex is a positively geared investment with the potential to create equity in a calculated way.
Buying purely on price tag can be a pitfall - you get what you pay for.
You must have the capacity to cover a 20% deposit i.e. $100-$150,000 in equity. It can be achieved with a lower deposit but that would create higher risk (discuss this with you advisor).
You must be able to service a large loan.
Great for someone who is time poor and wants to invest strategically.
Creates the ability to fast track your wealth, so it’s great for retirees.
You have the option to rent and achieve an ongoing high interest return.
Only certain councils will allow duplexes. NSW and Qld are more favourable to duplexes because of population growth the housing shortage.
Seeking help from professionals means you don’t have to do it all by yourself. You can save time and avoid mistakes.

So What’s Next, Where Should you Start?

Step 1. Meet with an advisor to understand your financial capacity and the tax implications.

Step 2. Decide on your end goal - consider what do you want to achieve through this investment. If you don’t it’s like getting dressed and hopping in the car, but not knowing where you are going!

Step 3. Research and develop a plan of action. You can’t buy property overnight so start researching and making steps towards your goal.

Step 4. Meet with a trusted property investment company who can discuss the options with you and help facilitate the investment.

With the ability to generate equity quickly, and provide a higher rental yield per square metre, a duplex is the smart way to invest. However, investing in property is not ‘one size fits all’, by understanding the things to consider when investing in a duplex you can decide if it’s the best way for you to create wealth.

Silvertail Property Group have a great selection of duplex options in Adelaide, Melbourne, Sydney and Brisbane. We can help you invest in a duplex - the smart way! Contact Silvertail Property Group for more information.

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