Duplex Houses: Definition and Investment

It’s undeniable that you’ll need to make quite a few decisions before finalizing a property investment. Perhaps the most important is to determine which type of residential property is most suitable for you. However, there are a variety of residential properties available today. There are duplex houses, for instance. A duplex house is a type of residential building wherein two households can live independently in separate structures. Generally, in Australia, the structure of a duplex is often two-story or connected side-by-side with a common central wall.

As with any other type of real estate investment, duplexes also have pros and cons. One advantage to this kind of property is that you’ll receive a helping hand with your mortgage payment each month since there will be tenants living on your property. There are, however, potential drawbacks such as the kinds of tenants you might have to deal with. They might be disturbing or worse, cause a problem in some cases. On another note, the cost to build a duplex is another important factor to consider. It can be influenced by different factors, such as the location of the property. In general, the cost of building a duplex may start as low as $150,000 and go up to more than a million dollars.

It’s obvious that, before buying a duplex, it’s best to understand what it entails and calculate what it would cost. In this way, you can see if it is the right venture for you and you won’t waste your hard-earned resources. Throughout this article, we will discuss all you need to know about duplex houses. First, let’s look at what is a duplex.

What is a Duplex?

As a real estate term, a duplex, also known as a multi-family home, refers to a building that has two residential units. Simply put, it can provide habitation for two households. Hence, the name duplex.

When compared to other types of residential properties, duplex houses can easily be identified. Some of the features of a duplex building include these.

1. There are two separate entrances and driveways to each unit.
2. A common wall separates the two units, whether the building has two stories or is side by side.
3. The entire property may be listed in the market as either residential, a multifamily type of property, or even commercial.
4. Each unit has its private amenities, such as a living room, kitchen, bathroom, and bedroom.
5. The units closely resemble each other, whether it is with the design, or with the structure.

As for the construction of a duplex, quality yet affordable materials are most often used. But regardless, everything depends on the financial resources and investment risk tolerance of the property owner. In addition to preparing for the budget and the construction, a few things must be taken care of when building a duplex.

Why You Should Buy Duplex?

A duplex is a good investment for a variety of reasons. An important one is that it can help you pay off your mortgage payments. If you rent out both or just one of the units, you can simply use the rental income to cover your monthly mortgage payment. Additionally, investing in a duplex building can also save you money on taxes since income-generating rental properties are eligible for tax deductions.

Furthermore, you can have two residential properties in one investment with a duplex. As opposed to building a single-family home on a different plot of land, this makes it more affordable. Particularly when you look at things from a long-term perspective. In addition, one obvious benefit of investing in a duplex house would be the income that it would bring in. You will have a great monthly cash flow, regardless of whether you rent out one or both units. The same applies if you plan to sell the property as a whole, you can earn a decent income from it.

What are the Types of Duplex Houses?

Even though duplexes can have two stories or be constructed side-by-side, they generally fall into several categories. The different types of duplex houses are listed below.

1. Units are single-story and built next to each other: On the ground floor, there are two residential units adjacent to each other, separated by a common wall. Duplexes of this type are typically preferred by households with children and older adults. This is because there are no stairs or balconies, which can sometimes be dangerous.
2. A two-story building with one unit on top and one on the bottom: The tenants reside on separate floors due to the duplex design, which divides up the units on each floor. There may be different entrances for each household living in each unit at times.
3. Two-story units that are side-by-side: With this type of duplex house, residents have their own two-story home. In this scenario, the properties are then constructed next to each other with a shared wall separating them. The concept is usually most effective on small lot sizes.
4. Ranch style: A duplex house like this is often built near high altitudes and earthquake-prone zones. It is typically a one-story structure that is quite simple to construct and maintain.
5. Mansion style: There are high ceilings and windows in this duplex property, making it up-to-date with the times. It also has modern amenities and features that are not so common in your average duplexes.

What is the Difference between a Duplex and a House?

Choosing between a duplex and a house can be a difficult decision. However, it is quite easy to tell the difference. When you’re buying a duplex vs. buying a house, you’ll notice that they differ in their construction and in their ability to accommodate a variety of household units.

As mentioned earlier, a duplex is a residential property consisting of two dwelling units. Each unit is divided by a common wall and has different access points for the households residing in it. Houses, on the other hand, are single-family residential buildings. They are typically inhabited by one household. Houses also have one access point and are not attached to another unit.

Simply put, a duplex is two linked houses separated by a common wall, whereas a simple house consists of one unit so that it is by itself and detached from other housing units. In spite of these subtle differences, a duplex building and a houses share some similarities. These two structures both serve as residential dwellings. These properties provide a private living space, such as a bedroom, a bathroom, a kitchen, and a living room.

What are the Benefits of Buying a Duplex?

When you purchase a duplex, you get a number of benefits that will certainly prove to be worthwhile for the amount of money you spend. Here are some of the benefits you get when you buy a duplex:

1. A duplex house is affordable: Duplexes are usually cheaper than single-family homes, especially when you plan to buy half of the property. This is far from an investment in a single-family home, which is quite expensive nowadays. In fact, it remains affordable even if you plan to buy the entire duplex property since you’re already purchasing two units in one transaction.
2. It provides privacy: Duplex houses offer privacy as they isolate one unit from the other with a centre wall, unlike other residential units where only rooms are rented out. Both units have their own living spaces and utilities. These are not shared with any other residents.
3. Duplexes can give you good cash flow: In the event, you rent out one or both units, you will have a steady source of income from rental income. Not only does this allow you to produce a good profit, but it can also assist you in making your mortgage payment.
4. Live in close proximity to elder family members or other relatives: Buying a duplex makes it possible for you to live with your relatives. This is convenient when you want to be with elderly parents or family members and still maintain your privacy on the other side.
5. Get to know the business of renting out properties: Leasing one or two units will allow you to experience what it’s like to be a landlord firsthand. You can then learn quite a bit along your investment journey, particularly in real estate.

What are the Potential Pitfalls of Investing in Duplex?

Investing in a duplex does come with some disadvantages, which are the same for any property investment. These are a few of the potential pitfalls of investing in duplexes:

1. There are local authorities that don’t permit the construction of duplexes: Depending on where the property is located, some local governments do not allow such types of residential properties. Before spending any money on the land and construction, it’s best to consult the authorities.
2. Take on more responsibilities as a landlord: If you lease out either or both units, you will have more to deal with as a landlord. For instance, you will have to deal with home inspections or repairs on occasion. Not to mention that paperwork needs to be done.
3. Income might not be a consistent source: Renters may come and go and if you don’t have tenants on your property, you won’t have an income to look forward to each month.
4. Tenants might be a problem: Tenants can cause problems at times. It may be that they are late on payments, cause problems with the property itself, or even cause a disturbance with you or with another neighbour living on the opposite side of the property.

What should You Know about Buying a Duplex?

Besides the pros and cons, there are a few things you ought to know before buying a duplex. As an example, there are minimum site requirements in Australia for duplexes.

In New South Wales, specifically, there must be a minimum of 400 square meters per block, or the minimum lot size established by the council. These blocks must also be at least 12 meters wide, and structures must have a minimum side setback of 0.9 meters. Furthermore, all dwellings must be at least 5 meters wide, face a public road, and cannot be built behind another property. There must also be at least one parking space per dwelling.

This compliance is due to the Low Rise Housing Diversity Code, which began on July 1, 2020. Yet, this is the case in Australia. The laws and regulations may vary depending on where you live or where your property is located.

Besides knowing the minimum site requirements, here are a few other things worth knowing before buying a duplex:

1. Take the time to find the right location: Such properties may not be available in your desired area, for instance. This is because some local governments don’t allow such units, as previously mentioned. As a result, you’ll have fewer options for the location itself. Therefore, you should look into it.
2. Don’t forget the essential services: Check the accessibility of essentials such as electricity, water, internet, and sewerage. If these things are taken lightly, they can cause a huge setback.
3. Prepare taxes: Property owners may be able to apply tax deductions to their rental properties. If you want to know what taxes you need to pay, it’s best to contact your local authorities.

Even though these are only a few of the many things to consider when buying a duplex, you can always seek assistance from an expert. A professional can help you navigate the process along with handling all the paperwork involved.

Can You Own Half a Duplex?

You can own half of a duplex. This, however, depends on the title of the property. It is only possible to buy and own half of the duplex when the property has been divided into two separate titles.

Can You Convert a Duplex to a Single Family Home?

A duplex can be converted into a single-family home. There are, however, associated expenses with making such a major change. In addition to the expenses, there are also a lot of other things to consider. It’s a lot of work from demolition to layout tweaks to adding and decorating areas. The following is a brief guide on how you can convert a duplex into a single-family home.

1. Determine whether there are actually components that cannot be removed from the property. Discuss this with an expert.
2. Hire an architect to help you come up with a new floor plan for the house.
3. Consult the local authorities to learn what kind of permits you need for your construction.
4. You can oversee the construction yourself, or hire a construction manager to take care of everything.
5. Then demolition is essential. The removal of certain areas is generally part of the process, such as a second kitchen and rooms you aren’t interested in keeping.
6. It’s time to restructure and establish what was laid out in the floor plan.
7. Then add necessities like plumbing, electricity, and heating.
8. The final step would be to put the finishing touches on the entire property by decorating the entire house.

It’s not easy to convert a duplex house, but you can do it smoothly when you work with a contractor who knows what they’re doing. This way, you can have the single-family home you desire in just a few short months.

Can You Build a Duplex in Australia?

Australia permits the construction of duplexes. However, it is important to note that there can be differences in rules and regulations between each state. For instance, New South Wales has set minimum site requirements as mentioned previously. On the other hand, Queensland has developed its own standard for duplex housing, which can be found on the Queensland government website. It is entitled Design and Siting Standard for Duplex Housing and describes the requirements and performance criteria of a duplex.

How to Design a Duplex House

Depending on your preference, there can be different ways to design a duplex house. In fact, you can simply search Duplex Home Designs online to get some inspiration for your own property. Yet, regardless of the style you ultimately select for the duplex, consider the following factors.

1. Your budget: It is important to know how much to spend on duplex designs. In this way, you’re less likely to overspend or end up with insufficient money to cover the costs at the end of the day.
2. Property location: Select a style that is appropriate for your location. The local climate, privacy, sunlight, and even the view may also be considered here.
3. Local planning restrictions: Local authorities may set rules and regulations regarding the aesthetics or exterior design of a property. Be sure to check about this in advance to avoid any problems down the road.
4. Landscaping: Landscapes for both units should serve to emphasize the differences between them, and not be mirror images of one another.

On another note, the costs associated with designing a duplex building can vary. There may also be other charges besides the actual style and materials, especially if you hire people who can offer those services.

How Much Does It Cost to Build Duplex Homes?

A duplex home in Australia can cost between $550,000 and $1.3 million excluding the cost of land. This includes everything from the materials required to any experts you may hire during the process. Clearly, there are a number of factors that can influence the total amount. Here are some factors that generally impact the cost of building a duplex.

1. Land size and location: The amount of land that is purchased and the demand within the area where the duplex will be situated can greatly influence its overall price.
2. Materials: It is important to consider the type and quality of materials used when calculating the total cost. This is because there will be varying needs for different types of structures, such as windows, roofs, paint, doors, foundation, and flooring.
3. Labour: You will work with experts in this process and may be charged for their services. The list could range from the architect you hire to the construction manager, and even the labourers themselves.
4. Layout: The floor plan or the overall structure of the duplex building impacts the cost significantly, as the materials needed, etc. are dependent upon it.

Do You Pay Stamp Duty when Building Duplex?

When you build a duplex, you have to pay stamp duty. In Australia, stamp duty is a tax imposed by the government on a range of personal and business assets. This may include shares and units, land and buildings, as well as leasehold improvements. Similar to a property tax, the government collects this tax to support government programs and services.

The rates for the stamp duty may differ pay state or territory especially since there are different regulations to follow. But in general, it is determined by the final purchase price of the asset, type of property, and the purpose of that property.

Where is the Best Place to Invest in Duplex?

It is understandable how the location of the property influences an investment. Therefore, it’s crucial to identify the best places to invest in property. In Australia, the following are some good locations for investing in duplexes.

1. Campbelltown, Sydney, NSW
2. Wynnum, Brisbane
3. Burleigh Waters, Gold Coast
4. Tweed Heads, Gold Coast
5. Lake Macquarie East, NSW
6. Croydon, Melbourne

In conclusion, it is important to know more about the duplex and what it involves so that you can be prepared all throughout your property investment journey. Nonetheless, you can always ask the experts for assistance to ease the process along the way.