If you like the idea of achieving two incomes from one property you might consider buying a duplex. But what are the advantages of adding duplexes to your property portfolio?
Duplex vs Dual Occupancy
A true duplex is strata titled and this adds instant value as each unit is then valued individually and can be sold separately. There is a firewall which runs in a straight line separating the two units.
A dual occupancy can never have separate titles and is referred to as a house and granny flat because the second unit must be under 60sqm of living area. Some councils will only allow a relative to occupy the second unit for minimum rent, so buyers need to be aware of this.
Positive Cash Flow
You have positive cash flow when the rent you receive from your investment property is high enough to cover the interest on your mortgage, rates and insurance, with cash left over. Because a duplex consists of two dwellings you get two rents, one from each dwelling, and this increases the cash flow. The cost of a duplex is not much more than a four bedroom house package and the rent amount is considerably more. For a duplex property you should receive a minimum of 6% yield. If not you are paying too much for the property.
By purchasing a duplex which is then strata titled you create equity as the dwellings are then re-valued as two separate properties. The difference in the price you paid for the duplex and the amount it is re-valued for is called equity. Up to 90% of this equity can then be drawn out of the property and used towards the deposit on your next property to increase your property portfolio.
What Makes Duplexes Different?
Duplexes are freestanding properties, so you’ll also own the surrounding land. This can mean a higher capital gains return over the long term when compared with a similar-sized apartment where you don’t own any land.
Duplexes are great for investors, families (live in one and rent out the other) or retirees looking to downsize.
To learn more, go to Vizion Group’s home page, and request your copy of ‘Step by Step Guide to Duplex Property Investing’ eBook.
About Vizion Group Qld
With over 20 years experience in property investment Paula & Denis Harris and Tracy & Rudy Drent came together with the goal of helping others with a key focus on positive cash flow properties for the first time investor or for the experienced investor looking for that unique asset that complements any portfolio.