Silvertail Property Group's Nidal Rasheed shares the basics for building a duplex for beginners—a strategy that could help an investor avoid unnecessary costs and fees while creating equity quickly.
Blogger: Nidal Rasheed, managing director, Silvertail Property Group
Keen to build equity through property investment, but short on time? A duplex may be the right investment strategy for you. I’ll help you discover the benefits and things to consider before you start.
A duplex is two separate homes built on the same title that has the ability to be retitled as strata titles after construction is complete. 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:
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 to 18 months. Alternatively, each property could be rented for $350 to $400 per week, achieving a high return of 6.1 per cent to 7 per cent.
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:
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 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: Take action and make it happen. Once you've decided that this is the ideal strategy for you, take action and make it happen!
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.
Equity is the difference between the market value of a property and the amount owed to a lender that holds the mortgage or the loanable amount.
Equity is the difference between the market value of a property and the amount owed to a lender that holds the mortgage or the loanable amount.
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