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Duplex Pros/Cons

Discussion in 'General Property Chat' started by Liam Blanden, 12th Dec, 2015.

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  1. Liam Blanden

    Liam Blanden Well-Known Member

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    Hey guys.

    I am still doing research into different property types and the pros and cons of owning. Anyone able to shed some light on Duplex purchases. This is taking into consideration purchasing both sides.

    Pros
    Large land size for future devs.
    Great yields.
    Ability to live in one and reno the other.

    Cons
    Low to non existent capital growth.
    Possible hassles with tenants and noise ect.
    Susceptibility to property loss or damage of both properties from same issue.

    Anything to add super-investor nerd-friends?

    Thanks in advance. Oh and
    XO :p[​IMG]
     
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  2. thatbum

    thatbum Well-Known Member

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    Are you talking about owning a duplex pair on one title?
     
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  3. HUGH72

    HUGH72 Well-Known Member

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    Pros
    Usually on a decent sized block.
    Possibility of adding additional buildings/units due to land size.
    Great yield compared to a house.
    Helps to diversify your rental income stream as it's less likely both will be vacant at the same time.
    Cons
    Generally they are not individually metered so in Qld at least you will have difficulty charging tenants for water.
    You may have to pay for mowing, yard maintenance etc for common areas.
    Easy to rent in a tight rental market with high rents but harder when the vacancy rate in an area is higher.
    Lower standard of tenant compared to a house and more transient tenants, a generalisation but that's been my experience.
    I haven't tried to sell one but I would imagine depending on the location they may take longer to sell as your market is most likely other investors.

    In summary it looks like I have listed more on the negative side but I am a fan of duplexes as the rental return is significantly higher than for a standard house in a similar suburb.
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    I bought my pair for 250k, it's rare to see them online for under 300k - 330k.

    Good yield as you say. Future tripled block.

    Has benefit of still receiving rent when one side is vacant.

    Haven't had any troubles between tenants. Lower standard though for sure.

    Disadvantage in Adelaide is you get a separate council rates and land tax bill for each side, even if on one title.
     
  5. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I would be buying whatever stock that is most prevalent and sought after and has the highest demand by the demographic in the area. Buying contrary to that might get better yields but CG will in many cases likely take a hit.
     
    Last edited: 13th Dec, 2015
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  6. big max

    big max Well-Known Member

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    If you are talking about owning both and the land itself, then yes then I love duplexes as an IP for the reasons others have mentioned.

    In a nutshell you essentially get a better yield whilst holding land that will appreciate at the same rate as the same size land with a freestanding house.

    Usually the price of the duplex does don't fully reflect this additional value. So as a value investor I love them!
     
  7. big max

    big max Well-Known Member

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    Not if your end aim is to either hold to develop or to sell for someone to develop. All of the duplexes I buy are on land that has development potential...
     
  8. big max

    big max Well-Known Member

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    All my qld duplexes have seperate water meters. Some ive had to pay a small fee to have them meet standards but it's well worth it.

    If you buy in the right location (ie near the beach) they are very easy to rent. Maybe I'm lucky but I've had very decent and stable tenants. I've found the tenants are often professionals with decent jobs who want something a little bigger than a standard apartment, in a good location, but don't see the need in paying form a whole house.

    Agree it may take longer to sell as your buyer market is smaller. That's why my duplexes are long term holds. Great yield with a long term land value sale...
     
  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Hi @big max,

    I agree with you mate. Buying a site with a view to develop is a whole different ball game with different parameters that need to be taken into consideration.

    What I was referring to when I said to invest in what the demographic wants and what is in demand is with regards to buying an ip in general.
     
  10. big max

    big max Well-Known Member

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    Yep noted and agree. Duplexes are harder to sell the market for end buyers is smaller. That's why I like them though as you can really use that to push for a lower price.

    Over time by the way, the rise of Airbnb should further help push up the value due to ability for an owner to live in one and get a very high return managing the other.
     
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  11. Scott No Mates

    Scott No Mates Well-Known Member

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    Really? Try telling that to anyone in inner Sydney. Who has $1.8+ for a single dwelling, vs $1.4 for a semi?
     
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  12. Scott No Mates

    Scott No Mates Well-Known Member

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    Unpros
    Duplexes = subdivision, limited additional future development potential.

    Uncons

    Capital growth mimics single dwelling houses
    Why disclose to anyone who owns the other side? No different from normal neighbour disputes.
     
  13. dabbler

    dabbler Well-Known Member

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    I would not have thought to try and buy a whole duplex.

    In regard to price, not really, lot of people do them in Sydney specifically to sell, anyway, in the price regard, out of interest I went to a few townhouse sales in Sydneys South, I kid you not when I say they pay the same price for a strata town house as a free standing house of similar age in similar area, I was shocked, this has happened in this last cycle.
     
  14. big max

    big max Well-Known Member

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    I'm the opposite! I would not have thought to just buy one duplex unit, as opposed to both (as well as the underlying land) :)
     
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  15. dabbler

    dabbler Well-Known Member

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    Well, inSydney you would be hard pressed to get a situation where both were selling at the same time, you would have to be doing this in a place where lot of investors own both, or family that own both.

    Also in a lot of areas of Sydney, duplex can be torrens titled.
     
  16. Liam Blanden

    Liam Blanden Well-Known Member

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    Amazing info as usual guys, thanks a bunch.

    I am only really asking because in Adelaide there are often duplex sales in high yield areas such as the one below.

    24 & 22 Midlow Road, Elizabeth Downs SA 5113 - Duplex for Sale - 2012460703

    In this case the houses themselves are not of great quality and i believe are about 40k over priced for each, but the place is sitting on a whopping 1300m2.

    For something that returns 7.5% and has that much land for future development or subdivision i would be ok with this property being rented till it falls over.

    Yes, it is in a poo area and yes, the tenants could cause problems, but with a bit of luck this sort of place could be a real cash cow.

    Thoughts?
     
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  17. Leo2413

    Leo2413 Well-Known Member Premium Member

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    [QUOT"Liam Blanden, post: 121170, member: 3104"]Amazing info as usual guys, thanks a bunch.

    I'm no expert in SA and i'm sure the SA gurus will chime in. so this is just my general opinion.

    In this case the houses themselves are not of great quality and i believe are about 40k over priced for each, but the place is sitting on a whopping 1300m2.

    Paying 80k over priced as you indicate for anything is a huge deal. I would need to ascertain from the get go that there is a high chance of great value I will be able to create in the deal in the short to medium terms. Value that will far exceed the premium I am paying. I know this is will depend on the individual's strategy but paying 80K above market value without a good indication from DD that I can make a great return on the deal is a huge problem businesswise for me. Size of the land doesn't matter if it cant bring back greater value than it was paid for.




    For something that returns 7.5% and has that much land for future development or subdivision i would be ok with this property being rented till it falls over. I would just make sure that my DD indicates there actually will be some great value to extract from the deal be it now or in the medium term. Otherwise your already starting off 80K behind, risk increased with no legitimate, solid plans in mind for the deal.

    Yes, it is in a poo area and yes, the tenants could cause problems, but with a bit of luck this sort of place could be a real cash cow. I wouldn't bet 80K on luck, in an area you think is inferior. Just make sure you do your DD on the development feasibility options side of things. Otherwise it could end up being a cash drainer from hoodlums with no CG in sight.

    Just my opinion.
     
  18. Sonamic

    Sonamic Well-Known Member

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    I've seen duplex pairs in similar area for 100k less. Yes they are only 3 bed duplex pair on 1,000sqm block of land. But at the end of the day 120k per unit is cheaper than 170k for a punt on yield in Adelaide.
     
  19. Liam Blanden

    Liam Blanden Well-Known Member

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    The affordable homes program in Adelaide occasionally puts these duplexes for sale for around 250k so i believe that this is more a price i would pay for a property of this calliber.

    Here is a perfect example that sold recently.

    12 And 14 Bartlett Street, Elizabeth Downs SA 5113 - Semi-Detached Property for Sale - 2012295744

    Similar yields, still a large block but almost 100k cheaper. That first example i stated was a terribad example :p but im looking at a more general opinion of duplexes as a property type.
    Thanks for the tips all the same @Leo2413 i will write them in my property book.
     
  20. Sonamic

    Sonamic Well-Known Member

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    I agree. I like them too. Duplex pair purchases are my next choice in my journey.