Why Buying a Duplex is a Good Idea

  • Posted 14 May

Why Buying a Duplex is a Good Idea

If you’re not familiar with the term “duplex”, these are two-home units that share a common wall. Typically the two units are sold and owned together, but occasionally you may find a duplex with separate titles for each side.

Many home buyers don’t consider a duplex when thinking about buying a home, but duplexes can offer multiple benefits. They often hold their value well and can provide good rental income.

Below are some of the reasons you may want to consider purchasing a duplex, particularly if you’re looking to expand your property investment portfolio.


Financial benefits of buying a duplex

Often duplex financing can help buyers secure a home in a strong market. If your ideal neighbourhood or suburb seems out of reach, a duplex can help you become a homeowner in the location you desire.

If you purchase the title to only one half of the duplex, you’ll be able to get the property at a lower price than a detached home in the same neighbourhood. And if you purchase the entire property, you’ll have rental income from the other side to help your mortgage finances.

Duplexes are great for families on a budget and retirees looking to downsize. You’ll get a great property for about half the price of a stand-alone house. This means you can either save some serious cash or move up to a better area than you thought you could afford.

Another advantage is that 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.


Potential issues of duplex ownership 

In many cases owning a duplex is a great financial decision, but there are a few issues you’ll want to be aware of.

Most importantly, you should look for neighbourhoods with fewer duplexes scattered in among single-family dwellings. Areas where most of the homes are duplexes tend to have lower property values and will not necessarily be a good return on your investment.

You’ll also want to avoid duplexes where one unit is at the front of the street and one is in the back of the lot. If you live in the front half of a duplex with this layout, your neighbours will be walking past your windows when they come home at night and you’ll feel like you have less privacy.

If you purchase only one side of a duplex, you’ll always have to negotiate with your neighbours and may be limited on changes you can make to the exterior of your property. Also, your property insurance will cover both sides of the duplex, so you’ll have to agree on a policy and split the costs.

On the other hand, if you decide to buy both halves, this puts you in the position of being a landlord. You’ll be able to claim the rental income to benefit your mortgage finance, but you’ll have to hire a property management company or do all the work to make sure you adhere to leasing laws and regulations governing landlords and tenants.

The right property can be both a great place to live and an excellent financial investment, but buying any home requires research and planning. Contact our home loan experts at Australian Credit and Finance to explore your options for home loans.

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