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Why buying a duplex is a good idea

A ‘duplex’ is a two-home unit that shares 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.

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

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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 may be able to get the property at a lower price than a detached home in the same neighbourhood. If you purchase the entire property, you’ll have rental income from the other side to help your home loan finances.

Duplexes can be 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 into a better area than you thought you could afford.

Another advantage is that duplexes are freestanding properties, so you’ll also be able to 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.

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Potential issues of duplex ownership

white-duplex-front-yard

In many cases owning a duplex is a great financial decision, but there are a few issues you’ll want to be aware of. Consider looking for neighbourhoods with fewer duplexes scattered 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 may also come across duplexes where one unit is at the front of the street and one is at the rear of the lot. If you live in the front half of a duplex with this layout, your neighbours may walk past your windows, meaning you may feel like you have less privacy. If you purchase only one side of a duplex, you’ll always have to be mindful your neighbours.

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 help pay off your home loan, but you may need to hire a property management company or do all the work yourself to make sure you adhere to leasing laws and regulations governing landlords and tenants.

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The right property can be both a great place to live and an excellent financial investment, but buying any kind of home, like a duplex, requires extensive research and planning. Contact our Home Loan Specialists at Lendi to explore your options for home loans.

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Tags: first home buyer, investment property, downsizing, saving

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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