The Advantages Of Building A Duplex In Queensland

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Multi-family homes, encompassing duplexes, triplexes, and dual living/dual occupancy residences, are on the rise in popularity across Queensland and other regions of Australia. These multi-unit residential buildings are uniquely designed to accommodate two or more households, often sharing a single structure, and they bring a plethora of advantages to both the residents and the broader community.

For many who dream of property investment and creating passive income streams, these multi-family homes present an appealing option. Imagine a scenario where your newly built home not only serves as your personal residence but also offers the potential for an additional income stream. It’s an opportunity worth exploring.

In this blog, I’m going to explore the benefits of investing in and building multi-family residential properties, while also considering some reasons you might want to be cautious about such an investment.

Let’s get started.

What Are The Pros And Cons Of Building A Duplex?

Before delving into the specific pros and cons of building a duplex, triplex or dual-living home, it’s important to understand the broader implications of such a decision. Building a duplex is not just a construction project; it’s a strategic move that can impact your lifestyle, finances, and future planning.

This type of property investment comes with unique opportunities and challenges that differ significantly from single-family homes. As we explore these advantages and drawbacks, keep in mind how they align with your personal goals, investment strategies, and the lifestyle you envision.

Now, let’s take a closer look at the pros and cons of building a duplex to help you make an informed decision.

Pros include:

1. Ability to generate multiple income streams
2. Can provide you with a place to live
3. Maximises the potential of your land
4. Potential tax incentives
5. Reduces the negative impact of the housing shortage
6. Ability to house family members
7. Provides optionality for one or two titles

Cons include:

1. Difficult to find a suitable block of land
2. More work managing multiple tenants
3. Upfront costs are likely to be higher
4. Increased maintenance issues
5. Noise issues from the other occupants

I’ll dig a little deeper into each of these points below.

The Pros Of Building A Duplex Consist Of:

1. A Duplex Provides The Ability To Generate Multiple Income Streams

One of the key advantages of constructing a duplex, triplex, or dual occupancy property is the installation of separate electricity and water meters for each unit. This feature is crucial as it allows for the independent billing of utilities, facilitating the renting out of each unit to different households. This setup is highly beneficial in creating multiple income streams.

As with any investment or rental property, you have the flexibility to either hire a real estate agent or manage the property yourself. Initiating a lease agreement with your tenants, lodging their bond with the Residential Tenancies Authority (RTA), and taking out a landlord’s insurance policy are integral steps in your journey to becoming a landlord. These actions pave the way for you to generate a rental yield from your property, making you an active player in the property investment market.

If considering managing the property yourself, I’ve just discovered a service called RentBetter. As of 16/11/23, they have a 4.8 star review rating on Google from 245 customers so they must be doing something right.

According to their website, their software allows you to (and I quote):

This comprehensive approach to property management, whether done through a property manager or managed yourself, streamlines the process of handling multiple income streams from your duplex or dual occupancy property. It’s about balancing the responsibilities of a landlord with the potential for significant financial rewards. With the right tools and strategies in place, you’re well on your way to making the most out of your investment.

Now, let’s move on to the next advantage of building a duplex.

2. A Duplex Can Provide You With A Place To Live

Consider the unique benefit of this arrangement: why not lease out one side of the duplex and live in the other?

This approach not only allows you to tap into the potential of generating income from your property but also solves your own housing needs.

Imagine the convenience of living next to your investment, easily managing the property, and keeping a close eye on your tenants. You’re not just creating an income stream; you’re also securing a home for yourself in a property you know inside and out. It’s the epitome of a win-win situation, blending personal accommodation with savvy investing.

3. A Duplex Maximises The Potential Of Your Land

Opting for a duplex over a typical single-family home can significantly enhance the utility and value of your property.

By choosing a dual occupancy design, you effectively utilize a larger square meterage of your land, turning areas that would have been mere lawns or unused space into cash flow-generating living quarters.

This approach not only offers the opportunity for an additional income stream but potentially also increases the overall value of your property. In essence, building a duplex or dual occupancy home is not just about maximizing the physical space of your block of land; it’s about optimizing its financial potential and transforming it into a more valuable and versatile asset.

4. A Duplex Has Potential Tax Incentives

Highly recommend that you speak with an accountant who knows their way around property taxation laws and take the time to read this article provided by the ATO regarding ‘rental expenses you can claim’.

A notable advantage of owning a duplex is the tax benefits it offers, especially if you’re living in one half of the property. You can deduct half of your property’s overall expenses, like mortgage interest, as these relate to the rented portion of the duplex.

Additionally, all costs directly associated with the rented side, such as maintenance or depreciation, can be completely written off against the rental income you receive. This tax perk is unique to duplex ownership; in a purely owner-occupied home, you wouldn’t have the opportunity to claim such deductions. It’s important to remember, however, that depreciation deductions apply only to the rented unit and not to the one you’re living in.

As mentioned earlier, it’s important to consult with an accountant to ensure that the information provided here is still relevant at the time you are reading it. We strongly advise against making any investment decisions based solely on the content of this article. Please remember, this content is intended for entertainment purposes only.

5. A Duplex Reduces The Negative Impact Of The Housing Shortage

Queensland in particular is currently facing a housing shortage, many properties that are listed for rent have 50 or more people show up to the open homes each competing to secure the property.

Many of the people who attend these open homes are then offering over and above the asking price of the property and/or offering to pay multiple months rent in advance just to secure somewhere to live.

It’s a really unfortunate problem the state is facing and is all occurring due to demand for rental properties outweighing the current supply.

By building a duplex or any property that can house more than just yourself, you are effectively helping to reduce the housing supply side issues that Queensland is currently facing and are also opening yourself up to the possibility of being offered an above-market rate for your rental property.

It also feels good to provide others with somewhere to live so you can pat yourself on the back for that one.

6. A Duplex Has The Ability To House Family Members

As the years go by our loved ones grow older and we begin to consider the options we have that can allow them to live closer to us.

While not ideal for that mother-in-law you never quite got along with, perhaps a dual occupancy home is just what you need to give you that peace of mind that your parents or grandparents are always only just a few meters away when they might need your helping hand.

Alternatively, you might be considering going halves in a property with a sibling, the opportunities here are abundant.

You and your sibling could both live in one side of the property while renting out the other, which could help you both pay down the mortgage faster.

Or you might both decide you’d like to have one of the units each while still having the ability to rent out individual rooms within each of your units.

Embracing a dual occupancy home presents a range of flexible living arrangements, whether it’s keeping family close, co-investing with siblings, or optimizing rental opportunities, all while nurturing family bonds and financial growth.

7. A Duplex Provides Optionality For One Or Two Titles

In Queensland, the way a duplex is titled can significantly impact your future options. A duplex built on a single title is considered one property and must be sold as a whole. However, if you’re considering selling each unit separately, you can explore the process of obtaining individual strata titles for each unit.

Strata titling in Queensland involves certain costs and legal procedures. These costs can vary depending on the complexity of the property and the specific requirements of the strata titling process. This process typically includes surveying, legal fees, and filing fees, which can add up.

To navigate this process, it’s advisable to consult with a specialized strata lawyer or a property surveyor who can guide you through the legalities and costs involved. They can provide tailored advice and manage the titling process, ensuring compliance with local regulations and smoothing the path towards individual unit sales.

Side Note: Where Are You Saving Your New Home Inspo?

Looking for a place to organize and store the growing collection of notes and ideas for your new home?

We got you.

Back when I was planning my first home I had the same problem, notes everywhere with no structure to keep track of them.

I was using Evernote, Excel, sheets of paper in my office and to-do list apps, but then I realised something, if I’m facing this problem then surely many others must be also. So I set out to build an online home planning service where you can create a vision for the new home you’re planning by storing all of your notes and inspiration in one easy-to-access place.

To achieve this I’ve developed a tool named IdeaDrop, which is available at no cost. It allows you to conveniently store all your notes and inspirational images for your new home in one place. This way, everything is organized and easily accessible when it’s time to start discussions with your builder, ensuring all your ideas are neatly compiled and ready to go.

Curious to learn more about IdeaDrop?

This article digs into what it is and how it can help you visualise your dream home.

Alright back to it.

The Cons Of Building A Duplex Consist Of:

1. It Can Be Difficult To Find A Suitable Block Of Land For A Duplex

Not every block of land is going to be suitable for building a duplex. In Brisbane, the local council requires that your block of land be zoned either Medium-density or Low-Medium density as per this article.

Brisbane City Council then also requires that the duplex you intend to build upon your land meets the Dual Occupancy code contained within the Brisbane City Plan.

The Gold Coast City Council also has its own Dual Occupancy code.

Based on these council requirements, it’s important to ensure you have a clear understanding of each requirement set out by your local council prior to purchasing any blocks of land, as this will help prevent any unwanted issues from arising.

If you’re struggling to find the right block of land to suit your dual occupancy or duplex project, take a minute to check out our guide on finding the perfect block of land for your dream home.

2. Duplexes Create More Work Managing Multiple Tenants

Owning a duplex inherently means managing more tenants. While this can be beneficial in terms of rental income, it also increases the potential for complications, especially if you encounter problematic tenants. Managing a duplex can be doubly challenging if both units are occupied by tenants who are difficult to deal with, leading to a range of issues from maintenance headaches to conflict resolution.

If you opt to self-manage the duplex, be prepared for the additional workload. This includes tracking two separate rent payments, managing two sets of bond payments, addressing twice the number of maintenance requests, and ensuring both sets of tenants maintain and clean the property adequately at the end of their leases.

On the other hand, if you choose to have a real estate agent handle the property management, remember that this typically incurs separate management fees for each unit. While this adds to the operational costs, it can significantly reduce the stress and time commitment associated with directly managing multiple tenants in a duplex setting.

Ultimately, while owning a duplex has its advantages, it’s important to weigh these against the increased complexities of managing multiple tenants, ensuring you’re prepared for the responsibilities that come with duplex ownership.

3. Upfront Costs To Build or Buy A Duplex Are Likely To Be Higher

The main reason that a duplex or dual occupancy home will be more expensive to build than a regular home is due to the requirement for these properties to have a fire-rated wall installed between the two dwellings.

These walls are known as an Intertenancy wall system (aka Party wall) and are designed to give the occupants of unit 2 additional time to escape the property if a fire were to break out in the adjacent unit by delaying the time it takes for the fire to spread throughout the entire duplex.

Other factors that contribute to the higher cost of building a duplex include the need for double amenities and utilities. Unlike a single-occupancy dwelling, a duplex necessitates two sets of many components. This means equipping each unit with its own oven, cooktop, and separate plumbing and electrical connections. Importantly, each unit will also require its own laundry facilities, adding to the overall cost.

Beyond the basics, there are additional considerations such as installing separate heating and cooling systems and water heaters for each residence. Safety features like smoke detectors also need to be duplicated, ensuring each unit complies with safety regulations.

The initial investment for a duplex or dual occupancy home is higher due to essential safety features like fire-rated walls and the need to duplicate amenities and utilities in each unit. These factors are vital for ensuring the safety, comfort, and independence of each residence, contributing to the overall cost of such properties.

4. Duplexes May Have Increased Maintenance Issues

The presence of double the appliances, fixtures, and tenants in a duplex naturally leads to a higher volume of maintenance requirements. This increase in upkeep is a standard aspect of property ownership and an unavoidable part of the landlord’s responsibilities.

However, there is a silver lining. All maintenance costs can be deducted from the rental income for tax purposes, provided the property is rented out and the maintenance is directly related to the tenanted section. This financial relief can significantly mitigate the impact of these increased maintenance demands, ensuring that the property remains a viable and profitable investment.

5. You May Experience Noise Issues From The Other Duplex Occupants

This factor primarily becomes relevant if you choose to reside in one half of the duplex or dual occupancy property while renting out the other side.

We’ve all been guilty of having the radio, TV or some music playing a little too loud at some time or another so it’s only reasonable to expect that there will be occasions where the tenants in a duplex will have music playing that may very well annoy you.

Don’t allow this one factor to put you right off, there are solutions for every problem.

If this does occur you can always just go and have a friendly chat with your neighbour and ask them to be mindful of the close-quarters property you each reside in.

You may even find that the neighbours can have their music playing and you might not even be bothered by it due to the fact that the fire-rated Intertenancy walls are likely to block out some of the sound that will travel into your side of the property.

If noise concerns are still a concern to you, you may also like to consider adding soundproof insulation to the internal and external walls of your unit to reduce the impact of unwanted noise reaching you.

There are many acoustic-rated insulation suppliers out there, one that I’ve both installed myself and ordered while employed as a new home estimator is the Soundscreen product produced by Bradford.

Check out the quirky video below that the Bradford Soundscreen team uploaded to youtube 😆.

The TLDR Because You Skimmed The Article

Overall, dual occupancy homes offer a number of benefits for those who are looking to build a new home and really want to maximise the opportunity your block of land has to offer.

From the ability to provide an additional income stream to addressing the housing shortage, these homes can be a great option for those who want to take advantage of the many benefits they have to offer.

If you’re interested in building a dual occupancy or Duplex home, be sure to research the council requirements in your area and have a clear understanding of the tax implications that will be applicable to you.

Also, consider working with a reputable builder like those available through our BuilderConnect program.

At Foresight Home Planning, our goal is to help you plan your dream project. To achieve this we’ve developed an innovative home planning method aimed at uncovering your deepest desires and then identifying the most suitable builder to turn your vision into reality.

If you’re uncertain of just where to begin on your journey, help yourself to our article that lays out a clear and easy to understand guide on what your first steps to building a new home should be.

Best of luck with your Duplex!

**Disclaimer: The information provided in this article is based on publicly available information. While we strive to ensure the accuracy of this content, Foresight Home Planning Pty Ltd does not guarantee the completeness or reliability of the information. This article is intended for entertainment purposes only and does not constitute professional advice. Foresight Home Planning does not accept liability for any loss, expenses or damage incurred as a result of reliance on the information contained herein. Readers are advised to conduct their own research and seek professional advice before making any decisions related to property purchases, contracts with builders or investments.

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