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Developing A Duplex, Two houses, two rents, two sales: too good to be true?

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Your Investment Property | 16 Mar 2017, 12:00 AM Agree 0
Duplex development is all the rage at the moment, and for good reason. Turning a single block into two homes can earn impressive instant capital and virtually double your rental return. The question is: where do you start? Pauline Hatch reports.
  • Mr Cautious | 23 Nov 2018, 01:22 PM Agree 0
    I would be very cautious with your comments about cash flow and comparing it to a single piece of land rental income to a single home!
    You make the following statements -"If you’re after cash flow, a duplex provides a dual income for the cost of a single piece of land."
    and "As an example, a three-bedroom home in Palm Beach on Queensland’s Gold Coast currently rents for $650 per week. Four streets away, a three-bedroom duplex earns $550 per unit. That’s $1,100 per week combined – $450 more than the standalone home."

    First of all, you need to compare land sizes and prices to be equivalent and comparable. A larger single piece of land that is sub dividable will end up with smaller land parcels after the subdivision, with different market values. Subdivision cost will also need to be taken into account.

    The same comparisons need to be looked at for your example of rental income given for a single 3 bed home to 3 bed duplex. One, the duplex will have higher building costs to construct. Two, the 2 dwellings and the end market value and possibly the borrowings will be higher than the single 3 bed home.

    Please compare apples with apples.
    Yes there can be an advantage or gain with this strategy, however please compare equally with comparable properties instead of over stating the out come of your strategy.
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