If you are considering investing in property in Australia, you may want to consider owning a duplex. Not only can a duplex provide positive cash flow through rental income, but it also offers higher potential tax breaks, the ability to get funding easier to purchase the property, an easier asset for lower risk appreciation, and the opportunity to diversify your investment portfolio. If you are willing to take the time and find a quality duplex it will likely be a smart financial move in a market with high demand for rental properties.
Here are the top 5 things that I have found from buying/building duplexes:
1. Positive cash flow
One of the main benefits of investing in a duplex is higher cash flow. This means that the property will likely have a rental income higher than the expenses associated with owning it, such as loan repayments, council rates, holding/maintenance costs. In a market with high demand for rentals, owning a duplex can provide a consistent stream of income for you because you own two assets on the one title instead of just one!
2. Tax benefits
Owning a duplex allows you to claim certain tax breaks on the property. These include interest on the mortgage, property management fees, ownership related costs, and depreciation of the property. These deductions can significantly reduce the overall cost of ownership and increase the potential for positive cash flow. When you build a new duplex, the depreciation is very high due to the higher cost of construction, I have found that this actually allows me to offset a lot of my income tax through this tax break.
3. Easier to get a loan
Getting a loan for a duplex is much easier because the rents are higher on a duplex then a traditional house due to having two tenants. This allows the bank to service your loan easier and, in some cases, use a lower deposit. I have found that a $50,000 deposit is sometimes enough to buy a duplex as the rents service the loan really easily.
4. Potential for capital growth
No one can predict the future of the real estate market with absolute certainty, investing in a duplex can provide the opportunity for the property to appreciate in value over time with much less risk involved due to the high rental income. As the market grows and demand for rental properties increases, the value of your duplex should increase alongside the yield amount, providing potential for profit or equity release in the future.
5. Ability to diversify your property portfolio
Owning a duplex can also provide a way for you to diversify your investment portfolio. Rather than relying only on the higher risk of capital growth, a duplex offers a tangible investment that can provide a steady stream of income. Diversifying your property portfolio can help to spread risk and potentially increase overall returns. This has also been seen to be a benefit for SMSF’s who want reliable returns with limited risk.
Buying or building a duplex in Australia can be a smart financial decision due to its high cash flow potential and other key benefits as stated above. If you are considering this option, it is important to do your due diligence and carefully consider factors such as location, market conditions, and financing options before making a decision. Reach out below if you want to learn more about duplexes, only certain councils in Australia allow them.
Disclaimer: The information provided in this article is solely the author’s opinion and not investment advice – it is provided for educational purposes only. By using this, you agree that the information does not constitute any investment or financial instructions. Do conduct your own research and reach out to financial advisors before making any investment decisions.
